Ohio regulators on Thursday threw up a hurdle for a solar project that's slated to be the state’s largest, rejecting plans from American Electric Power’s Ohio subsidiary to charge ratepayers for costs to build the 300-megawatt project.

The decision, which also applied to another planned 100-megawatt AEP Ohio project, shouldn’t come as a complete surprise: In January commission staff issued a recommendation against the projects, arguing the power isn’t needed in the state.

Though AEP Ohio called the decision “disappointing” in an email to Greentech Media, the utility said the projects could go on even after the rejection. AEP plans to look for offtakers interested in bilateral contracts, such as corporations or other large purchasers. Hecate Energy is developing the 300-megawatt project, while Willowbrook Solar will develop the smaller of the two.

It’s not the first time AEP has faced challenge from regulators on its renewable plans. In July of 2018, the utility canceled its 2-gigawatt Wind Catcher project after the Texas Public Utility Commission said the project didn’t provide enough benefit. Wind Catcher was slated to be the largest onshore wind project in the U.S. 

That setback didn’t put AEP off renewables, which have become a key segment of its business. This year the utility purchased Sempra Renewables for more than $1 billion and upped its renewables portfolio to more than 1.3 gigawatts. In Ohio, AEP plans to add 500 megawatts of wind plus 400 megawatts of solar. But that capacity is at the mercy of Ohio regulators’ determination of need — need the commission said AEP Ohio didn’t demonstrate in the case of the 400 megawatts currently proposed.   

When it filed for approval of the Ohio solar projects, AEP Ohio said the plants' construction would save ratepayers $218 million over the two-decade span of their power-purchase agreements and guard against price changes in PJM Interconnection territory. 

“As the market price of energy in PJM fluctuates over time,” the utility wrote, the solar PPAs “will act as a hedge against energy price volatility.” 

To pay for the projects, the utility’s customers would have seen an increase of about 28 cents per month on their bills. AEP Ohio said the projects would contribute 3,900 jobs and grow state GDP by more than $400 million. 

Ohio ranked 37 out of 50 states for installed solar in 2018, according to the Solar Energy Industries Association and Wood Mackenzie Power & Renewables. In 2017, its biggest year for large-scale installations, it built only 27 megawatts. WoodMac's 2021 forecast for Ohio of nearly 500 megawatts relies on AEP's 300 megawatts for the lion's share of the progress expected in that year.

The struggle over AEP Ohio’s projects comes amid a larger fight over preferred generation resources in the state, which still uses coal for nearly 50 percent of its generation. 

A law passed in July, HB 6, reduces Ohio’s renewable portfolio standard from 12.5 percent renewables by 2027 to 8.5 percent by 2026. The bill also provides money to stand up FirstEnergy Solutions' nuclear plants (by adding a charge of 85 cents per month to residential utility bills) and two Ohio Valley Electric Corp. coal plants (with a $1.50 monthly residential charge).

Clean-energy and environmental advocates have challenged the new law and are considering taking their fight all the way to the Ohio Supreme Court. They say Ohio could miss out on the benefits of a clean-energy transition, a concern reinforced by the commission’s rebuke of AEP Ohio’s solar plans. 

“Solar energy is cheaper and cleaner than other options,” said Daniel Sawmiller, the Ohio energy policy director at the Natural Resources Defense Council, in a statement on the commission’s decision. “We can’t be left behind while other states attract the economic opportunities and jobs of the clean energy economy.”