We actively support industries experiencing high growth while also focusing on new business development opportunities. Two recent initiatives focus on supporting supply chain resiliency and indoor agriculture.
The shortage of personal protective equipment and other essential items during the global pandemic exposed the fragility of global supply chains. The potential for logistics challenges from trade conflicts and other supply chain disruptions is shifting the industry’s focus from cost cutting and efficiency to diversification and resiliency. In addition, rising global energy, labor and transportation costs makes domestic manufacturing and sourcing competitive and attractive. President Biden and his Administration’s executive orders on “Made in America”, along with an increased focus on environmental, social and governance (ESG) issues contribute to companies evaluating the impacts of overseas sourcing and production. The expansion of manufacturing in the U.S. is a growing opportunity for economic development in our communities.
In response, our E&BD team is leading a strategic initiative centered on supporting U.S. manufacturing. Through this initiative, we are targeting existing AEP customers and suppliers, as well as potential new-to-AEP customers that may be considering shifting some or all of their overseas production to the U.S. and/or may be seeking more domestic U.S. sources for their supply chains. We joined two key reshoring organizations that specifically work with companies to analyze the cost advantages of domestic U.S. production and sourcing.
As part of the initiative, we are assessing our own internal supply chain for opportunities to buy local and expand supplier diversification. Bringing manufacturing opportunities to our local communities could help revitalize some of our most economically challenged areas – creating jobs, taxes and economic vitality.
Traditional farming has also been impacted by the COVID-19 pandemic. Border closures, quarantines and supply chain disruptions accelerated issues of food insecurity and logistical challenges of transporting critical food supplies over long distances. One way this is being addressed is through indoor agriculture - indoor facilities that grow produce using a combination of electric lighting, HVAC equipment, technology and building controls. Indoor agriculture has numerous environmental benefits, can produce higher food yields, is climate and weather resistant, and can help address food insecurity in underserved areas. It also opens up opportunities for electric utilities to play a key role in site location, electric load growth and load-shifting flexibility, energy management, and rebates and incentives.
Our E&BD team has focused on assisting key players in the indoor and alternative agriculture space for several years. One community in our Appalachian Power territory will benefit from the world’s largest vertically integrated indoor aquaculture facility. Located on the boundary of Tazewell and Russell counties in Southwest Virginia, this $228 million facility will have a significant impact on the economic vitality of the region, which was negatively impacted by the closure of coal-fueled power plants and mining facilities.
The Electric Power Research Institute (EPRI) is leading an indoor agriculture investment study to gain insights on operational models’ impacts, the impacts of weather conditions and resource consumption, and how facilities can affect grid operations and support sustainability. Through this study, EPRI is deploying 320-square-foot container farms around the country. AEP Ohio, Public Service Company of Oklahoma and Southwestern Electric Power Company are participating in the pilot at three locations. AEP’s E&BD team is leveraging their Geographic Information System (GIS) mapping to identify and inform location decisions. The insights will be invaluable as we look to prepare our infrastructure and local economies to support this new growth opportunity.
The federal government and the armed forces are an important customer segment and growth area for AEP. We provide electric service through our regulated utilities to over 3,500 federal accounts. Our team works to help our federal and military customers meet their sustainability and resiliency goals, including those required by law and executive orders. The federal government has a comprehensive framework that calls for using resources more efficiently and acquiring more energy from renewable resources.
In 2020, Public Service Company of Oklahoma (PSO) signed a 30-year lease with the Army to install an energy resilience project on approximately 81 acres at Fort Sill, located near Lawton, Oklahoma. If approved by the Oklahoma Corporation Commission, the $117.9 million project will include the construction of 36 megawatts (MW) of gas-fired electric generation and 10.9 MW of solar panels. This project adds more clean energy to the power grid, improves the safety and security of grid modernization efforts, and increases energy supply diversity. The new natural gas units will provide greater resiliency and reduce service disruptions for customers. The project will also help balance the system as PSO integrates more intermittent renewables into its generation fleet.
In February 2020, Southwestern Electric Power Company (SWEPCO), along with its Energy Service Company (ESCO) partner was awarded a Utility Energy Service Contract (UESC) for Red River Army Depot (RRAD). SWEPCO will provide RRAD with comprehensive energy and water efficiency improvements and demand reduction services. This UESC project has the potential to encompass a broad range of energy conservation measures, including system upgrades and recommissioning, deep retrofit projects, renewable energy, cogeneration plants and microgrids.
Our E&BD team plays a significant role in the Just Transition and revitalization of some of the hardest hit communities impacted by fossil-fuel plant closures. As we shift from fossil-based electricity to cleaner resources such as wind and solar, there are human and economic impacts including loss of jobs at the plants and in the broader economy; loss of taxes that support public services, including education; and decreased economic activity that is supported by the plant’s ecosystem.
We have long embraced our responsibility to support our workers and our communities and help them acquire and find new skills, new industries and new partnerships that enable them to diversify, thrive and be resilient. Our E&BD team is activated early, often years ahead of a planned retirement. This gives us the time to assess options and scout the area for other developable properties in or near the impacted communities that may be more marketable than the plant site itself. At the same time, we provide resources such as grants and research, including workforce analysis. Learn more in the Just Transition section of our Climate Impact Analysis Report.