Emission reduction targets accelerated, including new net zero goal by 2045 and 80% reduction in full Scope 1 emissions by 2030 from 2005 baseline
AEP shares updates on strategic initiatives, highlights planned capital investments in renewables and energy grid. (Credit: Sixflashphoto/ Wikipedia.org)
American Electric Power (Nasdaq: AEP) plans to invest in its regulated businesses, accelerate its carbon reduction targets and streamline the business to drive value for customers, communities and investors. AEP leadership will share the company’s financial plan and strategy with analysts in New York City today.
AEP narrowed its 2022 operating earnings (earnings excluding special items) guidance range to $4.97-$5.07 per share, raising the midpoint to $5.02 per share. The company also announced its 2023 operating earnings guidance range of $5.19 to $5.39 per share with a projected annual operating earnings growth rate of 6% to 7%.
Operating earnings could differ from those prepared in accordance with Generally Accepted Accounting Principles (GAAP) for matters such as impairments, divestitures or changes in accounting principles. AEP is unable to forecast if any of these items will occur or any amounts that may be recorded for future periods. Therefore, AEP is not able to provide a corresponding GAAP equivalent for earnings guidance.
“AEP is committed to providing maximum value to our customers and stakeholders, while de-risking and simplifying the business through active management of our portfolio,” said Julie Sloat, AEP president and chief financial officer. “Our strategic vision prioritizes delivering clean, reliable energy and service offerings that boost and empower the communities we serve, all while maintaining affordability for our customers and offering significant shareholder value.”
The company plans to invest $40 billion in capital from 2023 through 2027 with an emphasis on transmission, distribution and renewable energy. AEP will allocate $26 billion to transmission and distribution operations to continue building a modern, efficient, reliable and resilient energy grid. During the same period, AEP plans to invest $9 billion in regulated renewable generation.
“Nearly all of our capital will be allocated to our regulated businesses, and 90% of our future investment will focus on wires and renewables,” Sloat said. “This approach will enable us to enhance service for customers, advance the clean energy transition and take advantage of a robust pipeline of growth opportunities in the grid and renewable energy space. Our high-growth transmission business has a long runway of investment opportunities focused on improving system performance, increasing reliability and resiliency and enhancing market efficiency.”
As the company transitions to a clean energy future, AEP is adjusting its near-term carbon dioxide emission reduction target from a 2000 baseline to a 2005 baseline, upgrading its 80% reduction by 2030 target to include full Scope 1 emissions and accelerating its net-zero goal by five years to 2045.
“AEP has a proven track record of reducing fleet emissions and repeatedly has reached our goals ahead of schedule,” said Nicholas K. Akins, AEP chair and chief executive officer. “Raising our carbon reduction targets reflects our progress in reducing our environmental footprint and delivering more low-emissions energy to our customers. We’re confident we can continue this momentum to a net-zero future by integrating more clean energy resources, strengthening the energy grid and harnessing the power of emerging technologies. In addition to environmental benefits, renewable resources offer stability for customers from fuel price volatility.”
AEP announced Sept. 30 that it expects to complete the sale of its Kentucky operations to Liberty in January 2023. Earlier this year, AEP also announced it would sell its portfolio of contracted, unregulated renewable energy assets. The sales process for those renewable resources began in August 2022 and is on track to close during the second quarter of 2023. AEP also will initiate a strategic review of its retail business as part of its ongoing strategy to de-risk and streamline the company.
“The sale of our unregulated, contracted renewable assets and our Kentucky operations will allow us to shift capital to revitalize our transmission and distribution systems and implement energy solutions to benefit our customers and communities,” Sloat said. “We’re beginning a strategic review of our retail business as we focus on growth in our regulated businesses and simplify the structure of the company.”
Source: Company Press Release