AEP considers a $10 billion increase in its five-year capital expenditure plan to meet data center demand

American Electric Power said on Thursday that it would consider adding $10 billion to the $54 billion capital plan, which is a record. The demand for data centres in the Midwest and Southern service areas of this U.S. utility has increased.

The U.S. Power Companies have raised their capital investment and load forecasts as the technology industry invests billions in expanding energy-hungry cloud computing and artificial intelligence data centers.

AEP has committed to 20 gigawatts in new power through 2029. The utility anticipates a total retail demand increase of up to 9% per year over the next three.

U.S. Energy Information Administration (EIA) expects that power consumption will reach new records this year and in the next. This is due to the growing demand for data centers that are dedicated to AI, cryptocurrencies and other technologies, as well as increased electricity use by homes and businesses to heat their buildings and transport themselves.

AEP, with 5.6 million customers across 11 states, has added nearly 450 Megawatts to Ohio's data centers in December due to demand from Amazon Web Services (AWS) and Meta. The utility anticipates adding similar amounts of load every month until the end of the calendar year. More than 4.7 gigawatts in data center processing are contracted to be put into service by 2025.

The majority of the data center electricity consumed is in Texas and Ohio. AEP's territory includes Indiana, where Amazon.com and Google have recently begun service. Another 1 gigawatt is expected to be contracted for Indiana.

Bill Fehrman, CEO of AEP, said during a conference call about the company's earnings that "they will continue to ramp up gradually over the next few years."

This growth is a testament to our commitment to the economic development of the country and the opportunities that lie ahead. But we will make sure it doesn't fall to our existing customers.

AEP is embroiled in an ongoing regulatory battle over the development of power contracts for data centers and large customers.

AEP reported a higher profit for the fourth quarter on Thursday as commercial customers increased their demand for electricity.

The Columbus, Ohio, based company earned $664.11 million or $1.25 a share in the three-month period ended December 31 compared to $336.2 million or 64 cents a share last year. (Reporting from Laila K. Kearney, New York; Vallari Srivastava, Bengaluru. Editing by Maju S. Samuel and Nia W. Williams.)

(source: Reuters)