NARUC International Relations Committee Meeting February 5, 2012 Washington, D.C. Jay Godfrey Managing Director, Renewable Energy

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1 NARUC International Relations Committee Meeting February 5, 2012 Washington, D.C. Jay Godfrey Managing Director, Renewable Energy American Electric Power Company

2 U.S. electric generation profile is shifting and expected to shift dramatically: Near-term environmental requirements are expected to require retirement of numerous operating coal-fired units Natural gas supply is abundant (in North America) at anticipated stable low price also provides valuable grid flexibility Larger scale deployments of renewables are driving lower costs and are being interconnected with load centers in increasing quantities worldwide AEP is active in the U.S. developing renewable projects through: Power Purchase Agreements (PPAs) Transmission projects Introduction Enabling public policies both at home and internationally 2

3 American Electric Power (AEP) Over 5.3 Million Customers in 11 States in 3 RTOs Approximately 40,000 MW of Generation 3

4 AEP is also a Transmission Leader Largest Owner of Transmission Assets in U.S. 39,000 miles of HV Transmission 216,000 miles of distribution circuits 4

5 AEP is also a Transmission Leader Major Transmission Project Developer 5

6 AEP Generation Transition Coal Plant Retirements Coal Plant Retrofits New Gas Generation Increased use of Renewables Smart Grid Technologies Transmission Build-out 6

7 AEP s Renewable Footprint 2,000 + MW of wind 363 MW Hydro 10 MW solar 7

8 Global Generation Trends Developed countries are diversifying fuel portfolios to achieve energy security, independence and environmental goals Developing countries are developing renewables aimed at 100% electrification and improving quality of life for citizens and protecting the environment Global recession is impacting pace of change AEP is assisting developing countries through demonstration projects, training workshops and policy recommendations with coalitions and the United Nations AEP is collaborating on technology development with Korean and Chinese Power companies 8

9 AEP s International Activities Global Sustainable Electricity Partnership: Jointly develop global electric policies and to promote sustainable development worldwide Members include AEP, Duke, Électricité de France, Electrobras, Enel, Eskom, HydroQuebec, RusHydro, Kansai Electric, RWE, State Grid of China and Tokyo Electric Examples: ( Developing small renewable energy projects with local utility companies in developing countries as a training tool Conducting financing electrification workshops for energy and finance ministers in 55 countries with the United Nations World Business Council for Sustainable Development Recommending financing strategies, technology deployment, and enabling policies for countries to achieve accessibility, affordability, and clean energy goals in 2050 ( World Energy Council Leading clean energy programs with energy ministers worldwide ( 9

10 International Success Story The e8 Galapagos San Cristobal Wind Project The first large-scale wind project in Ecuador Three 800 kw turbines for total installed capacity of 2,400 kw First to go through community review process Operating since 2007 under PPA with local utility company A six-year project with an approximate cost of $10 million USD Complemented by two 6 kw Solar PV systems, solar PV technical training and energy efficiency educational programs A wind project built on a UNESCO World Heritage Site, as a component of the United Nations Development Program (UNDP) AEP managed the project design and construction, and conducted operating and maintenance training for local utility company staff 10

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12 Conclusion Renewable energy development can be accelerated in the US and globally if: Technology is deployed at scale through energy development plans Financing flows through strong public / private partnerships that create regulatory certainty and attractive investment risk profiles Reasonable rates of returns are assured for project developers and investors, including cost recovery on PPAs Public policies for generation and transmission are established Long-term power purchase agreements or capital investments are generally the least cost method of adding renewables and other clean energy technologies to a utility s generation mix 12