Cost of Renewables in the Dec. 2015 AEP Settlement

Revised 01 & 18 Jan 2016


I have estimated the cost of the renewable part of the AEP/Sierra-Club agreement and believe that the amount is conservative. The result (details below) is that households should pay 34¢ per month. Note that I have used real prices. Many analyses use a quantity called levelized cost of energy (LCOE), which is hypothetical.


The key to costing the wind and solar premium is to estimate the excess cost over what the customer is paying for conventional power.


Wind production = 500 MW*730 (hours)/month*0.33(capacity factor) = 120,000 MWh/month. Since residences consume one-third of the electricity in  Ohio, their share of the renewables is 40,000 MWH per month. @ 1.5 million AEP customers, each customer’s share is 27 kWh per month.

The Michigan compliance report says price of wind is in the low 50’s per MWh. LRL survey says average price in our region (OH, IN, Il, MI, WI) is $34.

The lowest AEP generation price to households for conventional fuels is $51.90; it rises to $61.50 per MWh for the longest contract. So a wind premium of $5 per MWh (= 0.5 ¢ per kWh), assuming that Ohio pays the Michigan price, is used. The cost amounts to 14 ¢ per month for 27 kWh


Solar production = 400 MW* 730 hours per month* 0.15 (capacity factor) = 44,000 MWh/per month with 14,700 going to residences. @ 1.5 million AEP customers, each customer’s share is 10 kWh per month.

Price data for large solar, which AEP plans to build, is scarce. The solar industry reported a price of $61 per MWh for a facility in Alabama, which has only a bit more sunshine than Ohio, according to the solar map. To be conservative, I chose a solar cost for Ohio of $70 per MWh, which is a premium of $20 per MWh (= 2¢ per kWh) over the AEP conventional-power price. The solar cost amounts to 20 ¢ per month for 10 kWh.


AEP Customers: Wikipedia, American Electric Power, accessed 12 Dec. 2015

AEP Price:

LRL survey: Ryan Wiser, et al., 2014 Wind Technologies Market Report, Aug. 2015 (n. b. fig. 46)

MI Compliance Report: Michigan Public Service Commission, Report On The Implementation Of The P.A. 295 Renewable Energy Standard And The Cost-Effectiveness Of The Energy Standards, February 13, 2015 (n. b. p. 30)

Solar Map: NREL, PV Solar Radiation,

Solar Report: M. Makyhoun, et al. Utility Solar Market Snapshot, May 2015



Solar Farm Area

There is concern that the proposed AEP solar construction in SE Ohio will occupy too much land. At 75kW per sq. ft., the 400 MW project will occupy about one sq. mi. SE Ohio has plenty of potential sites (e.g. parking lots) and much vacant land. There should be no problem.

Fuel Prices Go Down while Electric Bills Go UP

The table shows that fuel prices for electric generation have been declining the past few years. Fuel costs cannot explain the rise in electric bills.

Fuel PercentX Cost, $/BTUX % Drop in  cost
Jan. 2009 Peak since 2009 Current

(Sept. 2015)

Since 2009 Since Peak
Coal 67 2.30 2.49 (Feb. 2012) 2.12 8 15
Natural Gas 18 6.30 7.33 (Jan. 2010) 2.19 65 70


X: Percent of Ohio electricity provided by each fuel in 2014.  Energy Information Administration reports costs in terms of energy per dollar to facilitate comparison (1).


(1) Energy Information Administration, Electric Data Browser,

Ohio Renewable Energy Compliance Costs Don’t Grow


Consumer renewable energy charges required by Ohio law (130-SB310), have remained relatively constant over the years, varying from 50 to 70 ¢ per month even as the renewable energy requirement has risen from 0.5 to 2.5 percent. Overcharges in 2014 and refunds in the first part of 2015 (1) obscure the relative constancy.




Computational Details

I assumed that the typical monthly usage is 1000 kWh, as does PUCO (1).  Consumer charges are calculated as in Ohio Administrative Code Section 4901:1-21-19 (B).


(1) PUCO Chairman Andre T. Porter, letter to Sen. Balderson & Rep. Roegner, 11 Sep. 2015,, click on “Additional Testimony”

(2) Graph sources;

2011: PUCO Case No. 12-2668-EL-ACP

2012: PUCO Case No. 13-1909-EL-ACP

2013: PUCO Case No. 14-2328-EL-ACP (draft)

2014: PUCO Chairman Thomas Johnson, Report to the Energy Mandates Study Committee, 4 Dec. 2014, click on ‘Testimony’

2015: Ref. (1) and IEU- Ohio website,, accessed 1 Dec. 2015