AEP Bounces Back From Wind Catcher Cancellation With 1.2GW RFP

Southwestern Electric Power Company this week released a request
for proposals for up to 1.2 gigawatts of wind resources, six months
after the
cancellation
of its ambitious Wind Catcher project. 

SWEPCO, a subsidiary of American Electric Power (AEP), said it
will accept proposals of 100 megawatts-plus until March 1. Projects
should be put into service before December 15, 2021 to take
advantage of at least 80 percent of the Production Tax Credit.

AEP nixed the Wind Catcher project in July, after a regulatory
tussle and an ultimate rejection from the Texas Public Utility
Commission. Despite that high-profile setback — Wind Catcher was
to be the largest U.S. project at 2,000 megawatts — analysts at
the time said the wind industry was healthy.

This latest move suggests SWEPCO agrees. It’s latest Integrated
Resource Plan
, filed in December with the Arkansas Public
Service Commission, includes the 1,200 megawatts it plans to add
through this latest RFP and calls for a total of 2,000 megawatts in
nameplate wind capacity through 2038.

That would make wind 24 percent of SWEPCO’s nameplate capacity
mix — up from 8 percent in 2019 — with natural gas accounting
for 27 percent and coal accounting for 25 percent. WoodMac analyst
Anthony Logan said the viability of soliciting wind into 2023,
“while exciting, doesn’t necessarily inform how the market will
look in the rest of the country,” because “this region has just
about the cheapest wind in the country.”  

In announcing the RFP, SWEPCO’s president and COO Malcolm
Smoak said the utility “continues to see strong customer interest
in more renewable energy.” In a recent
presentation
, SWEPCO said it expects to select final projects
between March and July. 

Research and consulting group Wood Mackenzie Power &
Renewables affirmed the positive outlook for the
wind industry in

research
released Wednesday. Despite the loss of Wind Catcher,
WoodMac expects the U.S. market to add 23 gigawatts of new capacity
through 2020.

FIGURE: U.S. Historical and Forecast Wind Capacity
Installations

But WoodMac also said that coming supply chain challenges
threaten the wind industry’s growth.

Analysts said bottlenecks in supply could lead to the delay or
cancellation of 23 percent of capacity additions expected in the
next two years. The situation may jeopardize $2.1 billion in
revenue.

“These supply chain constraints will escalate deployment risks
for all wind energy participants — increasing the likelihood of
higher costs, missed deadlines, lost production, and fewer PTCs if
projects can’t be commissioned in time,” said Dan Shreve, head
of global wind research at WoodMac. 

The report noted that much of the wind industry has not
anticipated the severity of these supply chain constraints and the
associated losses.

The risk is especially high in 2020, when WoodMac forecasts 12.9
gigawatts of installations as installers rush to meet the PTC.
Though 2012 saw the same capacity installed, WoodMac said increases
in turbine size mean more transportation challenges.

Through 2020, blade lengths will have increased by about 34
percent, from an average of 44 meters in 2012 to 55 meters in 2020.
That means getting equipment from point A to B requires special
trailers, drivers and even escorts. In addition to working on a PTC
extension, WoodMac said the industry needs a forward-thinking
action plan to maintain its positive position. 

For SWEPCO’s RFP, Logan notes the “unusual” requirement that
turbines be sourced from GE, Siemens-Gamesa or Vestas could lower
execution risks.

Source: FS – Transport 2
AEP Bounces Back From Wind Catcher Cancellation With 1.2GW RFP



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