AEP secures 13 GW of new gas turbine capacity with aggressive procurement posture amid asset scarcity.

American Electric Power secured 3 GW of gas turbine capacity in the second quarter, bringing its total turbine supply that can be deployed by 2031 to approximately 13 GW, according to Bill Fehrman, AEP's chairman, president and CEO. The company has also secured options for an additional 10 GW of turbines by 2035. The turbine deals are with GE Vernova and Mitsubishi.

The timing of the 10 GW of turbine supply aligns well with AEP's aging power plants, positioning the utility to replace retiring coal and gas plants across its vertically integrated operations. "The new generation investments are going to play a pretty central role in driving the long-term growth as we look to deploy this 13 GW of turbine capacity across the regulated businesses," Fehrman said.

Turbines represent "a scarce resource and will become increasingly more valuable," Fehrman noted. "We're going to continue to be aggressive in our positions on this, and we're continuing to actively work with the key suppliers and are very confident that not only with what we have locked up, but we've got clear line of sight through certain framework agreements and such that we can get what we need to continue to deliver for customers."

Beyond turbine procurement, AEP Ohio has reached a deal to acquire the 710-MW coal-fired Longview power plant near Maidsville, West Virginia, and secured a permit to build a 1.2-GW gas-fired power plant at the same site. The Longview plant is currently owned by Mountain State Energy Holdings.

AEP operates under a $78 billion, five-year capital plan running through 2030 and plans to announce the next iteration this fall. By 2035, the company's utilities expect to add 27.2 GW to their systems through a mix of 15.3 GW of natural gas, 6.4 GW of solar, 5.1 GW of wind, and 500 MW of storage capacity. The utilities have pending requests for proposals totaling 7.8 GW.

Three months prior, Fehrman had flagged concerns about PJM Interconnection regarding governance, the ability to add large loads, and resource adequacy. However, engagement has since improved markedly. "The pace and intensity of productive conversations with PJM has significantly increased," he said. "We're seeing very positive engagement across the board, including the team at PJM, FERC, and other key stakeholders." FERC held a technical conference on July 23 exploring possible changes to PJM's governance framework.

"We are very optimistic that there's going to be alignment around some of the solutions," Fehrman said. "As these issues continue to evolve, it's obviously important that any of the frameworks that get put forward ensure fairness to all of the participants and protect customers and appropriately assign costs to those who are causing them."

AEP's contracted large load pipeline grew to 69 GW, up from 63 GW in the first quarter. The data center and large load pipeline includes 45 GW in Texas, 12 GW in Ohio, and 12 GW combined across Oklahoma, Indiana, Kentucky, Louisiana, and Virginia. Large load tariffs require customers to make long-term commitments supporting the necessary investments, and include "strong protections against project delays and changing development time lines," according to CFO Trevor Mihalik, giving the company confidence in capturing this growth while managing potential risk.