American Electric Power Co. said Wednesday that it will spend $4.5 billion to develop one of the largest single wind farms in the U.S. and a related 350-mile transmission line.
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The investment is the latest sign that U.S. wind power projects are beginning to attract serious money, even in the heart of oil and gas country, as they become more competitive with other sources of electricity.
When complete, the 2,000-megawatt project in the Oklahoma Panhandle would also be one of the largest single purchases of renewable energy by a utility company.
AEP said it had a deal with Invenergy, a privately held firm based in Chicago that had been developing the wind farm, to purchase the project.
AEP will also build a 350-mile dedicated transmission line to take the power to Tulsa, from where it will be distributed throughout the region, to serve homes and businesses in Texas, Oklahoma, Arkansas and Louisiana.
The move continued what has been a swift transition to other energy sources for the Ohio-based power company, which derived the overwhelming majority of its electricity from coal a decade ago but has since been investing in natural-gas and renewable-energy projects.
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"AEP is moving to a cleaner energy future, driven by new technologies and the expectations of our customers and shareholders," the company's chief executive, Nick Akins, said in a statement.
AEP spokeswoman Melissa McHenry said the project made financial sense because "it is cheaper for the customers in that area for us to add this project as opposed to other generation."
The company estimated the project, called Wind Catcher Energy Connection, would support 4,000 direct and 4,400 indirect jobs annually during construction and 80 permanent jobs once operational. It also estimated it would contribute roughly $300 million in property taxes over its life.
The announcement is the latest in a string of big investments in wind. Earlier this month, Pacificorp, a Pacific Northwest utility owned by Warren Buffett's Berkshire Hathaway Inc., said it would spend $3.5 billion on wind and transmission projects.
In March, Minnesota based Xcel Energy said it would spend $4.2 billion to build 11 new wind farms that would total 3,380 megawatts of generating capacity.
Last year, MidAmerican Energy Co., also a Berkshire Hathaway unit, said it would spend $3.6 billion on wind energy in Iowa.
The investments in wind should come as no surprise, says Jason Bordoff, director of the Center on Global Energy Policy at Columbia University.
"Even when you look at wind without subsidies in the places with the best resources, it competes very well," he said. "Over time renewables are becoming cost competitive on their own."
The AEP project is expected to be completed by the end of 2020. That would qualify it for full wind subsidies. In 2015, Congress voted to begin stepping down wind subsidies, but projects that begin construction soon will still qualify for the full subsidy.
The wind farm will be one of the largest, if not the largest, single wind farm in the U.S., but remains only about a quarter of the size of the giant Gansu Wind Farm in China, near the Mongolia border.
Write to Russell Gold at email@example.com
(END) Dow Jones Newswires
July 26, 2017 20:21 ET (00:21 GMT)