SWEPCO Expands Generation Capacity with New Power Plants

Rhea-AI Summary

SWEPCO, an AEP subsidiary, announced several new generation projects pending regulatory approval. The key developments include a 450-MW natural gas plant in Hallsville, Texas, expected to operate by 2027, and the Welsh Natural Gas Conversion Project (1,053-MW) converting coal-fired units to natural gas by 2027-2028.

Additionally, three renewable projects are under construction: the 200-MW Diversion Wind Farm in Texas (operational December 2024), the 598-MW Wagon Wheel Wind Facility in Oklahoma (operational December 2025), and the 72.5-MW Rocking R Solar Facility in Louisiana. SWEPCO has also secured a short-term capacity agreement with a Texas natural gas facility.

Positive

• Significant capacity expansion with 450-MW natural gas plant development
• 1,053-MW coal-to-gas conversion project improving operational efficiency
• 870.5-MW of renewable energy projects under construction
• Diversification of energy portfolio across multiple sources and locations

Negative

• High capital expenditure required for multiple simultaneous projects
• Regulatory approval pending for major developments
• Heavy reliance on natural gas (48% of portfolio) exposes to commodity price risks

Insights

Energy Infrastructure Analyst

The extensive generation capacity expansion by SWEPCO represents a significant strategic move, with the 450-MW Hallsville Natural Gas Plant and 1,053-MW Welsh conversion project forming the backbone of their fossil fuel infrastructure. These projects, combined with renewable additions totaling over 870-MW, demonstrate a balanced approach to meeting growing capacity demands.

The timing of these projects is particularly strategic, with operations scheduled between 2024-2028, allowing for gradual integration into the grid. The Welsh conversion project stands out as a cost-effective solution, leveraging existing infrastructure while transitioning from coal to natural gas. The diversification across natural gas, wind and solar assets creates a robust portfolio that addresses both baseload and intermittent power needs.

Market Research Analyst

This comprehensive expansion plan significantly strengthens AEP's market position in the Southwest Power Pool region. The strategic mix of natural gas and renewables aligns with current market trends and regulatory requirements. The 1,503-MW total natural gas capacity additions, combined with 870.5-MW of renewable projects, represent a substantial infrastructure investment that should enhance SWEPCO's revenue potential and operational flexibility.

The inclusion of a power purchase agreement for the Rocking R Solar Facility demonstrates financial prudence, allowing SWEPCO to diversify its energy mix without the full capital burden of ownership. This balanced approach to capacity expansion should positively impact AEP's long-term market value and competitive position.

SHREVEPORT, La., Dec. 18, 2024 /PRNewswire/ -- Southwestern Electric Power Co. (SWEPCO), a subsidiary of American Electric Power (Nasdaq: AEP), is excited to announce the ongoing development of several new generation projects, pending regulatory approval. These initiatives are designed to enhance SWEPCO's diverse energy portfolio by adding natural gas facilities alongside new wind and solar farms, addressing the growing capacity demands of our customers in a cost-effective manner.

As part of the company's vision to improve customers' lives with reliable and affordable power, today's announcement includes future development of a 450-Megawatt (MW) natural gas plant to be located at a previously retired plant site in Hallsville, Texas. Natural gas is the leading fuel for electric generation nationwide, accounting for 48% of SWEPCO's existing power generation portfolio. Its turbines offer a reliable and dispatchable energy source, capable of ramping up within minutes.

Due in large part to the evolving reserve requirements set by the Southwest Power Pool, SWEPCO anticipates an increasing capacity need. Integrating these generation plants is essential to meet customer needs both now and in the future.

New Proposed Natural Gas Projects:

• 450-MW Hallsville Natural Gas Plant: SWEPCO is initiating a transformative project at the site of the retired H.W. Pirkey Power Plant. This facility is expected to begin operations in 2027, pending regulatory approval from utility regulators in Arkansas, Louisiana, and Texas, as detailed in filings submitted on Dec. 17. The Hallsville Natural Gas Plant will feature two General Electric combustion gas turbine generators and will utilize existing water intake structures and site infrastructure to minimize project costs.
• 1,053-MW Welsh Natural Gas Conversion Project: On Dec. 17, SWEPCO also submitted filings for a fuel conversion project at the Welsh Power Plant, located northwest of Cason, Texas. Pending regulatory approval, this initiative will convert the existing coal-fired boilers of Units 1 and 3 to burn natural gas, with Unit 1 conversion anticipated in 2028 and Unit 3 in 2027.

Renewable Projects Under Construction

• 200-MW Diversion Wind Farm: Located in Baylor County, Texas and scheduled to begin operations in December 2024.
• 598-MW Wagon Wheel Wind Facility: This project, spanning Garfield, Kingfisher, Logan, Payne, and Noble counties in Oklahoma, is making steady progress, with officials estimating it to be operational in December 2025.
• 72.5-MW Rocking R Solar Facility: SWEPCO's first utility scale solar energy resource is nearing completion in Caddo Parish, Louisiana. SWEPCO will not own this facility and will instead purchase the output of the facility via a purchase power agreement. The solar farm will generate enough energy to power approximately 12,000 homes each year.

Through these strategic initiatives, SWEPCO is committed to ensuring a reliable energy supply while effectively meeting the evolving needs of our customers. "The future growth of new technologies and continued service to our customers are priorities that will require a diverse generation portfolio," stated Brett Mattison, SWEPCO President and Chief Operating Officer. "As we enter this era of technological transformation, our customers need an energy system capable of delivering reliable, affordable, and environmentally sustainable power whenever and wherever it is needed. Each of these projects represents an important addition to our generation fleet in service to our customers."

In addition to these projects, SWEPCO has selected a short-term capacity agreement with a natural gas facility in Texas as part of a competitive bid process. The agreement will help serve as a bridge to more permanent resource additions.

"Through these endeavors, SWEPCO remains dedicated to providing a robust energy supply that meets the dynamic electricity demands of the communities we serve," Mattison added.

About Southwestern Electric Power Co. (SWEPCO)
We deliver safe, reliable and affordable power to more than half a million homes and businesses in Arkansas, Louisiana and Texas. Our 1,400 employees power today's necessities and inspire tomorrow's possibilities. You'll see us improving communities, promoting sustainability and building grid resiliency throughout our territory, spanning more than 25,000 distribution line miles. Our work in energy efficiency has been repeatedly recognized by the U.S. Department of Energy, which honored us as an ENERGY STAR® 2023 Partner of the Year for Sustained Excellence. We recognize that innovative approaches to workforce development are necessary to effectively recruit qualified, diverse talent in today's competitive labor market and this includes a commitment to building a diverse and skilled workforce through partnerships to grow the talent pipeline. We're proud to be named Texas Workforce Commission's 2023 Employer of Excellence and to receive the 2023 Curt Eysink Excellence in Workplace Development award from the Louisiana Community and Technical College System. Because we produce and deliver one of the most powerful forces on earth, we keep the safety and well-being of our customers and employees at the forefront, always. We are proud of the Million Work Hours Safety Award from the Arkansas Department of Labor Licensing and Arkansas Workers' Compensation Commission on behalf of our Flint Creek Power Plant for working 4 million hours without a lost-time accident. We believe we can deliver reliable electricity while protecting the environment. Our work to support habitat conservation was recently recognized by the Wildlife Habitat Council Conservation (WHC) who awarded us a Silver Certification for supporting sustainable ecosystems at our Eagle Watch Nature Trail. SWEPCO is an American Electric Power (Nasdaq: AEP) company. SWEPCO's headquarters are in Shreveport, LA. News releases and other information about SWEPCO can be found at SWEPCO.com. Connect with us by following Facebook.com/SWEPCO, Twitter.com/SWEPCOnews, Instagram.com/swepco, Youtube.com/SWEPCOtv and LinkedIn.com/company/swepco.  

About American Electric Power (AEP)
Our team at American Electric Power (Nasdaq: AEP) is committed to improving our customers' lives with reliable, affordable power. We are investing $54 billion from 2025 through 2029 to enhance service for customers and support the growing energy needs of our communities. Our nearly 16,000 employees operate and maintain the nation's largest electric transmission system with 40,000 line miles, along with more than 225,000 miles of distribution lines to deliver energy to 5.6 million customers in 11 states. AEP also is one of the nation's largest electricity producers with approximately 29,000 megawatts of diverse generating capacity. We are focused on safety and operational excellence, creating value for our stakeholders and bringing opportunity to our service territory through economic development and community engagement. Our family of companies includes AEP Ohio, AEP Texas, Appalachian Power (in Virginia, West Virginia and Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana, east Texas and the Texas Panhandle). AEP also owns AEP Energy, which provides innovative competitive energy solutions nationwide. AEP is headquartered in Columbus, Ohio. For more information, visit aep.com.

 

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SOURCE American Electric Power

FAQ

When will SWEPCO's new 450-MW Hallsville natural gas plant begin operations?

The Hallsville natural gas plant is expected to begin operations in 2027, pending regulatory approval from Arkansas, Louisiana, and Texas regulators.

What is the capacity of SWEPCO's Welsh Natural Gas Conversion Project?

The Welsh Natural Gas Conversion Project has a capacity of 1,053-MW, converting Units 1 and 3 from coal to natural gas.

How many homes will SWEPCO's Rocking R Solar Facility power?

The 72.5-MW Rocking R Solar Facility will generate enough energy to power approximately 12,000 homes annually.

What renewable energy projects is SWEPCO currently developing?

SWEPCO is developing three renewable projects: the 200-MW Diversion Wind Farm, 598-MW Wagon Wheel Wind Facility, and 72.5-MW Rocking R Solar Facility.

When will SWEPCO's Wagon Wheel Wind Facility become operational?

The 598-MW Wagon Wheel Wind Facility is estimated to become operational in December 2025.