AEP Lifts Capital Plan 30% to $100B as Data Center Load Hits 84 GW
AEP’s five-year capital plan just grew 30% to $100 billion, and the biggest driver is a single 10.4-GW data center campus in Ohio. Utility Dive reports that the company’s contracted large loads rose 22% to 84 GW, up from 69 GW the previous quarter. For line, substation and civil subcontractors, the numbers point to multi-year transmission and generation work across AEP’s 11-state footprint.
Background
AEP disclosed the new plan on its Oct. 28, 2026 earnings call, according to Utility Dive. The previous plan was $78 billion. Spending on gas-fired generation through 2031 rises to $20 billion from $13 billion. Transmission rises to $37 billion from $33 billion. AEP also expects its utilities to spend $8 billion on renewables over the same five years.
The company now projects 13% compound rate base growth over the next five years, up from 11%. AEP has 14.4 GW of active generation requests from its utilities. Utility Dive reports that AEP’s total retail electric sales rose 11% in the third quarter and 8.7% over the first nine months, mainly on data center development. Third-quarter net income was $1.2 billion on $6.8 billion in revenue, compared with $972 million on $6 billion a year earlier.
Two projects anchor the plan. The first is a roughly $5 billion, 765-kV transmission project in Ohio, called Piketon, that supports SB Energy’s 10.4-GW data center campus. The second is a $4 billion, 702-MW fuel cell project in Wyoming. It uses Bloom Energy fuel cells under a 20-year power purchase agreement with Google, and AEP expects it online in 2028. Construction there is already underway.
Analysis
Gas is growing faster than wires. Our arithmetic: gas generation spending is up $7 billion, roughly 54%, while transmission is up $4 billion, roughly 12%. Transmission is still the larger bucket at $37 billion, but the incremental money is going to generation. AEP’s CFO said contracted demand is growing faster than the output of the existing fleet, and the company says it is preparing to add about 9 GW of gas-fired generation through 2032. Utility Dive’s earlier coverage reported that AEP secured 13 GW of gas turbines, so the equipment is being locked up ahead of the construction labor.
Piketon is a staged build, not a single push. The three 765-kV lines each provide about 3.2 GW of capacity and carry in-service targets of Dec. 31, 2028, 2029 and 2030, per AEP’s SEC filing. AEP expects to start construction early next year. That gives the first line roughly two years from start to energization. The staggered dates suggest crews could be needed in offset waves rather than all at once. That is our inference, not something AEP has stated.
Regulatory gates will set the pace. The project needs approvals from PJM, the Public Utilities Commission of Ohio and FERC. The data center’s first 800 MW will be served with existing transmission and needs no additional regulatory approvals, AEP said. Our inference is that notices to proceed, and the packages behind them, will be sequenced around those approvals. AEP has not published a package schedule.
SoftBank is funding Piketon, and the return is tied to cost and schedule. SoftBank and its affiliates will pay for the Piketon transmission project, with an 11.35% base return on equity that could move between 10.71% and 11.99% depending on final costs and in-service dates. Because that return depends on final costs and dates, the incentive favors contractors who can hold schedule.
The genco question could shift who the customer is. CEO William Fehrman said AEP may house future gas plants in separate generating companies if the structure proves viable, naming West Virginia and Indiana. If that happens, the entity issuing generation work in those states could differ from the regulated utility. That would affect prequalification paperwork and contract counterparties.
What the source does not say. The figures Utility Dive cites are not broken out by state. They also do not name an EPC contractor, a general contractor or open subcontract packages. AEP’s utilities serve customers in Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia, but the $100 billion is not allocated among them in this reporting. Treat any state-level work forecast as an estimate until AEP or its regulators publish more detail.
What It Means for Subcontractors
- Pre-qualify with AEP now, ahead of the expected early-2027 Piketon construction start. Piketon construction is expected to start early next year, and the first 765-kV line has a Dec. 31, 2028 in-service target. Complete registration with AEP’s supply-chain and contractor portals now. Our inference is that packages will be sequenced around PJM, PUCO and FERC approvals, so vendors already on the approved list will be first in line when those gates clear.
- Transmission line and civil crews: plan for three offset windows. The $5 billion Piketon project covers three 765-kV lines with in-service dates of Dec. 31, 2028, 2029 and 2030. Foundation, structure and stringing crews should expect staggered demand rather than one peak. Ask in prequalification whether work is bundled by line or by scope.
- Substation and E&I firms: tie bids to the owner’s cost incentive. SoftBank pays for Piketon, and the return on equity ranges from 10.71% to 11.99% based on final costs and in-service dates. Schedule certainty and cost control carry weight with that owner. Bring crew availability data and schedule-recovery history to your submittals.
