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Solar and wind should play a part in powering the nation's electricity grid, two energy chief executives said Thursday. But they disagreed about the risks of relying too heavily on renewable sources.

Since solar and wind generators can't be located everywhere because of climate limitations, they require infrastructure to transmit the power to the load centers.

"That's not the way to design your electricity networks in American," Southern Company Chairman and CEO Tom Fanning said on CNBC's "Squawk Box."

"The greater the distance, the greater the risk," he added.

But sitting alongside Fanning, American Electric Power Chairman and CEO Nick Akins said, "Transmission is a key component to optimizing the grid."

"If you have wind located in areas where the wind is blowing considerably, you can get relatively low, very low, wind power prices. The key to that is making sure resources are placed in the proper places in the country," Akins added.

Fanning didn't dispute that, but he argued more in favor of solar power—calling it his "favorite renewable."

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The tax benefits from the government make the economics of using solar work, he said. "Without the tax benefits, it's not as competitive for sure."

While taking advantage of the tax breaks, Fanning said, "I think it's bad policy to have these kinds of tax benefits in this way." The industry should be forced to compete on a "level playing field," he added.

AEP CEO: Low nat gas 'double positive'

One of the main areas of agreement between the two CEOs was in the promise of the low costs of natural gas as an alternative to coal.

"Whenever natural gas prices are low, it's a direct benefit to the economy and our customers," American Electric's Akins said. Nat gas is much more efficient, "so it turns out to be a double positive for customers."

Southern's Fanning said nat gas generates nearly half of the power at his company compared with only about 16 percent five years ago. Back then, coal was 70 percent, compared with 32 percent currently, he added.

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