AEP raises five-year capital plan to $100B on data center load

American Electric Power raised its five-year capital plan to $100 billion from $78 billion, a 30% increase driven by expected generation and transmission spending, company officials said on an earnings call Wednesday, Utility Dive reported.

Contracted large load rose 22% to 84 GW, mainly on a 10.4-GW data center campus in Ohio that SB Energy is developing, CFO Trevor Mihalik said on the call. Through 2031 the plan allocates $20 billion to gas-fired generation and $37 billion to transmission, up from $13 billion and $33 billion under the previous plan, according to company presentations. AEP’s utilities also expect to spend $8 billion on renewable projects over the next five years.

For allocators weighing wires against generation, the Ohio lines carry a formula-set return while the fuel cells depend on a single 20-year offtake. SoftBank and its affiliates will pay for the Ohio transmission project built for SB Energy’s campus, and the lines earn an 11.35% base return on equity, adjustable to 11.99% or 10.71% with final costs and in-service dates, AEP said in its quarterly SEC filing. The Wyoming fuel cell project, 702 MW of Bloom Energy units at a cost of $4 billion, is underpinned by a 20-year power purchase agreement with Google and is due online in 2028.

“Contracted customer demand is growing faster than the operating output of our existing fleet, creating a clear durable need for new baseload dispatchable generation,” Mihalik said on the call.

AEP expects to start building the Ohio project, Piketon, early next year. Its three 765-kV lines will each provide about 3.2 GW of capacity for the data center complex, with targeted in-service dates of Dec. 31, 2028, 2029 and 2030, the company said in its quarterly SEC filing. The campus’s initial 800 MW of load will be served on existing transmission capacity and does not require additional regulatory approvals; the transmission project needs approvals from PJM Interconnection, the Public Utilities Commission of Ohio and the Federal Energy Regulatory Commission.

Gas-fired generation adds $7 billion to the plan, compared with $4 billion for transmission, and AEP’s utilities are preparing to add about 9 GW of gas-fired generation. Google, whose contract underpins the Wyoming fuel cells, has also paid directly for grid capacity behind its own load, agreeing to fund the Arkansas grid for a 600 MW data center, as Private Wealth Daily previously reported.