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2017IntegratedResourcePlan
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2017 Integrated Resource Plan
April 3, 2017
Tucson Electric Power Company
TucsonElectricPower
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2017IntegratedResourcePlan
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Acknowledgements
TucsonElectricPowerCompanyIRPTeamJeffYockey,Manager,EnvironmentalandLong‐TermPlanningVictorAguirre,Manager,ResourcePlanningKevinBattaglia,LeadResourcePlannerLucThiltges,LeadResourcePlannerLeeAlter,SeniorResourcePlannerErnestoBlancoJr,Fuels,SeniorPortfolioAnalystHenryCattan,FuelsandResourcePlanningGregStrang,LeadForecastingAnalystStephanieBrowne‐Schlack,SeniorForecastingAnalystDebbieLindeman,Supervisor,EnergyEfficiencyPlanningAnalysis&ReportingRonBelval,Manager,RegionalTransmissionPlanningGaryTrent,Manager,TransmissionPlanningChristopherLindsey,Manager,DistributionEngineering&TechnicalEnergyServicesRichardBachmeier,PrincipalRateDesigner,Rates&RevenueRequirementsLaurenBriggs,Manager,BalancingAuthorityFunctionSamRugel,Director,SystemControl&ReliabilityMichaelBowling,Director,WholesaleMarketingNicoleBell,RenewableForecastingandTradingAnalystMichaelBaruchSupervisor,ResidentialEnergyEfficiencyPrograms&ServicesJeffKrauss,Manager,RenewableEnergyTedBurhans,Manager,RenewableEnergyJoeBarrios,Supervisor,MediaRelations&RegulatoryCommunicationsCarmineTilghman,SeniorDirector,EnergySupply&RenewableEnergyErikBakken,SeniorDirector,TransmissionandEnvironmentalServicesMikeSheehan,SeniorDirector,FuelsandResourcePlanning
IRPConsultantsandForecastingServicesPaceGlobalhttp://www.paceglobal.com/GaryW.Vicinus,ExecutiveVicePresident‐ConsultingServicesMelissaHaugh‐ConsultingServicesAnantKumar‐ConsultingServicesBrianKwak–ConsultingServiceChuckFan–ConsultingServicesWoodMackenzie‐ConsultingServiceshttp://public.woodmac.com/public/homeEPIS‐AuroraXMPSoftwareConsultingServiceshttp://epis.com/
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TableofContentsACKNOWLEDGEMENTS.......................................................................................................................3 TucsonElectricPowerCompanyIRPTeam........................................................................................................................................3 IRPConsultantsandForecastingServices...........................................................................................................................................3
ACRONYMS............................................................................................................................................13 FORWARD..............................................................................................................................................17 CHAPTER1............................................................................................................................................19 EXECUTIVESUMMARY.......................................................................................................................19 Introduction....................................................................................................................................................................................................19 CoalPlantRetirements...............................................................................................................................................................................20 RenewableEnergyIntegrationandDiversification......................................................................................................................21 GridBalancingResources.........................................................................................................................................................................22 SmartGridOperations................................................................................................................................................................................22 RegionalInfrastructureProjects............................................................................................................................................................23 TransformationofDesertSouthwestWholesalePowerMarkets...........................................................................................23 RegionalTransmissionOrganizations.................................................................................................................................................24 MarketFundementals.................................................................................................................................................................................24 EnergyEfficiency..........................................................................................................................................................................................25 ANewIntegrationApproachtoResourcePlanning......................................................................................................................26 Summaryofthe2017IRPReferenceCasePlan..............................................................................................................................27 PlannedCoalPlantRetirements.............................................................................................................................................................27 PlannedRenewableResourceAdditions...........................................................................................................................................27 PlannedGridBalancingResources.......................................................................................................................................................27 PlannedEnergyEfficiencyCommitments..........................................................................................................................................27 TEP’s2017IRPReferenceCasePlan...................................................................................................................................................28
CHAPTER2............................................................................................................................................31 ENERGYDEMANDANDUSEPATTERNS.......................................................................................31 LoadForecast.................................................................................................................................................................................................31 GeographicalLocationandCustomerBase.......................................................................................................................................32 CustomerGrowth..........................................................................................................................................................................................33 RetailSalesbyRateClass..........................................................................................................................................................................34 ReferenceCaseForecast............................................................................................................................................................................35 Methodology...................................................................................................................................................................................................35 ReferenceCaseRetailEnergyForecast...............................................................................................................................................36 ReferenceCaseRetailEnergyForecastbyRateClass..................................................................................................................37 ReferenceCasePeakDemandForecast..............................................................................................................................................38 DataSourcesUsedinForecastingProcess........................................................................................................................................39 RiskstoReferenceCaseForecastandRiskModeling...................................................................................................................39 FirmWholesaleEnergyForecast...........................................................................................................................................................40 SummaryofReferenceCaseLoadForecast......................................................................................................................................41 FutureDriversthatMayInfluencetheLong‐TermLoadForecast.........................................................................................42 ElectricVehicles............................................................................................................................................................................................43 FutureAdoptionRateInfluencers.........................................................................................................................................................45
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Policy..................................................................................................................................................................................................................45 BatteryTechnology......................................................................................................................................................................................45 GridImpacts....................................................................................................................................................................................................46 SmartGrid........................................................................................................................................................................................................47 TheFutureoftheDistributionGrid......................................................................................................................................................47
CHAPTER3............................................................................................................................................49 OPERATIONALREQUIREMENTSANDRELIABILITY................................................................49 LoadandResourceAdequacy.................................................................................................................................................................49 Future Load Obligations .......................................................................................................................................... 51
System Resource Capacity ....................................................................................................................................... 52
TypicalDispatchProfiles...........................................................................................................................................................................53 BalancingAuthorityOperations.............................................................................................................................................................55 Control Performance Standard (CPS) ...................................................................................................................... 58
Balancing Authority ACE Limit (BAAL) ..................................................................................................................... 58
Disturbance Control Standard (DCS) ....................................................................................................................... 58
Frequency Response Measure (FRM) ...................................................................................................................... 58
Reserves ................................................................................................................................................................... 59
Load Following ........................................................................................................................................................ 59
Adjustments to Operating Reserve .......................................................................................................................... 61
Frequency Response ................................................................................................................................................ 61
Inertia ...................................................................................................................................................................... 62
Voltage Support ....................................................................................................................................................... 62
Power Quality .......................................................................................................................................................... 63
DISTRIBUTIONSYSTEMENHANCEMENTS.................................................................................64 DistributionCapacityExpansion...........................................................................................................................................................64 New 138kV Substations ........................................................................................................................................... 64
Benefits Realized from New Substations ................................................................................................................. 64
Existing Substation Upgrades .................................................................................................................................. 65
4kV System Conversion ............................................................................................................................................ 65
4KV System Conversion Benefits ............................................................................................................................. 65
CLEANENERGYSTANDARDS...........................................................................................................66 RenewableEnergyStandardCompliance..........................................................................................................................................66 EnergyEfficiencyStandardCompliance.............................................................................................................................................66 Utility‐SpecificStandardDerivedThroughtheIRPProcess.....................................................................................................67
RENEWABLEENERGYINTEGRATION...........................................................................................68 OperationalChallenges..............................................................................................................................................................................68 ShiftingNetPeak...........................................................................................................................................................................................70 WeatherForecastingtoSupportSystemDispatch........................................................................................................................71
ENVIRONMENTALREGULATIONS..................................................................................................73 Overview...........................................................................................................................................................................................................73 Regional Haze .......................................................................................................................................................... 73
Clean Power Plan ..................................................................................................................................................... 74
CPP Overview .......................................................................................................................................................... 75
Arizona .................................................................................................................................................................... 76
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Navajo Nation ......................................................................................................................................................... 76
New Mexico ............................................................................................................................................................. 76
PACE Global Arizona CPP Analysis ........................................................................................................................... 77
National Ambient Air Quality Standards ................................................................................................................. 79
PowerGenerationandWaterResources...........................................................................................................................................80 PowerGenerationandWaterImpactsofResourceDiversification......................................................................................81
CHAPTER4............................................................................................................................................83 ANEWINTEGRATIONAPPROACHTORESOURCEPLANNING.............................................83 LoadModifyingResources........................................................................................................................................................................84 RenewableLoadServingResources.....................................................................................................................................................84 ConventionalLoadServingResources................................................................................................................................................84 GridBalancingResources.........................................................................................................................................................................84 TypicalSummerDayCategorizedbyResourceRequirements................................................................................................85 TypicalWinterDayCategorizedbyResourceRequirements...................................................................................................86
RESOURCESMATRIX..........................................................................................................................87 ResourceBenchmarking............................................................................................................................................................................87 SourceData......................................................................................................................................................................................................88 Lazard’sLevelizedCostofEnergyAnalysis......................................................................................................................................89 OverviewonConventionalandAlternativeEnergyTechnologies.........................................................................................89 Lazard’sLevelizedCostofStorageAnalysis.....................................................................................................................................90 OverviewonEnergyStorageTechnologies......................................................................................................................................90 CostCompetitiveStorageTechnologies.............................................................................................................................................90 FutureEnergyStorageCostDecreases...............................................................................................................................................91 2017IntegratedResourcePlanLevelizedCostComparisons..................................................................................................92 LCOEAssumptions–AllResources......................................................................................................................................................92 2017LevelizedCostofAllResources..................................................................................................................................................93 Load Modifying Resources – Cost Assumptions ...................................................................................................... 94
LCOE Assumptions for Load Modifying Resources .................................................................................................. 95
Renewable Load Serving Resources – Cost Assumptions ........................................................................................ 96
LCOE Assumptions for Load Serving Resources – Renewables ................................................................................ 97
Conventional Load Serving Resources – Cost Assumptions ..................................................................................... 98
LCOEAssumptionsforLoadServingResources–Conventional............................................................................................99 Grid Balancing Resources – Cost Assumptions ...................................................................................................... 100
LCOE Assumptions for Grid Balancing Resources .................................................................................................. 101
RenewableElectricityProductionTaxCredit(PTC)..................................................................................................................102 EnergyInvestmentTaxCredit(ITC).................................................................................................................................................103 Solar Technologies ................................................................................................................................................. 103
Impacts of Declining Tax Credits and Technology Installed Costs ......................................................................... 104
Impacts of Declining PTC and Technology Installed Costs ..................................................................................... 105
CHAPTER5.........................................................................................................................................107 LOADMODIFYINGRESOURCES....................................................................................................107 EnergyEfficiency.......................................................................................................................................................................................107 2017 Implementation Plan, Goals, and Objectives ................................................................................................ 107
Planning Process .................................................................................................................................................... 108
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Program Screening ................................................................................................................................................ 108
Utility Resource Cost Test ...................................................................................................................................... 109
Total Resource Cost ............................................................................................................................................... 109
Participant Cost Test ............................................................................................................................................. 109
Rate Impact Measure Test .................................................................................................................................... 110
Societal Cost Test ................................................................................................................................................... 110
CurrentEnergyEfficiencyandDSMPrograms.............................................................................................................................110
RESOURCEPLANNINGINTEGRATION.......................................................................................112 DSMForecasting........................................................................................................................................................................................112 LoadShapeResults...................................................................................................................................................................................114 EnergyEfficiencyTechnologySummary.........................................................................................................................................117
DISTRIBUTEDENERGYRESOURCES..........................................................................................118 SolarPhotovoltaicDGSystemsOverview.......................................................................................................................................119 TypicalSystemComponents:...............................................................................................................................................................119 ConfigurationofTypicalPVSystems................................................................................................................................................120 SolarHotWaterHeaters.........................................................................................................................................................................121 IntegralCollectorStorage(ICS)PassiveDirectSystem............................................................................................................122 ThermosiphonPassiveDirectSystem..............................................................................................................................................122 TypicalInstallations.................................................................................................................................................................................123 DistributedGenerationTechnologySummary.............................................................................................................................123
CHAPTER6.........................................................................................................................................125 LOADSERVINGRESOURCES.........................................................................................................125 RenewableEnergy.....................................................................................................................................................................................125 Solar PV Technology .............................................................................................................................................. 126
Solar Resource Characteristics .............................................................................................................................. 127
PhotovoltaicSolarPowerTechnology.............................................................................................................................................128 Flat‐PlatePVSystems..............................................................................................................................................................................129 SolarPVTechnologySummary...........................................................................................................................................................131 U.S. Solar Map ....................................................................................................................................................... 132
Arizona Solar Power Map ...................................................................................................................................... 133
ConcentratingPhotovoltaics(CPV)...................................................................................................................................................135 CPVTechnologySummaryandCosts...............................................................................................................................................135 ConcentratingSolarPowerTechnology(CSP).............................................................................................................................136 Power Tower CSP Systems ..................................................................................................................................... 136
CSP Technology Summary and Costs ..................................................................................................................... 137
IvanpahSolarElectricGeneratingStation......................................................................................................................................138 StirlingEngineDishTechnology.........................................................................................................................................................140 ParabolicTroughPowerPlants(PTPP)...........................................................................................................................................142 ParabolicTroughPowerPlantTechnology...................................................................................................................................144 Mojave PTPP Project ............................................................................................................................................. 144
HybridizedConfigurationwithNaturalGasCo‐Firing..............................................................................................................145 StorageConfigurationbasedonTwo‐TankMoltenSaltSystem...........................................................................................145 SolanaGeneratingStation......................................................................................................................................................................146 WindPower..................................................................................................................................................................................................148 Resource Characteristics ....................................................................................................................................... 148
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U.S. Wind Resource Map ....................................................................................................................................... 148
ArizonaWindResourcePotential......................................................................................................................................................151 NewMexicoWindResourceMap.......................................................................................................................................................152 NewMexicoWindResourcePotential.............................................................................................................................................153 Wind Technology Summary ................................................................................................................................... 155
Bioenergy/Bio‐Resources......................................................................................................................................................................156 Arizona Biomass Map ............................................................................................................................................ 157
New Mexico Biomass Map .................................................................................................................................... 158
Biomass Technology Overview .............................................................................................................................. 159
Biomass Technology Summary and Costs ............................................................................................................. 160
NaturalGasResources.............................................................................................................................................................................160 NGCC Technology Summary .................................................................................................................................. 161
CoalResources............................................................................................................................................................................................162 Pulverized Coal Technology Summary and Costs .................................................................................................. 163
Integrated Gasification Combined‐Cycle (IGCC) .................................................................................................... 163
Coal Market Prices ................................................................................................................................................ 164
NuclearResources.....................................................................................................................................................................................165 Small Modular Nuclear Reactors ........................................................................................................................... 165
PermittingandTimetoCommercialOperation...........................................................................................................................167 SMR Technology Summary .................................................................................................................................... 167
CHAPTER7.........................................................................................................................................169 GRIDBALANCINGANDLOADLEVELINGRESOURCES..........................................................169 EnergyStorage............................................................................................................................................................................................169 PumpedHydro‐Power .......................................................................................................................................... 169 CompressedAirEnergyStorage(CAES) .............................................................................................................. 170 Batteries ................................................................................................................................................................ 170 Flywheels ............................................................................................................................................................... 170
Energy Storage Applicability ................................................................................................................................. 171
Energy Storage Technology Summary ................................................................................................................... 173
Batteries ................................................................................................................................................................ 173
Pumped Hydro ....................................................................................................................................................... 173
Compressed Air Energy Storage ............................................................................................................................ 173
FastResponseThermalGeneration..................................................................................................................................................174 Reciprocating Internal Combustion Engines .......................................................................................................... 174
RICE Technology Summary .................................................................................................................................... 176
Large Frame Combustion Technology Summary ................................................................................................... 176
Aeroderivative Combustion Turbine Technology Summary .................................................................................. 177
DemandResponse.....................................................................................................................................................................................177 Demand Response Technology Summary.............................................................................................................. 178
Utilityinstalledthermostatsandswitchesatcustomersiteusedtocontrolcustomerdemand...........................178 RateDesign...................................................................................................................................................................................................178 DemandRates.............................................................................................................................................................................................179 Time‐VaryingRates..................................................................................................................................................................................179 DistributedGeneration...........................................................................................................................................................................179 TEPRateDesign.........................................................................................................................................................................................180
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DesertSouthwestWholesalePowerMarkets‐Transformation..........................................................................................181 WholesalePowerMarketOverview..................................................................................................................................................181 Non‐DispatchableRenewableMustRunResources..................................................................................................................181 ImpactsonBaseloadGenerationResources..................................................................................................................................182 Reduction in Overall Natural Gas Demand and Commodity Prices ....................................................................... 183
ArizonaGasStorageProject..................................................................................................................................................................184 KinderMorgan2017OpenSeason....................................................................................................................................................184
CHAPTER8.........................................................................................................................................185 REGIONALTRANSMISSIONPLANNING.....................................................................................185 Overview........................................................................................................................................................................................................185 Ninth Biennial Transmission Assessment .............................................................................................................. 185
Reliability Must Run (RMR) Assessment ................................................................................................................ 185
Ten Year Snapshot Study ....................................................................................................................................... 185
Extreme Contingency Study ................................................................................................................................... 185
Effects of Distributed Generation and Energy Efficiency Programs ...................................................................... 185
WestConnect................................................................................................................................................................................................186 WECC...............................................................................................................................................................................................................187 Multi‐Regional&Interconnection‐WideTransmissionPlanning........................................................................................188 EvolvingResourceMixChallenges.....................................................................................................................................................188 KeyIssues:....................................................................................................................................................................................................189 OtherRegionalTransmissionProjects.............................................................................................................................................190 NogalesDCIntertie...................................................................................................................................................................................190 SunziaSouthwestTransmissionProject.........................................................................................................................................191 TheSouthlineTransmissionProject.................................................................................................................................................192 WesternSpiritCleanLine......................................................................................................................................................................193 EnergyImbalanceMarkets....................................................................................................................................................................194 CAISO – Energy Imbalance Market EIM ................................................................................................................ 194
RegionalTransmissionOrganizations(RTOs).............................................................................................................................197
CHAPTER9.........................................................................................................................................199 TEPEXISTINGRESOURCES...........................................................................................................199 TEP’sExistingResourcePortfolio......................................................................................................................................................199 CoalResources............................................................................................................................................................................................201 SpringervilleGeneratingStation.........................................................................................................................................................202 SanJuanGeneratingStation..................................................................................................................................................................203 NavajoGeneratingStation.....................................................................................................................................................................204 FourCornersPowerPlant.....................................................................................................................................................................205 H.WilsonSundtGeneratingStation..................................................................................................................................................206 LunaEnergyFacility.................................................................................................................................................................................207 GilaRiverGeneratingStation...............................................................................................................................................................208 CombustionTurbines..............................................................................................................................................................................209 FuturePlantoMovetoCyclingOperations...................................................................................................................................210 ExistingRenewableResources............................................................................................................................................................211
EXISTINGFIXEDAXISSOLARPVPROJECTS............................................................................212 Springerville Solar .................................................................................................................................................. 212
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Solon / TEP UASTP II .............................................................................................................................................. 213
Gato Montes .......................................................................................................................................................... 213
Solon Prairie Fire ................................................................................................................................................... 214
Ft. Huachuca – Phase I .......................................................................................................................................... 215
Ft. Huachuca Phase‐II ............................................................................................................................................ 215
EXISTINGSINGLEAXISTRACKINGPROJECTS........................................................................216 Cogenera ............................................................................................................................................................... 216
Solon UASTP I ........................................................................................................................................................ 216
E.ON UASTP ........................................................................................................................................................... 217
Picture Rocks ......................................................................................................................................................... 217
E.ON Valencia ........................................................................................................................................................ 218
Avalon Solar I and II ............................................................................................................................................... 218
Red Horse Solar II .................................................................................................................................................. 219
NRG Solar .............................................................................................................................................................. 220
EXISTINGCONCENTRATINGPVPROJECTS..............................................................................221 Amonix UASTP II .................................................................................................................................................... 221
White Mountain .................................................................................................................................................... 222
EXISTINGCONCENTRATINGSOLARPOWERPROJECTS......................................................222 Areva Solar ............................................................................................................................................................ 223
EXISTINGWINDRESOURCES........................................................................................................224 Macho Springs ....................................................................................................................................................... 224
Red Horse 2 Wind Project ...................................................................................................................................... 225
EXISTINGBIOMASSPROJECTS.....................................................................................................226 Sundt Biogas .......................................................................................................................................................... 226
TEP’sEnergyStorageProjects.............................................................................................................................................................227 DistributedGenerationResources.....................................................................................................................................................228 Davis Monthan Air Force Base Distributed Generation Project ............................................................................. 229
TRANSMISSION.................................................................................................................................230 Overview........................................................................................................................................................................................................230 TEP’sExistingTransmissionResources..........................................................................................................................................230 Pinal Central to Tortolita 500 kV Transmission Upgrade ...................................................................................... 231
Pinal West to South Upgrade Project .................................................................................................................... 232
CHAPTER10.......................................................................................................................................233 FUTURERESOURCEREQUIREMENTS........................................................................................233 FutureEnergyEfficiencyAssumptions............................................................................................................................................233 FutureRenewableEnergyAssumptions.........................................................................................................................................234 Technology Considerations .................................................................................................................................... 236
Diversity of Resources ........................................................................................................................................... 236
Utility Scale Project Ownership ............................................................................................................................. 236
FutureGridBalancingResources.......................................................................................................................................................237 Energy Storage ...................................................................................................................................................... 237
Fast Response Thermal Generation ....................................................................................................................... 238
DemandResponse.....................................................................................................................................................................................239 FutureTransmission................................................................................................................................................................................240
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Ten‐Year Transmission Plan .................................................................................................................................. 240
Transmission Substation Reconfiguration Projects ............................................................................................... 240
Conceptual Future Local Area 345 kV EHV Transmission Projects ........................................................................ 240
Transmission Resources Needed for New Generating Resources .......................................................................... 241
CHAPTER11.......................................................................................................................................243 ALTERNATIVEFUTURESCENARIOSANDFORECASTSENSITIVITIES............................243 PACE Alternative Future Scenarios ........................................................................................................................ 243
NaturalGasPrices.....................................................................................................................................................................................245 CoalPrices.....................................................................................................................................................................................................246 CapitalCosts.................................................................................................................................................................................................247 PaloVerde(7x24)MarketPrices........................................................................................................................................................249 LoadGrowthScenarios...........................................................................................................................................................................250 High Load Scenario ................................................................................................................................................ 251
Low Load Scenario ................................................................................................................................................. 251
FUEL,MARKETANDDEMANDRISKANALYSIS......................................................................252 Permian Natural Gas Prices ................................................................................................................................... 253
Permian Natural Gas Price Distributions ............................................................................................................... 254
Palo Verde (7x24) Wholesale Power Prices ........................................................................................................... 255
Palo Verde (7x24) Market Price Distributions ....................................................................................................... 256
Load Variability and Risk ....................................................................................................................................... 257
CHAPTER12.......................................................................................................................................259 REFERENCECASEPLAN..................................................................................................................259 Resource Diversification ........................................................................................................................................ 259
Loads and Resource Assessment ........................................................................................................................... 260
Addition of Resources to Meet System Requirements ........................................................................................... 261
Addition of Load Serving Resources ...................................................................................................................... 261
Addition of Grid Balancing and Load Leveling Resources ...................................................................................... 261
Reference Case Plan Summary and Timeline ........................................................................................................ 261
ReferenceCasePlanAttributes...........................................................................................................................................................264 Existing Renewable Integration Requirements ..................................................................................................... 265
Reference Case Plan Renewable Integration Requirements .................................................................................. 266
Clean Power Plan Compliance ............................................................................................................................... 267
ReferenceCasePlanRiskDashboard................................................................................................................................................269
LOADGROWTHSCENARIOANALYSIS.......................................................................................271 High Load Scenario ................................................................................................................................................ 271
Low Load Scenario ................................................................................................................................................. 272
CHAPTER13.......................................................................................................................................273 ALTERNATIVEPORTFOLIOS........................................................................................................273 OverviewoftheEnergyStoragePortfolio......................................................................................................................................274 OverviewoftheSMR‐FullCoalRetirementPortfolio..............................................................................................................276 OverviewofExpandedEnergyEfficiency.......................................................................................................................................277 OverviewoftheExpandedRenewablePortfolio.........................................................................................................................279
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OverviewofMajorIRPAssumptionsbyPortfolio......................................................................................................................281 SummaryofNPVRevenueRequirementsbyScenario.............................................................................................................282 SummaryofNPVRevenueRequirements–BaseCaseScenario..........................................................................................283 SummaryofNPVRevenueRequirements–HighEconomyScenario................................................................................284 SummaryofNPVRevenueRequirements–HighTechnologyScenario...........................................................................285 DistributionofNPVRevenueRequirementsbyPortfolio.......................................................................................................286 DistributionofNPVRevenueRequirementsbyPortfolio.......................................................................................................287 NPVRRMeanandWorstCaseRisk....................................................................................................................................................288
CHAPTER14.......................................................................................................................................289 FIVE‐YEARACTIONPLAN..............................................................................................................289
PACEGLOBALFUTURESTATESOFTHEWORLD.................................................APPENDIXA 2017FLEXIBLEGENERATIONTECHNOLOGYASSESSMENT.............................APPENDIXB
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ACRONYMS ACC–ArizonaCorporationCommissionACE–AreaControlErrorANPR–AdvancedNoticeofProposedRulemakingAPS–ArizonaPublicServiceCompanyBA–BalancingAuthorityBART–BestAvailableRetrofitTechnologyBcf–BillionCubicFeetBES–BulkElectricSystemBEV–BatteryElectricVehiclesBTA–BiennialTransmissionAssessmentBtu–BritishThermalUnitC&I–CommercialandIndustrialCAES–CompressedAirEnergyStorageCBM–CoalBedMethaneCC–CombinedCyclePlantTechnologyCCCT–CombinedCycleCombustionTurbineCCR–CoalCombustionResidualsCCS–CarbonCaptureandSequestration;CarbonCaptureandStorageCFL–CompactFluorescentLightBulbCAISO‐CaliforniaIndependentSystemOperatorCO2–CarbonDioxideCPP–CleanPowerPlanCSP–ConcentratingSolarPowerCT–CombinedTurbineDER–DistributedEnergyResourcesDG‐DistributedGenerationDOE–U.S.DepartmentofEnergy(Federal)DLC–DirectLoadControlDMS–DistributionManagementSystemDR–DemandResponseDSM–DemandSideManagementEAF–EquivalentAvailabilityFactorEE–EnergyEfficiencyEIA‐EnergyInformationAdministrationEIM–EnergyImbalanceMarketELCC–EffectiveLoadCarryingCapacityEMS–EnergyManagementSystemEPA‐EnvironmentalProtectionAgencyEPRI–ElectricPowerResearchInstituteEPS–EmissionPerformanceStandard
ListofAcronyms
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ERC–EmissionRateCreditESS–EnergyStorageSystemEV–ElectricVehiclesFERC–FederalEnergyRegulatoryCommissionFIP–FederalImplementationPlanGIS–GeographicInformationSystemGHG–GreenhouseGasGW–Gigawatt,GWh–Gigawatt‐HourHAPS–HazardousAirPollutantsHEV–HybridElectricVehicleHRSG–HeatRecoverySteamGeneratorIGCC–IntegratedGasificationCombinedCycleIRP–IntegratedResourcePlanISCC–IntegratedSolarCombinedCycleITC–InvestmentTaxCreditkW–KilowattkWh–Kilowatt‐HourkWyr–Kilowatt‐YearLCOE–LevelizedCostofElectricityLNG–LiquefiedNaturalGasMACT–MaximumAvailableControlTechnologyMcf–MillionCubicFeetMMBtu–MillionBritishThermalUnits,alsoshownasMBtuMBtu–MillionBritishThermalUnits,alsoshownasMMBtuMW–MegawattMWh–Megawatt‐HourNAAQ–NationalAmbientAirQualityStandardsNaS–SodiumSulphurNASNRC–NationalAcademiesofScienceNationalresearchCouncilNEC–NavopacheElectricCooperativeNERC‐NorthAmericanElectricReliabilityCorporationNGCC–NaturalGasCombinedCycleNGS–NavajoGeneratingStationNMED–NewMexicoEnvironmentalDepartmentNNT–No‐NoticeTransportationNOX–NitrogenOxide(s)NPV–NetPresentValueNPVRR–NetPresentValueRevenueRequirementNRC–NuclearRegulatoryCommissionNREL–NationalRenewableEnergyLaboratoryNSPS–NewSourcePerformanceStandardsNTUA–NavajoTribalUtilityAuthorityO&M–OperationsandMaintenancePEV–Plug‐inElectricVehiclesPM‐ParticulatematterPNM–PublicServiceCompanyofNewMexicoPPA‐PurchasedPowerAgreement
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PTC–ProductionTaxCreditPSD–PreventionofSignificantDeteriorationR&D–ResearchandDevelopmentRCRA–ResourceConservationandRecoveryActREC–RenewableEnergyCreditRES–RenewableEnergyStandardRICE–ReciprocatingInternalCombustionEngineRFP–RequestforProposalROB–ReplaceonBurnoutROD–RecordofDecisionROW–RightofWayRTO‐RegionalTransmissionOrganizationRTP–RenewableTransmissionProjectRUCO‐ResidentialUtilityConsumerOfficeSAT–Single‐AxisTrackingSCADA–SupervisoryControlandDataAcquisitionSCE–SouthernCaliforniaEdisonSCR–SelectiveCatalyticReductionSCT–SocietalCostTestSCCT–SimpleCycleCombustionTurbineSGS–SpringervilleGeneratingStation(akaSpringerville)SIP–StateImplementationPlanSJCC–SanJuanCoalCompanySJGS–SanJuanGeneratingStationSMR–SmallModular(Nuclear)ReactorSNCR–SelectiveNon‐CatalyticReductionSRP–SaltRiverProjectSRSG–SouthwestReserveSharingGroupSO2–SulfurDioxideSTG–SteamTurbineGeneratorSWEEP–SouthwestEnergyEfficiencyProjectTEP–TucsonElectricPowerCompanyTOU–Time‐of‐UseTOUA‐TohonoO’odhamUtilityAuthorityTRICO–TricoElectricCooperativeUES–UniSourceEnergyServices(ParentCompanyofUNSElectric)UAMPS‐UtahAssociatedMunicipalPowerSystemVAR–Volt‐AmpereReactive;ReactivePowerWECC‐WesternElectricityCoordinatingCouncil
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Forward As our community grows and changes, Tucson Electric Power (TEP) must evolve to continue satisfying the energy needs of our customers with a more flexible and responsive resource portfolio. Our 2017 Integrated Resource Plan (IRP) reflects our ongoing transformation from a traditional utility to a more technology and consumer‐focused provider of energy products and services – a shift that must be accomplished without sacrificing reliability, convenience or affordability. TEP will continue to diversify its generation portfolio and reduce its significant reliance on coal by expanding cost‐effective renewable resources, particularly solar. Our goal is to serve at least 30 percent of our retail load from renewable resources by 2030 – twice the level TEP must achieve by 2025 under Arizona's Renewable Energy Standard. We also will continue to rely on energy efficiency measures while investing in cleaner burning natural gas resources. We anticipate making significant progress toward that goal by adding approximately 800 megawatts (MW) of renewable energy capacity by 2030. We recently signed an agreement with NextEra Energy Resources LLC., to purchase power from a new 100 MW wind facility. We’re also evaluating proposals for a new 100 MW‐dc solar facility that would be built and owned by a project partner. Both projects are scheduled for completion in 2019. Amid such change, we also must maintain access to and control of reliable, cost‐effective conventional generating resources. To that end, TEP recently replaced a long‐term lease with full ownership and control of Unit 1 at the Springerville Generating Station – Arizona’s newest, most efficient coal plant. This will allow our resource portfolio to remain appropriately balanced during planned reductions of coal‐fired resources at the San Juan and Navajo Generating Stations. Our increasingly diverse, sustainable generation portfolio will create operational challenges that require new ways of managing the intermittency and variability of renewable resources. Through a partnership with the University of Arizona, we are using unique and highly customized forecasting models to predict our solar and wind systems’ next‐day production. These predictions help us make more informed decisions about real‐time system dispatch. We’re also making greater use of energy storage systems, which can boost power output levels more quickly than conventional generating resources to maintain the required balance between energy demand and supply. Such systems are expected to rapidly decline in cost over the next several years. TEP recently completed three energy storage projects with a combined capacity of 22 MW that are designed to provide grid‐balancing resources such as frequency response and regulation and voltage support. We also are planning investments in flexible, fast‐responding reciprocating internal combustion engines that will provide capacity and assist in mitigating power fluctuations associated with renewable resources. Such systems can run efficiently at varying loads without regard to frequent starts and cycling operations. Renewable resources, energy efficiency measures and demand response technologies will play increasingly prominent roles in our future resource plans. Renewable resource costs are becoming competitive with conventional generation, while energy efficiency remains the lowest‐cost option. That said, building the most reliable and cost‐effective portfolio requires us to consider the price, benefits and feasibility of each resource option in relation to existing infrastructure, environmental factors and other operating conditions unique to our company. That’s why we believe utility‐specific clean energy standards should be determined through the IRP process instead of mandatory, numeric‐driven statewide standards. This report also describes how new smart grid technologies identified in TEP’s 10‐year transmission and distribution plans would improve service reliability by providing increased system capacity and contingency support for the distribution network. These network upgrades will support the grid of the future with integration of technologies like remote switching that can help prevent and minimize service interruptions. New technologies will continue to create new energy choices for consumers and new options for utilities. TEP must remain flexible and focused on managing resources in ways that adapt to such changes while maintaining progress toward achieving a sustainable portfolio that preserves safe, reliable and affordable service. David G. Hutchens President and CEO
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CHAPTER 1
EXECUTIVE SUMMARY Introduction
Forthelast50years,TucsonElectricPower(TEP)hasreliedonafleetofbaseloadcoalplantstomeetthemajorityofcustomers’energyneeds.CustomerusageandpeakdemandsteadilyandoftenrapidlyincreasedasmoreandmorepeoplemovedtoTucsonforitsfavorableclimate.Naturalgasfiredsteamboilersandcombustionturbines,aswellaspurchasedpower,providedtheadditionalcapacityneededtomeetsummerpeakdemand.Duringthistimetheprimaryresourceplanningchallengewastomeetthiseverincreasingsystempeakeconomicallygivenhighvolatilityinnaturalgasandwholesalepowerprices.
Presently,manynewfactorshavecomeintoplay,somecompeting,somecomplimentary,thatnecessitatevaryingfromthestatusquo.Changingcustomerusepatternshaveresultedinlowerloadgrowth,yetthereexiststhepotentialfornewopportunitiesthatwillrequirecommunicationandcoordinationbetweencustomersandthegrid.Operatingrequirementsrelatingtoreliability,gridsecurity,cleanenergystandards,andenvironmentalcompliancearebecomingcontinuouslymorestringentatthesametimethatwepreparefortheoperatingchallengesrelatingtointegratinghigherlevelsofrenewableenergy.Resourceeconomicsandenvironmentalconsiderationshaveshiftedthehistoricallystrongpreferenceforcoal,toamorebalanceduseofcoal,naturalgas,andrenewableresources.Givenallthesechanges,weneedtoviewresourcesdifferently,tobebetteralignedwiththeroleeachresourceplaysinmeetingtheeconomicalandreliabledeliveryofenergytoourcustomers.
Furthermore,thetraditionalroleofresourceplanningitselfhaschanged.Whilewestillmustprovideforreliableandsafepowerataffordablerates,ourstakeholdersexpectustoachievethoseobjectiveswhileimprovingenvironmentalperformanceandmitigatingrisk.Tomeettheseexpandedobjectives,TEPmustbepreparedtomakesignificantchangeswhilemaintainingoptionalitytoaccountfortheuncertaintyinherentinalong‐termoutlook.
TEP’s2017IntegratedResourcePlanidentifiesthecurrentandanticipatedchangesfacingtheutilityindustry,andTEPspecifically,andoutlinesaplantomeetourcustomers’energyneedsinlightofthesechanges.TheIRPpresentsasnapshotofcurrentloadsandresourcesandprojectsfutureenergyandcapacityneedsthrough2032.TEPpresentsthe2017ReferenceCasePlanthatprovidesareasonablepathforwardintermsofreliability,affordability,environmentalperformanceandrisk.
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CoalPlantRetirements
AspartofTEP’slonger‐termportfoliodiversificationstrategy,theCompanyisreducingitssignificantrelianceoncoaltoapproximately38%ofretailenergydeliveries.Overthenextfiveyears,TEPwillreduceitscoal‐firedcapacityby508MWthroughplannedretirements.TEPplanstoexitSanJuanGeneratingStation(“SanJuan”)Unit2attheendof2017,exittheNavajoGeneratingStation(“Navajo”)attheendof2019,andexitSanJuanUnit1attheendofJune20221.TheseplannedcoalretirementswillenableTEPtotakeadvantageofnear‐termopportunitiestoreducecostsandrebalanceitsresourceportfoliooverthelonger‐term.Thisreductionincoalresourceswillresultinsignificantcostsavings2forTEPcustomersandwillresultinmeaningfulreductionsinairemissionsandwaterconsumption3.Finally,TEP’slong‐termcommitmentstocleanenergyresourceswillhelpminimizetheCompany’slong‐termenvironmentalriskwhilelockinginlower‐costsustainablesourcesofenergyfordecadestocome.
Figure1‐TEP2017IRPReferenceCaseTimelineforCoalUnitRetirements
1OnMarch16,2107,PNMannouncedthattheircurrentIRPanalysisconcludedthatretiringtheremainingtwounitsattheSanJuanGeneratingStationintheFarmingtonareain2022couldprovidelong‐termbenefitsforitscustomers.https://www.pnm.com/031617‐irp2Aspartofthe2014IRPanalysis,TEPavoidedapproximately$165inpollutioncontrolswithitscommitmenttoretireSanJuanUnit2attheendof2017.Inthe2017IRPanalysis,TEP’scustomerswillrealizeanadditionalnetpresentvaluesavingsofapproximately$179millionrelatedtotheretirementofTEP’sownershipinterestinNavajoattheendof2019andtheretirementofTEP’sownershipinterestinSanJuanUnit1attheendofJune2022.3TheretirementofbothNavajoandSanJuanUnits1and2resultsinreductionsinTEP’stotalsystememissionsof15.8%forcarbondioxide(CO2),29.8%fornitrousoxides(NOx),and9.8%forsulfurdioxide(SO2).Inaddition,theretirementoftheNavajoandSanJuanunitsshowwaterconsumptionisreducedbyapproximately2,599acrefeetperyear,anoverallsavingsof16.18%.
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RenewableEnergyIntegrationandDiversification
TEPwillcontinuetoexpanditsportfolioofrenewableenergyresourcesasacomponentofouroverallresourcediversificationplanaswellasourtargetedgoalofserving30%ofretailloadwithrenewableenergyby2030.AsTEPexpandsitsrenewableenergyportfolio,theCompanycontinuestoevaluatethemostcost‐effectiveoptionsavailable.TheCompanyexpectstohaveahigherpercentageofsolarresources,primarilyduetofavorableproductioncurves,lowcosts,andlackofavailabletransmissiontoimportotherresources.TEP’sresourcemixwillalsoincludelargescalewindresourcesineasternArizonaandNewMexicothatareabletoutilizeexistingtransmissionfacilities,includingexpectedavailablecapacityfromplannedplantretirements,andnewlargeregionaltransmissionprojects.
TEP’srenewableenergytargetwillcomewithitsownsetofchallengesandwillrequireTEPtotransitiontoamoreflexibleandresponsivegenerationportfolio.Utility‐scalesolarPVthatistiedtothedistributiongridhassubstantialbenefits,andifproperlyplannedandsitedmaycontributetoreducedlinelosses,apportionedcapacityreductions(generationandtransmission),alongwithenvironmentalbenefits.However,alargeaccumulationofsolarPVinTEP’sportfoliointroducesoperationalchallengesatcertaintimesoftheyearasillustratedinthefigurebelow,showingahypothetical2030winterday.
TEP’sportfoliomusthavethecapabilitytoaccommodatetherapidrampingrequirements(upanddown)thatoccuroncertaindays,andstrategiesareneededtotakeadvantageoftheovergenerationthatmayoccur.
Initially,Arizona’scleanenergystandardsrelatingtorenewableenergyandenergyefficiencyprovidedthecatalystforthesedramaticchanges.Goingforward,futurecleanenergytargetsshouldbedevelopedonautility‐by‐utilitybasis.Whilethesestandardshaveproducedrealandtangiblebenefits,cleanenergystandardsappliedatastatewidelevelareinherentlyinflexible,andfailtotakeintoaccounttheuniquecircumstancesofeachutility.Thisinflexibilitycreatesinefficienciesinresourceacquisitionsandsystemdispatch,whichultimatelyresultsinhighercostspassedontocustomers.TEPbelievesthattheIRPisabettermechanismtodeveloputility‐specificcleanenergytargetsthanastate‐wide,“onesizefitsall”rulemaking.TheIRPprovides
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themostholisticconsiderationoftheverygoalsthatcleanenergystandardsaimtoachieve,whilebalancingthecostofachievingthosegoalsforourcustomers.
GridBalancingResources
AspartofTEP’s2017ReferenceCasePlan,plannedenergystoragesystemswillplayagreaterroleintheintegrationofmorerenewableenergyintoTEP’sresourceportfolio.Theseenergystoragesystemswillbereadilyavailabletoprovideancillarypowerservicessuchasfrequencyresponse,regulationandvoltagesupportthataremorechallengingtomaintainunderthedemandsofasystemwithhighlevelsofrenewableenergypenetration.
Inaddition,newfaststart,fastrampingthermalresourceswithmechanicalinertiawillalsohavetobeaddedinordertohelpbalancegridoperations.Reciprocatinginternalcombustionengines(RICEs)arefastresponseresourcesdesignedtoflexiblydispatchtomeetchangesinloadandcanprovide100%oftheireffectiveloadcarryingcapability(ELCC)duringpeakperiods.Theseunitsarenotdegradedbythenumberofstart‐ups,asarecombustionturbines,andtheyarecapableofrunningatanefficientheatrateevenat30%oftheirdesignedcapacity.A10MWunitcanidledownto3MWsunderspinandstandreadytoreacttosystemdisturbancesorrenewableintermittentvariabilityasneeded.4
Undertoday’sDirectLoadControl(DLC)programs,TEPisabletorelyonapproximately12MWofinterruptiblecommercialandindustrialloadstoreducesummerpeakingcapacityrequirements.Aspartofthe2017IRPReferencePlan,TEPplanstoevaluatethecost‐effectivenessoffutureDLCprograms.FutureDLCprogramswillbeproposedaspartoftheCompany’sannualEEimplementationfilings.InordertoachievehigherlevelsofDLC,TEPwouldlikelyneedtoexpanditsDLCprogramdesignbeyondtheCommercialandIndustrialsectors.Goingforward,ratherthanfocusingspecificallyonsummerpeakingrequirements,TEPintendstotransitionfromconventionalpeakshavingdemandresponse(DR)programstomoreadvancedDRprograms5thatarecapableofcost‐effectivelyaddressinggridbalancingneedssuchasshort‐runrampsanddisturbancesattimescalesrangingfromsecondsuptoanhour,throughouttheyear.
SmartGridOperations
TheadoptionofnewgridbalancingresourceswillplayamajorroleinprovidingTEP’sBalancingAuthority(BA)withthetoolsneededtomaintainsystemreliabilitywithhigherlevelsofintermittentresources.Inaddition,aspartofthe2017ReferenceCasePlan,TEPispreparingitsfuturegridoperationstoaccommodatehigherlevelsofdistributedenergyresourcesandothersmartgridinnovationsthroughtheuseofsmartdigitalnetworks.Thisstrategyismuchdifferentthanhowthedistributionsystemhasbeenmanagedinthepast.Atthecoreofthesesmartnetworkchangesistheneedforadigitalcommunicationsnetworkthatwillallowforintelligentelectronicdevicestobeinstalledonthedistributionsystembybothcustomersandtheutility.Thiscommunicationnetworkwillbemanagedthroughtheuseofadistributionmanagementsystem(DMS)thatwillprocesstheinformationfromthesedevicesandmakedecisionsinamannerthatoptimizesgridoperationsforthebenefitoftheutilityanditscustomers.
4Aspartofthiscurrentresourceplanningcycle,TEPconductedaFlexibleGenerationTechnologyAssessment(SeeAppendixB).TheresultsofthisstudyindicatethattheRICEtechnologyisthepreferredresourcethatwillprovidecapacityandassistinmitigatingrenewableenergyintermittencyandvariability.TEPplanstomoveforwardwithageneratingresourcemodernizationplanatSundtoverthenextfewyearstointegratethesefaststart,fastresourcesinthe2020and2022timeframes.5LawrenceBerkeleyNationalLaboratory.CaliforniaDemandResponsePotentialStudy‐ChartingCalifornia’sDemandResponseFuture,November2016.http://www.cpuc.ca.gov/WorkArea/DownloadAsset.aspx?id=6442451541
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RegionalInfrastructureProjects
TEPispoisedtotakeadvantageofseverallargeenergy‐relatedinfrastructureprojectsthataredevelopinginthesouthwesternUnitedStates.TherearethreelargetransmissionprojectsproposedforinterconnectionineasternandsoutheasternArizonathatmayinfluenceTEP’slong‐termresourceplanningdecisions.
TheSunZiaSouthwestTransmissionProject(“SunZia”)isaproposeddouble‐circuit500kVlinethatwilloriginateincentralNewMexicoataproposedsubstationnearAncho,NewMexicoandterminateattheproposedPinalCentralsubstationnearCasaGrande,Arizona.Anotherproposedproject,theSouthlineTransmissionProject,hasanewbuildportionandanupgradeportion.Thenewbuildsectionwouldinvolvetheconstructionofapproximately240milesofnew345kVdouble‐circuitelectrictransmissionlinesinNewMexicoandArizona.Theupgradesectionisadouble‐circuit230‐kVlinesconnectingtheApacheSubstationtotheexistingSaguaroSubstationnorthwestofTucson,Arizona.Additionally,theproposedWesternSpiritCleanLinewillcollectrenewablepowerfromeast‐centralNewMexicoanddeliveritviaanapproximately140‐miletransmissionlinetotheexistingelectricgridinnorthwesternNewMexicowhereitinterconnectswiththeTEPtransmissionsystematSanJuan.
Eachoftheseprojects,shouldtheybebuilt,wouldofferTEPanopportunitytotapintohighcapacitywindsitesinNewMexicoaswellaslargesolarfacilitieslocatedalongtheroute.
Inaddition,TEPandUNSElectricareinvolvedinthedevelopmentoftheNogalesInterconnectionProject,aproposeddirectcurrentinterconnection,whichwillallowforanasynchronousinterconnectionbetweentheelectricgridsinsouthernArizonaandthenorthwestregionofMexico.Theprojectwillsupportthereliabilityoftheelectricsystem,includingprovidingbidirectionalpowerflowandvoltagesupport,aswellasemergencyassistance,asneeded,fortheelectricsystemsbothnorthandsouthoftheborder.
TransformationofDesertSouthwestWholesalePowerMarkets
EnergyImbalanceMarkets(EIMs)aredesignedtocreateamarketopportunityforbalancingloadsandresourcesgiventheintermittentcharacteristicsofwindandsolarresources.AnEIMcanaggregatethevariabilityofresourcesacrossmuchlargerfootprintsthancurrentbalancingauthoritiesandacrossmultiplebalancingauthorityareas.Thesubhourlyclearing,insomecasesdownto5minutes,potentiallyprovideseconomicadvantagetoparticipantsinthemarket.
In2014,PacifiCorpjoinedtheCaliforniaIndependentSystemOperator(CAISO)EIM,andsincethattimeseveralotherutilitiesincludingArizonaPublicServicehavejoinedorcommittedtojoinbyacertaindate.ParticipantsintheEIMexpecttorealizeatleastthreebenefits:
Produceeconomicsavingstocustomersthroughlowerproductioncosts ImprovevisibilityandsituationalawarenessforsystemoperationsintheWesternInterconnection Improveintegrationofrenewableresources
TEPcontractedwiththeenergyconsultingfirmE3toperformastudytoevaluatetheeconomicbenefitsofTEPparticipatingintheenergyimbalancemarket.TheprojectanalysisbeganinFebruary2016andwascompletedinDecember,2016.BasedontheresultsoftheE3studyTEPestimatesanannualbenefitofapproximately$2.5million.However,itisexpectedthatthisbenefitwilldiminishovertime.TEPhasstartedtheprocessofdeterminingtherelevantcostsassociatedwithjoiningtheCAISOEIMmarketaswellasevaluatingwhatotherwesternEIMmarketoptionsmaybeavailable.
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RegionalTransmissionOrganizations
Seeinganeedforgreatercoordination,a“WorkingGroup”consistingofinvestorownedutilities,cooperativepowerprovidersandpublicpowerentitieswasformedtoconsiderandanalyzepotentialalternativestojoiningtheCAISOEIM.TheobjectivesoftheWorkingGroupareasfollows:
Determineeconomicbenefitsofpotentialalternativesandweighopportunitiesformarketparticipation
DetermineiftheCAISOEIMandregulatedmarketsintheMidwestandMountainwestoffercertaineconomicbenefitsrelatedtomoreefficientutilizationofgeneratingassetsandtransmissioninfrastructure
Evaluateoperationalbenefitsespeciallyastheyrelatetorenewableresourceintegrationandsystemregulation
EstablishifEIM/RegulatedMarketsandcertainalternativesmayofferreliabilitybenefitsrelatedtothegridoperations
Considergovernancestructureandimplicationsforresourcecontrol
TheWorkingGroupdiscussedvariousoptionswiththeCAISO,theSouthwestPowerPool,andtheMountainWestTransmissionGroup.Currentlythereisrecognizablevaluetoestablishingaregionalmarket.However,thecostofjoiningorestablishingaregionalmarkethaveyettobedeterminedorfullyevaluated.TEPwillcontinuetoengagewithmarketoperatorstodeterminethebestpathforwardforitscustomers.
MarketFundamentalsWiththerapidincreaseinrenewableresourcepenetrationthroughouttheregion,atransformationofmarketfundamentalsiscurrentlyunderwayandischanginghowbothload‐servingentitiesandwholesalemerchantstransact.Asshowninthefigurebelow,surplussolaroutputiscausingadownwardshiftinmarketpricesfromthehoursof8AMto4PM.
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Inadditiontosurplusrenewablegeneration,lowcostshalegasproductionhasalsoplayedasignificantroleintransformingthesupplyanddemandeconomicsofnaturalgas.Aswesawin2015and2016,expandednaturalgasproductionfromshaleformationsisdirectlyimpactingtheeconomicviabilityofmanybaseloadcoalandnuclearresources.Unlikerenewables,mostthermalplantslikecoalandnuclear,havehigheroperatingcoststhatcannotbefullyrecoveredinthewholesalemarket.Thus,theultimateeffectofhighpenetrationsofrenewablesandlowcostnaturalgaswilllikelybeanacceleratedretirementofolderandhighercostcoalandnuclearresources.Alternatively,resourceslikenaturalgascombinedcycle(NGCC)unitsthathavemuchlowercapitalandfixedcostsaremorecompetitivethancoalandnuclearintoday’swholesalepowermarkets.ThiscompetitiveadvantagewilllikelyresultinNGCCunitsdisplacingmanycoalandnuclearasbaseloadresourcessincetheyarebetterpositionedtomaintainprofitabilityinamarketdrivenbylownaturalgasprices.
EnergyEfficiency
TEPrecognizesenergyefficiency(EE)asacost‐effectivewaytoreduceourrelianceonfossilfuels.ToevaluateEEintermsofTEP’soverallresourceportfolio,TEPdeterminedthehourlysavingsofeachindividualEEmeasureusingwidelyusedandrecognizedthird‐partyloadshapes,andthenaggregatedthemattheportfolio‐levelbycustomerrateclass.Fromthesecompositeprogram‐levelsavings,TEPisabletoanalyzepeakperiodstodeterminecoincidentandnon‐coincidentpeakdemandsavings.ThelevelofenergysavingswasbasedoncompliancewiththeEEstandardthrough2020,excludingprogramcredits,andanestimateof“achievable”EEdevelopedbytheElectricPowerResearchInstitute(EPRI)forallyearsafter2020.Then,toevaluateEEasaresourceforreplacementofgeneration,thespecifictypesofmeasuresbeingimplementedaremodeledlikeotherresourcesagainsttheforecastedsystemload.ThefigurebelowprovidesasampleofhowcurrentEEmeasuresinteractwithTEP’ssystemloadsduringatypicalsummerday.Usingtheseresults,TEPcantargetmeasuresthatcoincidewithperiodsofhighramprate,perioddominatedbyhighcostresources,orthesystempeaks,bothdailyandannually.
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ANewIntegrationApproachtoResourcePlanning
Withtheincreasingcost‐competivenessofcertainrenewableresources,manyresourceplannersareintheprocessofintegratinghigherlevelsofrenewabletechnologiesasacomplementtotheirexistingconventionalgenerationfleet.Becauseoftheuniquechallengesthathighlevelsofrenewableenergyplaceongridoperations,the2017IRPtakesanewapproachincategorizingthecapabilitiesforeachtypeofresourceinordertobetterreflecttheroletheseresourceswillplayastheCompanytransformsitsresourceportfoliooverthenextdecade.
LoadModifyingResources–includesEE,distributedgeneration,andtimeofusetariffs,whoseeffectsareprimarily“behindthemeter”andaretherefore,largely,ifnotentirelybeyondtheviewandcontrolofthebalancingauthority.
RenewableLoadServingResources–includebothutilityscalesolarandwindtechnologies. ConventionalLoadServingResources–includecoal,nuclearandnaturalgastechnologiesthatare
fullydispatchableandareusedtosupplythevastmajorityoftheenergyneededtomeetload GridBalancingResources–includenaturalgascombustionturbines,demandresponse,naturalgas
reciprocatingenginesandstoragetechnologiesthatarefastrampingandflexible,asneededtomaintaingridreliability.
Thetablebelowprovidesabriefoverviewofthetypesofresourcesthatwillbeincludedandevaluatedintheresourceplanningprocesswithinthe2017IRP.
Category Type Zero Carbon Production
State of Technology
Primary Use Dispatchable by
Balancing Authority
Load Modifying Resources
Energy Efficiency Yes Mature Base
Load Reduction No Distributed Generation
Yes Mature Intermediate Load Reduction No
Rate Design (1) Mature Targeted Load
Usage / Reductions No
Load Serving Renewable Resources
Wind Yes Mature Intermediate Generation No
Solar Yes Mature Intermediate Generation
No
Load Serving Conventional Resources
Natural Gas Combined Cycle
No Mature Base Load Generation Yes
Pulverized Coal No Mature Base Load Generation Yes
Small Modular Nuclear (SMR)
Yes Emerging Base Load Generation
Yes
Grid Balancing Resources
Reciprocating Engines
No Mature 5 ‐ 10 Minute Ramping
YesCombustion Turbines
No Mature 10 ‐ 15 Minute
Ramping Yes
Pumped Hydro Storage
(1) Mature 1 Minute Ramping
Yes
Demand Response Yes Mature 1 Minute Ramping
Yes
Battery Storage (1) Emerging 1 Second Ramping
Yes
(1) Carbon intensity is dependent upon the resources that would be displaced by this rate tariff or storage technology net of charging.
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Summaryofthe2017IRPReferenceCasePlan
TEP’s2017IRPReferenceCasePlancontinuestheCompany’slong‐termstrategyofresourcediversificationbytakingadvantageofnear‐termopportunitiestoreduceitscoalcapacity,expandingthedeploymentofrenewableenergyresourceswithatargetofserving30%ofitsretailloadusingrenewableenergyby2030,continueddevelopmentandimplementationofcost‐effectiveEEmeasures,andtheadditionofhigh‐efficiencynaturalgasresources.
PlannedCoalPlantRetirements
InSeptember2016,TEPacquiredtheremaining50.5%shareofSpringervilleGeneratingStation(“Springerville”)Unit1,bringingourtotalcapacityatSpringervilleto793MWwithfullownershipandoperationalcontrolofUnits1and2.By2018,TEPanticipatesthatitwillreduceitscoalcapacityatSanJuanfrom340MWto170MWwiththeretirementofSanJuanUnit2.TEPwillfurtherreduceitsoverallcoalcapacityby168MWwiththerecentlyannouncedretirementoftheNavajoattheendof2019.6Finally,TEPplanstoexitSanJuanentirelywhenthecurrentcoalsupplyagreementendsinJune2022.
PlannedRenewableResourceAdditions
The2017ReferenceCasePlanincludestworenewableenergyprojectsthatareplannedtocomeonlinein2019.Theseprojectsconsistof100MWofwindand100MWdcofsolarPVthatarecurrentlyinprocurementas20‐yearPurchasedPowerAgreements(PPAs).Anadditional800MWofrenewablecapacityisplannedtobeaddedtothesystembetween2023and2030,consistingofadiversifiedmixofsolarPV(fixedaxisandsingle‐axistracking),andwind.
PlannedGridBalancingResources
Tosupportthesysteminlightofthishighpenetrationinintermittentrenewableenergy,andtoprovidereplacementcapacityfortheretirementofolder,lessefficientnaturalgassteamunitsatSundt(Units1and2),itisassumedthatTEPconstructsapproximately192MWofnaturalgasfiredRICEsbetween2020and2022.Moreover,anumberenergystorageprojectsareplannedtocomeonlinebetween2019and2021toprovideadditionalrenewableenergysupportandotherancillaryservices.Thesesystemswouldlikelybesizedas50MWprojectswithastoragedischargecapacityof50MWh.
PlannedEnergyEfficiencyCommitments
TEP'sEEprogramswillcontinuetocomplywiththeArizonaEnergyEfficiencyStandardthattargetsacumulativeenergysavingsof22%by2020.From2021throughtheendoftheplanningperiod,theestimatedannualsavingsinthe2017ReferenceCasePlanarebasedonanassessmentof“achievablepotential”inenergysavingsfromEEprogramsconductedbytheEPRI.By2032,thisoffsettofutureretailloadgrowthisexpectedtoreduceTEP’sannualenergyrequirementsbyapproximately1,894GWhandreduceTEP’ssystempeakdemandby318MW.AtimelineofTEP’sReferenceCasePlanispresentedbelow.
6 The2019retirementdateisdependentuponreceivinganextensionoftheleaseagreementtoallowforplantdecommissioningpriortoexpirationofthelease.Withoutanextensionofthecurrentlease,plantclosurewouldneedtotakeplaceasearlyasthisyeartoallowfordecommissioningbytheendof2019.
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TEP’s2017IRPReferenceCasePlanMilestoneTimeline
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TEP’s2017ReferenceCasePlan‐EnergyMixbyYear(GWh)
TEP’s2017ReferenceCasePlan‐CapacityMixbyYear(MW)
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TEP’s2017ReferenceCasePlan–PortfolioEnergyMix
Coal Generation,
69%Natural Gas, 11%
Market Purchases, 9%
Utility Scale Renewable Resources, 7%
Distributed Generation (DG), 4%
2017 Portfolio Energy Mix
Coal Generation,
50%Natural Gas, 28%
Market Purchases, 3%
Utility Scale Renewable Resources, 14%
Distributed Generation (DG), 5%
2023 Portfolio Energy Mix
Coal Generation,
38%
Natural Gas, 26%Market Purchases, 5%
Utility Scale Renewable Resources, 26%
Distributed Generation (DG), 5%
2032 Portfolio Energy Mix
The portfolio energy charts shown above represents the energy resource mix to serve TEP’s retail customers. Wholesale
market sales are excluded from these results. By 2030, TEP’s retail customers will be served from 30% renewables. This is
based on a combination of utility‐scale and distributed generation resources.
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CHAPTER 2
ENERGY DEMAND AND USE PATTERNS
LoadForecastIntheIRPprocessitiscrucialtoestimatetheloadobligationsthatexistingandfutureresourceswillberequiredtomeetforbothshortandlongtermplanninghorizons.Asafirststepinthedevelopmentoftheresourceplan,alongtermloadforecastwasproduced.ThischapterprovidesanoverviewoftheanticipatedlongtermloadobligationsatTEP,adiscussionofthemethodologyanddatasourcesusedintheforecastingprocess,andasummaryofthetoolsusedtodealwiththeinherentuncertaintysurroundinganumberofkeyforecastinputs.
Thesectionsinthischapterinclude:
CompanyOverview:TEPgeographicalserviceterritory,customerbase,andenergyconsumptionbyrateclass
ReferenceCaseForecast:AnoverviewoftheReferenceCaseforecastofenergyandpeakdemandusedintheplanningprocess
WholesaleObligations:Anoutlineofthefirmsystemrequirementsforwholesaleelectricitysales
Summary:Compilationofresultsfromthisanalysis
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GeographicalLocationandCustomerBaseTEPcurrentlyprovideselectricitytomorethan420,000customersintheTucsonmetropolitanarea(PimaCounty).PimaCountyhasmaintainedpositivegrowthoverthelastdecadeandisnowestimatedtohaveapopulationofapproximately1,000,000people.
Map1‐ServiceAreaofTucsonElectricPowerandUESUtilities
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CustomerGrowthInrecentyearspopulationgrowthinPimaCountyandcustomergrowthatTEPhavesloweddramaticallyasaresultofthesevererecessionandweakrecovery.Whilecustomergrowthiscurrentlyreboundingfromitsrecessionarylows,itisnotexpectedtoreturntoitspre‐recessionlevel.Chart1outlinesthehistorical(bluebars)andexpected(greenbars)customercountandcorrespondinggrowthintheresidentialrateclassfrom2000‐2032.AscustomergrowthisthelargestfactorbehindgrowthinTEP’sload,thecontinuingcustomergrowthwillnecessitateadditionalresourcestoservetheincreasedloadinthemediumterm.
Chart1‐EstimatedTEPCustomerGrowth2000‐2032
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
200,000
250,000
300,000
350,000
400,000
450,000
500,000
2000 2003 2006 2009 2012 2015 2018 2021 2024 2027 2030
Average Annual Residential Customers % Growth
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RetailSalesbyRateClassIn2016,TEPexperiencedapeakdemandofapproximately2,278MW,withapproximately8,900GWhofretailsales.Approximately66%of2016retailenergywassoldtotheresidentialandcommercialrateclasses,withapproximately34%soldtotheindustrialandminingrateclasses.Customerclassessuchasmunicipalstreetlighting,etc.accountedfortheremainingsales.Chart2givesadetailedbreakdownoftheestimated2017retailsalesbyrateclass.
Chart2–Estimated2017RetailSales(GWh)%byRateClass
Residential41.5%
Commercial24.1%
Industrial22.3%
Mining11.7%
Other0.4%
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ReferenceCaseForecast
MethodologyTheloadforecastusedintheTEPIRPprocesswasproducedusinga“bottomup”approach.Aseparatemonthlyenergyforecastwaspreparedforeachofthemajorrateclasses(residential,commercial,industrial,andmining).Asthefactorsimpactingusageineachoftherateclassesvarysignificantly,themethodologyusedtoproducetheindividualrateclassforecastsalsovaries.However,theindividualmethodologiesfallintotwobroadcategories:
1) Fortheresidentialandcommercialclasses,forecastswereproducedusingstatisticalmodels.Inputsincludefactorssuchashistoricalusage,weather(e.g.averagetemperatureanddewpoint),demographicforecasts(e.g.populationgrowth),andeconomicconditions(e.g.GrossCountyProductanddisposableincome).
2) Fortheindustrialandminingclasses,forecastswereproducedforeachindividualcustomer.Inputsincludehistoricalusagepatterns,informationfromthecustomersthemselves(e.g.timingandscopeofexpandedoperations),andinformationfrominternalcompanyresourcesworkingcloselywiththeminingandindustrialcustomers.
Aftertheindividualmonthlyforecastswereproduced,theywereaggregated(alongwithanyremainingmiscellaneousconsumptionfallingoutsidethemajorcategories)toproduceamonthlyenergyforecastforthecompany.
Afterthemonthlyenergyforecastforthecompanywasproduced,theanticipatedmonthlyenergyconsumptionwasusedasaninputforanotherstatisticalmodelusedtoestimatethepeakdemand.Thepeakdemandmodelisbasedonhistoricalrelationshipbetweenhourlyloadandweather,calendareffects,andsalesgrowth.Oncetheserelationshipsareestimated,60+yearsofhistoricalweatherscenariosaresimulatedtogenerateaprobabilisticpeakforecast.
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ReferenceCaseRetailEnergyForecastAsillustratedinChart3,afteraperiodofrelativelyrapidgrowthfrom2005–2008,TEP’sweather‐normalizedretailenergysalesfellsignificantlyfrom2008–2016.Ascommoditypricesremainweak,retailsalesareexpectedtocontinuetodeclinethrough2017.Ascommoditypricesbegintoreturntohistoricalaveragesin2020,miningloadisexpectedtoreturntohistoricalvaluesandexpandwiththeRosemontmineproject.After2024thegrowthinsalesisdominatedbyresidentialandcommercialsalesgrowthatalevelthatisfarslowerthanthepre‐greatrecessionhistoricalaverage.
Chart3‐ReferenceCaseRetailEnergySales,WeatherNormalizedHistorical
6,000
7,000
8,000
9,000
10,000
11,000
12,000
2005 2008 2011 2014 2017 2020 2023 2026 2029 2032
GWh
Long Term Growth Average Annual Rate of 0.9%
(2024 – 2032)
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ReferenceCaseRetailEnergyForecastbyRateClassAsillustratedinChart4,theReferenceCaseforecastassumessignificantshorttermchangesforthenextfewyearsfollowedbyslow,steadygrowthstartingin2024.However,thegrowthratesvarysignificantlybyrateclass.TheenergysalestrendsforeachmajorrateclassaredetailedinChart4.
Chart4‐ReferenceCaseRetailEnergySalesbyRateClass(GWh)
Afterexperiencingconsistentyearoveryeargrowththroughoutthepast,bothresidentialandcommercialenergysalesfellorremainedflatfrom2008‐2016.BothareassumedintheReferenceCasetoincreasesteadilyafter2017.However,industrialenergysalesareassumedtoincreasemuchmoreslowlythanthoseineithertheresidentialorcommercialclasses.Inaddition,miningsalesareassumedtosignificantlyfallinthecomingyearsduetolowcommodityprices.Asthesepricesreturntomorehistoricalaverages,thecurrentminingcustomersareforecasttoreturntonormaloperations,aswellasexpandduetotheRosemontmineproject.
0
500
1,000
1,500
2,000
2,500
3,000
3,500
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5,000
2005 2008 2011 2014 2017 2020 2023 2026 2029 2032
Residential Commercial Industrial Mining
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ReferenceCasePeakDemandForecastAsshowinChart5below,demandisexpectedtodropin2017.Thisislargelycausedbytheminingclasscurtailingloadandanexpectedreturnofmorenormalpeakweather.Astheminingclassreboundsandtheresidentialandcommercialclassesgrowslowlyandsteadily,theretailpeakdemandisexpectedtogrow.Theredandbluedashedlinesrepresentextremeweathercasesandaresetataone‐in‐tenyearweatheranomaly.
Chart5‐ReferenceCasePeakDemand(MW)
1,400
1,600
1,800
2,000
2,200
2,400
2,600
2,800
2002 2005 2008 2011 2014 2017 2020 2023 2026 2029 2032
High Low Peak
Long Term Peak Growth Average of 0.7%
2020 ‐ 2030
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DataSourcesUsedinForecastingProcessAsoutlinedabove,theReferenceCaseforecastrequiresabroadrangeofinputs(demographic,economic,weather,etc.)Forinternalforecastingprocesses,TEPutilizesanumberofsourcesforthesedata:
IHSGlobalInsight TheUniversityofArizonaForecastingProject ArizonaDepartmentofCommerce U.S.CensusBureau NationalOceanicandAtmosphericAdministration WeatherUndergroundForecastingService
RiskstoReferenceCaseForecastandRiskModelingAsalways,thereisalargeamountofuncertaintywithregardtoprojectedloadgrowth.Some,butcertainlynotall,ofthekeyriskstothecurrentforecastinclude:
Strengthandtimingoftheeconomicrecovery Possiblestructuralchangestocustomerbehavior(i.e.dopost‐recessioncustomershaveconsumptionpatternsdifferentfromthoseseenpre‐recession?)
Volatilityinindustrialmetalpricesandassociatedshiftsinminingconsumption EfficacyofEEprograms(i.e.whatpercentageofloadgrowthcanbeoffsetbydemandsidemanagement?)
Technologicalinnovations(e.g.pluginhybridvehiclepenetration) Volatilityindemographicassumptions(e.g.muchhigherorlowerpopulationgrowththancurrentlyassumed)
Becauseofthelargeamountofuncertaintyunderlyingtheloadforecast,itiscrucialtoconsidertheimplicationstoresourceplanningifTEPexperiencessignificantlylowerorhigherloadgrowththanprojected.Forthisreason,loadgrowthisoneofthefundamentalfactorsconsideredintheriskanalysisprocessundertakenaspartofthe2017IRP.Specifically,theperformanceofeachpotentialresourceportfolioisanalyzedthrough100simulationsofpotentialloadgrowth(alongwithcorrelatednaturalgasandwholesalepowerprices).AmoreindepthdiscussionofthisriskanalysisprocessisprovidedinChapter11.Inadditiontothesimulationanalysis,amorespecificdiscussionofhowresourcedecisionsandtimingwouldbeaffectedinthecaseofsustainedhigherorlowerloadsisprovidedintheLoadGrowthScenariosdiscussedinChapter12.
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FirmWholesaleEnergyForecastTEPiscurrentlyundercontracttoprovidefirmwholesaleenergyandcapacitytofiveutilitycustomers.ThesefirmobligationsareinadditiontoTEP’scommitmenttoserveitsretailcustomers.Thecontractsstipulateenergyservicestothefourentitiesbelow:
NavajoTribalUtilityAuthority(NTUA)throughDecember2022 TRICOElectricCooperative(TRICO)throughDecember2024 NavopacheElectricCooperative(NEC)throughDecember2041 TohonoO’odhamUtilityAuthority(TOUA)throughDecember2019 ShellEnergyNorthAmericaL.P.(“Shell”)throughDecember2017
TEPexpectedfirmwholesaleobligationsareshowninTable1below.ThecontractwithSaltRiverProject(SRP)expiredinthespringof2016;itwasnotrenewed.TEPsignedafirmwholesaleagreementwithNECinthefallof2015.DeliveryservicesforNECbeganinJanuary2017.Ashort‐termcontractwithShellexpiresattheendof2017.Itisimportanttonotecontractextensionshavenotbeenassumed.However,thereisapossibilitythatanyorallagreementscouldbeextended.Thiswouldobviouslyrequirecurrentresourceplanstoberevisedtoaccountfortheadditionalenergysalesandpeaksummerloadrequirements.
Table1‐FirmWholesaleRequirements
Firm Wholesale, GWh 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
NTUA 106 110 115 120 125 125 0 0 0 0
TRICO 30 74 75 136 187 229 254 284 0 0
NEC 315 401 401 402 401 401 401 402 401 401
Shell 112 0 0 0 0 0 0 0 0 0
TOUA 26 26 17 0 0 0 0 0 0 0
Total Firm Wholesale 589 611 608 658 713 755 655 686 401 401
Peak Demand, MW 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
NTUA 25 25 25 25 25 25 0 0 0 0
TRICO 50 85 85 85 85 85 85 85 0 0
NEC 44 44 44 44 44 44 44 44 44 44
Shell 100 0 0 0 0 0 0 0 0 0
TOUA 4 4 4 0 0 0 0 0 0 0
Total Firm Demand 223 158 158 154 154 154 129 129 44 44
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SummaryofReferenceCaseLoadForecastTable2belowexcludestheeffectsofdistributedgeneration(DG)andEE.
Table2‐TEPReferenceCaseForecastSummary
Retail Sales, GWh 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Residential 3,627 3,673 3,722 3,766 3,816 3,877 3,947 4,018 4,078 4,122 4,168 4,215 4,269 4,329 4,386 4,444
Commercial 2,103 2,128 2,151 2,171 2,201 2,243 2,287 2,331 2,375 2,417 2,458 2,500 2,544 2,586 2,631 2,677
Industrial 1,949 1,962 1,957 1,953 1,946 1,943 1,941 1,941 1,935 1,948 1,950 1,956 1,960 1,965 1,970 1,976
Mining 1,022 1,022 1,022 1,077 1,249 1,617 1,778 1,783 1,778 1,778 1,778 1,783 1,778 1,778 1,778 1,777
Other 33 33 33 33 33 33 33 33 33 33 33 33 33 33 33 33
Total Retail 8,734 8,818 8,885 9,000 9,245 9,713 9,986 10,106 10,199 10,298 10,387 10,487 10,584 10,691 10,798 10,907
Residential Sales Growth % ‐2.1% 1.3% 1.3% 1.2% 1.3% 1.6% 1.8% 1.8% 1.5% 1.1% 1.1% 1.1% 1.3% 1.4% 1.3% 1.3%
Commercial Sales Growth % ‐0.6% 1.2% 1.1% 0.9% 1.4% 1.9% 2.0% 1.9% 1.9% 1.8% 1.7% 1.7% 1.8% 1.7% 1.7% 1.7%
Industrial Sales Growth % ‐2.5% 0.7% ‐0.3% ‐0.2% ‐0.4% ‐0.2% ‐0.1% 0.0% ‐0.3% 0.7% 0.1% 0.3% 0.2% 0.3% 0.3% 0.3%
Mining Sales Growth % 2.2% 0.0% 0.0% 5.4% 16.0% 29.5% 10.0% 0.3% ‐0.3% 0.0% 0.0% 0.3% ‐0.3% 0.0% 0.0% ‐0.1%
Other Sales Growth % 6.5% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Total Retail Sales Growth % ‐1.3% 1.0% 0.8% 1.3% 2.7% 5.1% 2.8% 1.2% 0.9% 1.0% 0.9% 1.0% 0.9% 1.0% 1.0% 1.0%
Customer Count, 000 424 429 434 439 444 448 453 458 463 467 472 477 481 486 491 496
Firm Wholesale, GWh 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
NTUA 106 110 115 120 125 125 0 0 0 0 0 0 0 0 0 0
TRICO 30 74 75 136 187 229 254 284 0 0 0 0 0 0 0 0
NEC 315 401 401 402 401 401 401 402 401 401 401 402 401 401 401 402
Shell 112 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
TOUA 26 26 17 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Firm Wholesale 589 611 608 658 713 755 655 686 401 401 401 402 401 401 401 402
Retail Peak Demand, MW 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Retail Demand 2,220 2,230 2,243 2,280 2,319 2,429 2,440 2,452 2,485 2,495 2,506 2,504 2,515 2,531 2,549 2,565
Retail Demand Growth % ‐2.8% 0.5% 0.6% 1.6% 1.7% 4.7% 0.5% 0.5% 1.3% 0.4% 0.4% ‐0.1% 0.4% 0.6% 0.7% 0.6%
Firm Wholesale Peak Demand, MW 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
NTUA 25 25 25 25 25 25 0 0 0 0 0 0 0 0 0 0
TRICO 50 85 85 85 85 85 85 85 0 0 0 0 0 0 0 0
NEC 44 44 44 44 44 44 44 44 44 44 44 44 44 44 44 44
Shell 100 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
TOUA 4 4 4 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Firm Demand 223 158 158 154 154 154 129 129 44 44 44 44 44 44 44 44
Total Retail & Firm Wholesale 2,443 2,388 2,401 2,434 2,473 2,583 2,569 2,581 2,529 2,539 2,550 2,548 2,559 2,575 2,593 2,609
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FutureDriversthatMayInfluencetheLong‐TermLoadForecastInadditiontothemacro‐economicfactorsthatareinherentinlong‐termloadforecasts,futureloadgrowthwillbeinfluencedbydevelopmentofemergingtechnologiesandtheadoptionofcustomer‐driventechnologies.Onesuchtechnologyiselectricvehicles(EVs).EVscouldplayasignificantroleinfutureyearsasbothaloadrequirement(chargemode)andasystemenergyresource(dischargemode).Toachievethemostbenefitfromelectricvehiclesintermsofgridoperationsandemissionreductions,incentivesareneededfordaytimeworkplacecharging.Adaytimechargingincentivewouldenablecustomerstotakeadvantageoflowcostsolarresourcesduringthedaywhilesimultaneouslyprovidingsystemdischargebenefitstohelpmanagereal‐timegridrequirements.
Furthermore,theutilityofthefuturewillberequiredtoaccommodatehigherlevelsofdistributedenergyresourcesandothergridinnovationsasthecompanytransitionstoasmartdigitalnetwork.Thisstrategyismuchdifferentthanhowthedistributionsystemhasbeenmanagedinthepast.Atthecoreofthesesmartnetworkchangesistheneedforadigitalcommunicationsnetworkthatwillallowforintelligentelectronicdevicestobeinstalledonthedistributionsystembybothcustomersandtheutility.ThiscommunicationnetworkwillbemanagedthroughtheuseofaDMSthatwillprocesstheinformationfromthesedevicesandmakedecisionsinamannerthatoptimizesgridoperationsforthebenefitoftheutilityanditscustomers.
Finally,ratedesignwillalsoneedtoevolvetooffercustomersmoreoptionsandchoices.Customersmaywanttohaveaccesstoreal‐timepricingtariffsinordertominimizetheirenergyusageduringhighcostperiods.Othercustomersmaywantsignupforcleanenergytariffsthatincentivetheuseofzero‐emissionresourcessuchasrenewables,DR,andEE.Othercustomersmaywantademand‐andenergy‐basedratetariffthatwouldenablethemtotakeadvantageofdistributedenergyresourcesandstoragetechnologies.Inanycase,theabilitytocollectandmanagereal‐timegriddatawillbeacriticalmilestoneforutilitiestoachieveinordertoprovidethesetypesofservicesforcustomersinthefuture.
ThisnextsectionsdiscussessomeoftheseevolvingtechnologiesanddiscusseshowtheCompanyplanstointegratethemoverthenextfewyearsaspartoftheon‐goingIRPplanningprocess.
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ElectricVehiclesNationwide,2016pluginelectricvehiclesaleswere159,139units7of1.1millionlightvehiclessold8fora14%marketshare.Pluginelectricvehiclespredominantlyfallintotwocategories:
BatteryElectricVehicles(BEV)fullyelectric,batteryonlyvehiclesthatdonotconsumefossilfuel Plug‐inElectricVehicles(PEV)whichhavebothanelectricmotorandaninternalcombustionenginethatburnsfossilfuel
Figure2–TeslaModel3
7http://insideevs.com/monthly‐plug‐in‐sales‐scorecard/8http://online.wsj.com/mdc/public/page/2_3022‐autosales.html
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Anadditionalclassofvehicle,theHybridElectricVehicle(HEV),incorporateselectricbatterytechnologysimilartoaPEVbutnotablyreceivesitschargeviaregenerativebrakingandon‐boardchargingviaaninternalcombustionengine.HEVsrepresentthelargestshareofelectrifiedvehiclesoperatinginArizonaat1.1%,butdonotplugintotheelectricalgridforchargingandthereforarenotconsideredafactorinfutureloadgrowthscenarios.
OfactivevehiclesregisteredinthestateofArizona,just0.09%(6,260vehicles)arePEVsorBEVs.BasedonthelowadoptionrateandtotalnumberofEVsinArizona,itisreasonabletoassumethatEVadoptioninthestatewillcontinuetolagnationalhigh,medium,andlowmarketpenetrationprojections.ThisIRPcontemplatestwoscenarios,anaggressivegrowthscenarioandmoderatebasecasescenario.UnderthebasecasescenarioEVloadprojectionsremainbelow1%through2024andreach2.5%ofloadby2030.Themoreaggressivescenarioreaches1%by2021andrampsupto5%by2030.
Figure3‐ElectricVehicleDemandScenarios
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FutureAdoptionRateInfluencersMuchresearcharoundthecountryhasgoneintounderstandingthefactorsthatunderlieBEVandPEVadoption.WhilemanyinnovativeprogramsandinitiativeshavebeenlaunchedtosupportEVadoption,thetwomostsignificantinfluencersofadoptionratesare:
Policy Futureadvancesinbatterytechnology
PolicyThemostclearlydemonstrableinfluencerofEVadoptiontodatehasbeenfederalandstatepolicycreatingincentivesdirectlyreducingthecostofEVpurchases.Stateswithhighestincentives,suchasCalifornia,OregonandGeorgia,havereachedEVadoptionrates2to4timesabovethenationalaverage.Atthestatelevel,incentivepoliciesaredependentonpublicsupportandmaybecomplimentedbyregulationssuchasCalifornia’sZeroEmissionVehicleprogramrequiringautomakerstoachievevolumetricEVsalesgoalstiedtotheirtotalfleetsalesnumbers.
BatteryTechnologyTheopportunitythatholdsthegreatestpromisetoincreasefutureEVadoptionratesisimprovementstobatteryandmanufacturingtechnologythatreducethecostofbatteriesmeasured,in$/kWh.IndustryanalysistiesthepricepointatwhichEVsareonparitywithcontemporaryinternalcombustionenginevehiclestoabatterycostof$100/kWhcapacity.Thecurrentcostofbatteriesisaround$300/kWhcapacitywithclaimsthe2017TeslaandChevyBoltwillfeaturebatterycellsbelow$200/kWh.
Figure4–TeslaLithium‐IonBatteryProduction
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GridImpactsAdvancementsinEVbatterytechnologyaredramaticallyincreasingtherangeofthesevehiclesanddrivingchargingpatternstowardsevening,athomecharging,whichcanbeaccommodatedthroughexistinginfrastructurevialevel1tricklechargingusingastandard120vresidentialoutlet.ThispatternalignswithTEP’scurrenttimeofusebasedelectricvehiclechargingdiscountandcreatesaloadpatterncenteredonlateeveningoff‐peakpower.
Asecondchargingprofileoptionwouldcenteronworkplacechargingandpresentsafutureopportunitytoleveragepowerproducedduringlowgeneration‐costdaylighthours.Thisdaytimeworkplacechargingprofileisnotincentedunderthecurrentratestructurebutcouldbepromotedthroughafuturetariffdesignandaworkplacechargingstationsupportprogram.
Figure5‐EVChargingProfiles
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SmartGrid
TheFutureoftheDistributionGridChangesinthesupply,demand,anddeliveryofelectricityareremodelingelectricdistributionsystemsatmostNorthAmericanutilities.DistributedEnergyResources(DERs)areleadingmanyofthesechanges.
TEPisdevelopingandanalyzingstrategiestoenabletheseopportunities.TheoverarchingstrategywillhelpTEPadapttothechanginglandscapeforregulatedelectricutilities.
TEPenvisionsafuturethatwillaccommodateDERsandotherinnovationsintotheexistingnetworkwhiletransitioningtoadigitalnetwork.ToaccommodateDERsandotherinnovations,electricutilitiesneedtodomorethanmaketheirdistributionsystemsbigger.Instead,utilitiesneedtomaketheirdistributionsystemssmarter.Smartdistributionsystemsprovideflexibility,capability,speed,andresilience.Thesesmartdistributionsystemsincludenewtypesofsoftware,networks,sensors,devices,equipment,andresources.Toachievenewlevelsofeconomicvalue,thesesmartdistributionsystemsoperateaccordingtonewstrategiesandmetrics.WithmoreDGresourcesbeingdeployedonTEP’sdistributionsystem,higherdemandsandlowerpercapitaenergyconsumptionisoccurringtoday.Thisputsdemandsonthetransmissionanddistributionsystemsthatwerenotcontemplatedintheoriginaldesignsandrequirementsofthesystem.Tomeetthesenewdemands,newmethodsofoperationandtechnologyneedtobedevelopedandimplemented.TEPisinvestigatingtechnologytoaddmoresensingandmeasurementdevicesandnewmethodsformanagingandoperatingthedistributionsystem.Thisapproachturnsadistributionfeederintoaneffectivemicrogridsystem.
Figure6–SmartGridSystems
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Withincreaseddemandandlowerpercapitaenergyconsumption,newtechniquesandstrategiesneedtobedevelopedandimplementedtoeffectivelymanagecosts.Byaddingadditionalmeasurementandsensingcapabilities,thesituationalawarenessofthedistributionsystemwillbeincreased.Theincreasedsituationalawarenessallowsforrealtimeoperationsandplanningopportunitiesforefficiencyandproductivitychanges.Toutilizetheexistingdistributionsystemmoreefficiently,TEPisinvestigatingtheuseofDERs,energystorage,EE,andtargetedDRcapabilitiesinconjunctionwithoptimizationsoftware.Theseimprovementsmayreducetheinfrastructureadditionsrequiredinthepastascustomerdemandincreased.Thisstrategyismuchdifferentthanhowthedistributionsystemhasbeenmanagedinthepast.ItrequirestheuseofabottomupplanninganddesignprocessthatneedstobeintegratedwiththeIRPprocess.Newtoolsandcapabilitieswillberequiredasaresultofthenewopportunitiesenvisioned.
Atthecoreofthesechangesistheneedforacommunicationsnetworkthatallowsforintelligentelectronicdevicestobeinstalledonthedistributionsystem.Thecommunicationsnetworkallowsforthebackhaulofinformationfromtheintelligentelectronicdevicestocentralizedsoftwareandcontrolapplications.Simplycollectinganddisplayingmoresensingandmeasurementinformationwon’tprovidetheneededbenefits.Anintegratedapproachtotheinstallationoffielddevices,softwareapplications,andhistoricaldatamanagementwillbeneeded.ADMSisthecentralsoftwareapplicationthatprovidesdistributionSupervisoryControlandDataAcquisition(SCADA),outagemanagement,andgeographicalinformationintoasingleoperationsview.Bycombiningtheinformationfromallthreeofthesesystemsintoasingleview,anelectricaldistributionsystemmodelcanbecreatedforbothrealtimeapplicationsandplanningneeds.Thesingleviewprovidessituationalawarenessofthedistributionsystemthathasnotbeenpossibleinthepast.Italsocreatesaplatformfromwhichadditionalapplicationscanbelaunchedtocontinuetoprovidevalueandnewopportunities.Thehistoricalinformationalsocreatesanewopportunitytodrivevalueanddecisionsbasedonsystemperformanceanddynamicsimulations.
WiththedevelopmentofmultipledistributionmicrogridfeedersandDERsystems,thechallengeofresourcedispatchingwillbecomemorecomplex.Asolutiontodispatchacrossafleetofresourcesofexistingcentralizedgeneration,purchasedpowerfromthemarket,andtheintermittencyofDERsystemstocustomerdemandwillberequired.Thespeedwithwhichtheresourcepoolwillneedtochangeandoptimizeforefficiencyandcostwillrequirethesystemtobeautomated.Thedistributionmicrogridfeederconceptisintendedtohelpmanagethedistributionlevelintermittencybutwouldneedtobemonitoredandmanagedbytheautomatedsystemforresourcemanagement.Tomanagesuchalargeanddynamicsystemasoutlinedisasubstantialchallenge.Thistypeofautomatedsystemisnotcurrentlyavailablewithintheutilityindustry.
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CHAPTER 3
OPERATIONAL REQUIREMENTS AND RELIABILITY
LoadandResourceAdequacyAcriticalcomponentoftheIRPplanningprocessistheassessmentofavailablefirmresourcecapacitytomeetfirmloadobligationsandtomaintainaplanningmarginaboveautility’sforecastedload.AspartofTEP’slong‐termplanningprocess,theCompanytargetsa15%planningreservemargininordertocoverforforecastingvariancesandanysystemcontingenciesrelatedtounplannedoutagesonitsgenerationandtransmissionsystem.
Chart6‐TEP’s2017LoadsandResourceAssessment–ExistingResources
Chart6aboveillustratesTEP’sexistingresourceportfoliocomparedtoaretailloadforecastwhichincludesfirmwholesaleandplanningreserves.Thisloadsandresourceassessmentincludessignificantcoalandnaturalgasgeneratingunitretirements.SanJuanUnit2willceaseoperationsbyDecember31,2017.PreliminarystudiesperformedbyplantparticipantsatNavajoGeneratingStationindicatethatall3unitscouldberetiredasearlyasyear‐end2019.TEPisweighingitsoptionstocompletelyexitandterminateitsparticipationonSanJuanUnit1bytheendofJune2022.TEPisalsocommittedtoretiringandreplacingitsolderandlessefficientnaturalgassteamgeneratorsatSundtGeneratingStation.
ThecapacityreductionoftheseagingandcostlyunitswillrequireTEPtodiligentlysecurecost‐effectivereplacementcapacityinthenearfuture.Within5yearsTEPmayneed800MWsofreplacementcapacity.Thatshortfallincreasestoapproximately1,200MWsbytheendofthe15‐yearplanninghorizon.Theemergenceofrenewableresources,combinedwithevolvingoperationalrequirements,presentchallengesbutalsoanopportunitytobuildaresourceportfoliothatiseconomicallyandenvironmentallysound.TEPisresponsiveto
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500
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2,000
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2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
MW
Coal Resources Natural Gas Resources Renewable Resources
Demand Response Market Purchases Net Retail, Firm & Reserves
San Juan Unit 2
170 MW (Retired)
Navajo Units 1‐3168 MW (Retired)
San Juan Unit 1170 MW(Retired)
Sundt Unit 3104 MW (Retired)
Sundt Unit 181 MW (Retired)
SundtUnit 281 MW (Retired)
Local CTs123 MW (Retired)
800 MW Capacity Shortfall
1,200 MW Capacity Shortfall
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itscustomersanddedicatedtoprovidethemsafe,clean,andreliablepower.ThisIRPpresentsaReferenceCasePlanthatachievesatargetof30%renewablegenerationby2030.TEPisalsocommittedtoitsEEprogramsandissupportiveofDG.TherenewablestargetandEE/DGprojectionswillbecomplimentedwithproposedinstallationsofEnergyStorageSystemsandRICEs.ThereductionofgenerationanticipatedfromTEP’straditionallybase‐loadedcoalunitsalsonecessitatestheadditionofnaturalgascombinedcyclegenerationasareplacement.
Table3summarizesTEPgrossretailpeakdemandsbyyearbasedonitsSeptember2016loadforecastprojections.ThesedemandsaresummarizedbycustomerclassandbytheCompany’sassumptionsoncoincidentpeakloadreductionsfromDGandEE.Inaddition,TEPincludesasummaryofprojectedfirmwholesalecustomerdemandsalongwithdemandassociatedwithsystemlosses.Table3alsosummarizestheCompany’sreservemarginpositionsbasedonthecapacityresourcesshowninTable4.
Table4summarizesTEP’sfirmresourcecapacitybasedonitscurrentplanningassumptionsrelatedtoitscoalandnaturalgasresources.Table4alsoreflectsTEP’splantosource30%ofitsretailenergyneedsfromrenewablegenerationresourcesby2030.AdditionalresourcessuchasDRprograms,short‐termmarketpurchases,alongwithcapacitysourcedfromitsproposedbatterystorageproject,arealsoshownintheTEPresourceportfolio.TheresourceportfolioalsoincludestheadditionofNGCCresourcestooffsetcoalunitretirementsandRICEstohelpmitigateintra‐hourintermittencyandvariabilitychallengesintroducedbyrenewableresources.
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FutureLoadObligationsThefollowingtwotablesprovideadatasummaryofTEP’sloadsandresources.Table3showsTEP’sprojectedfirmloadobligations,whichincluderetail,firmwholesale,systemlosses,andplanningreserves.
Table3‐FirmLoadObligations,SystemPeakDemand(MW)
Firm Load, Demand MW 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Residential 1,284 1,304 1,326 1,356 1,379 1,411 1,425 1,439 1,464 1,474 1,487 1,492 1,503 1,519 1,534 1,550
Commercial 666 676 687 703 715 731 739 746 759 765 771 774 779 787 795 803
Industrial 357 363 369 377 384 393 397 401 408 411 414 415 419 423 427 431
Mining 131 131 131 138 157 229 228 228 228 228 228 228 228 228 228 228
Gross Retail Demand 2,438 2,474 2,513 2,574 2,635 2,764 2,789 2,814 2,859 2,878 2,900 2,909 2,929 2,957 2,984 3,012
Distributed Generation ‐76 ‐85 ‐93 ‐99 ‐105 ‐110 ‐114 ‐118 ‐121 ‐122 ‐123 ‐125 ‐125 ‐126 ‐127 ‐128
Energy Efficiency ‐142 ‐159 ‐177 ‐194 ‐211 ‐225 ‐235 ‐244 ‐253 ‐262 ‐271 ‐280 ‐289 ‐299 ‐308 ‐318
Net Retail Demand 2,220 2,230 2,243 2,281 2,319 2,429 2,440 2,452 2,485 2,494 2,506 2,504 2,515 2,532 2,549 2,566
Firm Wholesale Demand 223 158 158 154 154 154 129 129 44 44 44 44 44 44 44 44
Total Firm Load Obligations 2,443 2,388 2,401 2,435 2,473 2,583 2,569 2,581 2,529 2,538 2,550 2,548 2,559 2,576 2,593 2,610
Reserve Margin 522 361 362 365 374 388 395 395 481 499 519 547 448 453 435 434
Reserve Margin, % 21% 15% 15% 15% 15% 15% 15% 15% 19% 20% 20% 21% 18% 18% 17% 17%
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SystemResourceCapacityTable4showsTEP’sReferenceCasePlanscheduleforfirmresourcecapacitybasedonaresource’scontributiontosystempeak.
Table4–CapacityResources,SystemPeakDemand(MW)
Firm Resource Capacity (MW) 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Four Corners 110 110 110 110 110 110 110 110 110 110 110 110 110 110 ‐ ‐
Navajo 168 168 168 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
San Juan 340 170 170 170 170 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
Springerville 793 793 793 793 793 793 793 793 793 793 793 793 793 793 793 793
Remote Coal Resources 1,411 1,241 1,241 1,073 1,073 903 903 903 903 903 903 903 903 903 793 793
Sundt 1‐4 422 422 422 341 341 260 260 260 260 260 260 260 260 260 156 156
Luna Energy Facility 184 184 184 184 184 184 184 184 184 184 184 184 184 184 184 184
Gila River Power Station 412 412 412 412 412 412 412 412 412 412 412 412 412 412 412 412
Existing Combustion Turbines 219 219 219 219 219 219 219 219 219 219 219 219 96 96 96 96
Future Peaking Resources ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
Future NGCC Resources ‐ ‐ ‐ ‐ ‐ 412 412 412 412 412 412 412 412 412 412 412
RICE Resources ‐ ‐ ‐ 96 96 192 192 192 192 192 192 192 192 192 336 336
Total Natural Gas Resources 1,237 1,237 1,237 1,252 1,252 1,679 1,679 1,679 1,679 1,679 1,679 1,679 1,556 1,556 1,596 1,596
Utility Scale Renewables 134 134 208 208 208 208 279 289 321 346 376 400 433 453 470 483
Demand Response 28 32 37 42 44 46 48 50 52 54 56 58 60 62 64 67
Total Renewables & DR Resources 162 166 245 250 252 254 327 339 373 400 432 458 493 515 534 550
Short‐Term Market Resources 150 100 10 195 215 80 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
Future Storage Resources 5 5 30 30 55 55 55 55 55 55 55 55 55 55 105 105
Total Firm Resources 2,965 2,749 2,763 2,800 2,847 2,971 2,964 2,976 3,010 3,037 3,069 3,095 3,007 3,029 3,028 3,044
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TypicalDispatchProfilesTheprevioussectiondescribedhowtheTEPReferenceCasePlanwilladdresspeakhourdemand.ThisIRP,morethanpreviousones,requiredadditionalanalysisontheinterandintra‐hourdemandrequirementsandtheresponseoftheoptimalresourcemix.Chart7illustratesthemannerinwhichexistingresourceswereroutinelydispatchedtomeetanticipatedloadrequirementsduringasummerpeak‐typedayin2016.Thefiguresdonotrepresenttheactualpeakdays;insteadthedemandprofilesdemonstratedinthesefiguresareatypicaldayrepresentativeofeachrespectiveseasonfor2016.InChart7,it’sclearthatTEP’sexistingrenewableresourceshavealreadyhadanimpactonthedispatchofitscoalandnaturalgasresources.
BothChart7andChart8belowarederivedfromasampleofactualproductiondata.Theareashownabovethe‘Retail’linerepresentsopportunitysalesmadetothespotmarket.Notethatthecurrentlevelofrenewableresourcesiscreatingagreateropportunitytomakesalesfromcoalandnaturalgasresources.Ofcourse,thedepthofthatopportunitymaynotalwaysexistasrenewablesarecreatingthissituationregionallyandnotjustfortheutility.Thiscreatespressureonregionalpowerprices,whichhaveremaineddepressedoverrecentyears,influencedbyexcessgenerationandlowpricednaturalgas.
Chart7–2016ExampleSummerDayDispatch
InChart7above,weobservethatthehighpeakdemandexperiencedinthesummercanbemetwithsubstantialmarketpurchasesandtheutilizationofexistingpeakingresources(gasturbines).Thecontributionfromrenewables,ingreen,isshiftingthesetraditionalpeaksfurthertotherightandintotheeveninghours.Increasedsolargenerationisalreadycreatingashiftingasandenergymarketforecasts.
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Withcapacityavailableforpurchase,thegasandenergymarketpriceforecastsdictatethatapartofTEP’sgasresourceswouldbedisplaced.Theportionofthegasresourcesthatarenotdispatchedhavetraditionallyservedasstand‐by(reserve)capacity,thusservingavitalpurposeinmaintainingsystemreliability.Thisdisplacementisalsocausetoreevaluatehowcoalandgasresourcesshouldoperateandinsomecasesifthey’reabletooperatewithredefinedparameters.AsdemonstratedinChart7,TEPexperiencesitspeakdemandat4to5PMineitherJulyorAugust.IncreasedpenetrationofsolarPVishavingtheneteffectofshiftingthispeaktolaterhours,ultimatelyonto7to8PMasthesunsets.Meanwhile,systemoperatorsaredeployingtheirfastestrampingunitsupwardtorespondtotheramp‐downofsolarresources.
Chart8‐2017ExampleWinterDayDispatch
TheTEPwinterloadprofile,asseeninChart8above,differssignificantlyfromthesummerprofile.Thepeakdemandexperiencedonweekdaysinthewinterismeasurablylowerthanthoseseeninthesummer.Inthewintermonths,theloadpeaksintheearlymorninghoursandthenagaininthelateevening.Thedispatchstrategyinthewinterdifferssignificantlyfromthestrategyinthesummer.Adifferentsetofchallengesemergeswithincreasedsolargenerationduringthewinter.Amorepronounced‘duckcurve’createsrampdownandrampupchallenges,whilealsopushingthetraditionalbase‐loadcoalplantsclosertotheirminimumgeneration(andultimatelybelow).
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BalancingAuthorityOperationsTodescribeTEP’sutilityoperationwithrespecttotheelectricgridrequiresareviewofelectricgridfundamentals.ThereareseveralinterconnectionsontheNorthAmericancontinent–theEastern,ElectricReliabilityCouncilOfTexas,Quebec,andtheWestern.TheseareeachpartoftheNorthAmericanElectricReliabilityCorporation(NERC),(seeFigure7).InadditionCentroNacionaldeControldeEnergia(CENACE)operatesthenationalgridofMexico.WithintheWesternInterconnection,thereare38BAs(seeFigure8).EachBAisresponsibletobalanceloadsandresourcessothatfrequencyremainsatornear60Hzor60cyclespersecond.Thisresourcebalanceisimportantforthesafeandreliableoperationofsupplysideresourcesandenduseequipment.Simplyput,aBAisthecollectionofloadsandresourceswithinameteredboundary,connectedtootherBAsthroughtransmissiontiesforthepurposeofmaintainingfrequency.TEP’sBAboundary(seeFigure9)has44tiestoour7adjacentBAs.
Figure7‐NERCInterconnections
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Figure8‐WesternInterconnectionBalancingAuthorities
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Figure9‐TEP’sBalancingAuthorityArea
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TheprimaryquantityestablishedbyNERCfordeterminingaBA’sreliabilityperformanceisAreaControlError(ACE).ACEistheinstantaneousmeasureofaBA’sabilitytomanageitsloadobligationsandsupporttheinterconnectionfrequency(seeFigure10).ThefollowingmeasuresofACEovertimearethestandardsthateachBAisexpectedtomeet:
ControlPerformanceStandard(CPS)CPSisameasureofaBA’sACEovertimewithrespecttofrequency.TheBAhelpsfrequencybyovergeneratingwhenfrequencyislow,andundergeneratingwhenfrequencyishigh.ThisisknownashavingACEontheoppositesideoffrequency.
BalancingAuthorityACELimit(BAAL)BAALisameasureofhowlongaBAremainswithanACEthatishinderingfrequency.ItisunderstoodthatnoBAcanalwayssupportfrequency,butitisexpectedthataBAexperiencingdifficultiesdoesnotleanontheinterconnectionlongerthanittakestoresolvetheissue.
DisturbanceControlStandard(DCS)DCSisameasureofaBA’sabilitytoreplacetheirgeneratingresourcesfollowingtheunplannedlossofaresource.
FrequencyResponseMeasure(FRM)FRMisameasureofaBA’sabilitytoprovidefrequencyresponseduringadisturbance.Frequencyresponsetypicallycomesfromgovernorresponseongeneratorswithcapacitytoincreaseoutput,inductiveloads,andmorerecentlyinvertertechnologyconnectedtobatteriesorrenewablesourceswithcapacitytorespond.
Figure10‐BalancingAreaFunction
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ReservesReservesarethekeytoprovidingaBAwiththeabilitytorespondtodeviationsinACEandremaincompliantwiththemeasuresabove.Reservesareoftenlabeledbythefunctiontheyareperformingsuchasregulatingreservesforfollowingload,contingencyreservesforrespondingtoadisturbance,frequencyresponsivereservesthatimmediatelyrespondtofrequencyexcursions.CollectivelytheyarereferredtoasOperatingReserves.Reservesarealsoclassifiedasspinningandnon‐spinning.Spinreferstogenerationthatisonlinebutunloadedsothatitcanimmediatelyrespondtoanevent.Thereserveclassificationofnon‐spinorsupplementalcomesfromgenerationthatisnotconnectedtothesystembutcanbeconnectedandgeneratingpowerwithin10minutes,suchasaquickstartturbine.Interruptibleloadcontractsalsofallintothisnon‐spincategory.Non‐spinisprimarilyusedfordisturbancerecovery.Withtheproliferationofpowerelectronics,manyutilities,reservesharinggroups,andregulatingbodiesrecognizethevalueofstoragesystemsandheadroomonrenewablesystemswhichfactorintothereservecalculation.
LoadFollowingLoadfollowingisgenerallycharacterizedbyautility’sabilitytofollowtheloadshapeofitsBAAreaandregulatepoweroutputchangesoverafivetotenminutetimeframe.Loadfollowingisrequiredtorespondtothechangingconditionsofelectricsupplyanddemand.Historically,utilitiesreliedonamixofconventionalgenerationresourcestiedintoautilities’EnergyManagementSystem(EMS)thatprovidedAutomaticGenerationControl(AGC)tomanagetheirloadfollowingrequirements.However,asrenewableresourcesbecomealargerpartoftheresourceportfolio,changesinsupplyanddemandconditionswillbecomemoreextremeandwillhappenmorefrequently.Thesechangesrequirefastrespondingresourcesanddemandsideshapingtoaccommodatethefluctuatingresourcesasrenewablepenetrationincreases.
Regulationisusedtoreconcilemomentarydifferencescausedbyfluctuationsingenerationandloads.TheprimaryreasonforcontrollingregulationinthepowersystemistomaintaingridfrequencyrequirementsthatcomplywiththeNERC’sRealPowerBalancingControlPerformanceandDisturbanceControlPerformanceStandards.Thebenefitofregulationfromstoragetechnologieswithafastrampratesareontheorderoftwotothreetimesthatofregulationprovidedbyconventionalgeneration.Thisisduetothefactthatstoragetechnologieshavetheabilitytoreacttochangesinsystemconditionsinamatterofaminuteortworatherthanseveralminutes.TheblackloaddemandlineinChart9showsnumerousfluctuationsdepictingtheimbalancebetweengenerationandloadwithoutregulation.Thethickerorangelineintheplotshowsasmoothersystemresponseafterdampingofthosefluctuationswithregulation.
Oneofthenewchallengeswithhighlevelsofrenewablepenetrationisthelowloadlevelsseenintheoffseasonbellyoftheduckcurve(seeChart10),aswellasthelargedailyswingsassociatedwiththepeakseasonloadshape.WithloadsbeingsuppliedbybothDGandutilityscalerenewables,theconventionalresourcesmustbebackeddowntomakeroomfortherenewables,butthenmustrampuptocoverthepeakwhentherenewablesareunavailable.
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Chart9–EffectsofLoadRegulation
Chart10‐Typical2030Winter/SpringDuckCurve
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Anotherchallengetoregulationwithhighlevelsofrenewablepenetrationisintermittency.Movingcloudcoverandvariationsinwind,amongotherweatherpatterns,cancauselargeamountsofrenewablegenerationtodropoutorreturntoserviceinmereminutes.Thesefastchangesinrenewablegenerationrequireresourcesthatcanrampupanddownquicklyandrepeatedlyinordertoregulateandmaintainperformancemeasures.
Manypotentialsolutionstohelpmitigatethissteepdailyrampupanddownandinter‐hourintermittencyarebeingexploredandinclude:
Cyclingcoalplants Loweringtheminimumoperatinglevelsofconventionalplants Investinginfastresponsegeneratingtechnology Investinginstoragesystems Changingtheloadshapethroughratedesign
AdjustmentstoOperatingReserveTEPmaintainsanamountofOperatingReservesgreaterthantheminimumrequirement,buthadnotquantifiedtheexcess.DifficultieswithregulationduetorenewableintermittencyledTEP’sSystemControltostudytheintermittencyandexcessoperatingreserves.TheresultwasachangetohowTEPcalculatesandcarriesOperatingReserve.
ThepurposeoftheadjustmenttoOperationReservesistoensureadefinedamountofexcessreservesareavailableatalltimes.ThenewcalculationwillrequirethatadditionalOperatingReservesarecarriedintheOn‐PeakhoursandOff‐PeakHours.ExcessReservesmeetingthenewcriteriawerealreadyavailableduring85%ofhoursintheyear,butimplementingthisnewcriteriaisnecessarytoensuresufficientreservesareavailableatalltimes.
TEP’sEnergyManagementSystemtakestheSystemLoad,anddependingonwhetheritisanOn‐PeakorOff‐Peakhour,multiplyitbyavariabilitymargin.ThisamountisaddedtotheSpinningReserveRequirement,whichtheSystemOperatorsmonitorandmaintainaround‐the‐clock.Theyarealsofreetodeploythisreserveasnecessarytomaintainperformancemeasures.
FrequencyResponseFrequencyresponseisanancillaryservicerequirementthatissimilartoregulationexceptthatfrequencyresponseautomaticallyreactstoasystemdisturbanceinsecondsratherthanminutes.Frequencydisturbancesoccurwhenthereisasuddenlossofageneratingunitoratransmissionlineoutagedisruptingtheload/resourcebalance.Asaresult,othergeneratingresourcesthatareonlinemustrespondtocounteractthissuddenimbalancebetweenloadandgenerationandtomaintainthesystemfrequencyandstabilityofthegrid.Thefirstresponsewithintheinitialsecondsiscalledtheprimaryfrequencycontrol.ThisresponseistheresultofthegovernoractiononthegeneratingunitsaswellasstoragesystemswhichautomaticallyincreasetheirpoweroutputasshowninthelowerportionofFigure11below.Thisisfollowedbythelongerdurationofsecondaryfrequencycontrols.TheseresponsesareinitiatedbyAGCthatspansahalfaminutetoseveralminutesshownbythedottedlineinthelowerportionofFigure11.ThecombinedeffectofinertiaandthegovernoractionsofonlinegeneratingunitsdeterminestherateoffrequencydecayandrecoveryshowninthearrestingandreboundperiodsintheupperportionofFigure11.Thisisalsothewindowoftimeinwhichthefast‐actingresponseofflywheelandbatterystoragesystemsexcelsinstabilizingthefrequency.Thepresenceoffast‐actingstorageassuresasmoothertransitiontonormaloperationreturninggridfrequencybacktoitsnormalrange.
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Figure11–SequentialActionsofFrequencyControls
InertiaGeneratorsandmotorloadprovidetheinertiaofasystem.Inertiaistherotatingmassofgeneratorsandtheirprimemovers,aswellasmotorsandtheirloadwhichopposechangesinfrequency.Themagnitudeofinertiainthesystemischangingastheindustrymovesfromlargecentralizedsteamplantstomoreofadistributednetworkofgasturbinesandrenewablesystems.Astheinertiadeclines,therateofchangeoffrequencyincreases.Thecontributiontoinertiafrompowerelectronicsandtheirsystemsisstilltobequantifiedandissometimesreferredtoaspseudoinertia.
VoltageSupportAnotherreliabilityrequirementforelectricgridoperationistomaintaingridvoltagewithinspecifiedlimits.Tomanagereactanceatthegridlevel,systemoperatorsneedvoltagesupportresourcestooffsetreactiveeffectssothatthetransmissionanddistributionsystemnetworkscanbeoperatedinastablemanner.Normally,designatedpowerplantsareusedtogeneratereactivepower(volt‐amperereactive,VAR)tooffsetreactanceinthegrid.Aspowerplantsaredisplaced,VARsourcesneedtobestrategicallyplacedwithinthegridatcentrallocationsandbytakingthedistributedapproachandplacingmultipleVAR‐supportstoragesystemsnearlargeloads.
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PowerQualityTheelectricpowerqualityserviceinvolvesusingstoragetoprotectcustomeron‐siteloadsdownstream(fromstorage)againstshort‐durationeventsthataffectthequalityofpowerdeliveredtothecustomer’sloads.Somemanifestationsofpoorpowerqualityincludethefollowing:
Variationsinvoltagemagnitude(e.g.,short‐termspikesordips,longertermsurges,orsags) Variationsintheprimary60‐hertz(Hz)frequencyatwhichpowerisdelivered Lowpowerfactor(voltageandcurrentexcessivelyoutofphasewitheachother) Harmonics(i.e.,thepresenceofcurrentsorvoltagesatfrequenciesotherthantheprimaryfrequency)
Interruptionsinservice,ofanyduration,rangingfromafractionofasecondtoseveralseconds
Typically,thedischargedurationrequiredforthepowerqualityuserangesfromafewsecondstoafewminutes.Distributedstoragesystemscanmonitorgridpowerqualityanddischargetosmoothoutdisturbancessothatitistransparenttocustomers.
Table5–AncillaryServicesTechnicalConsiderationforStorageTechnologies
Ancillary Services Storage System Size Target Discharge Duration Minimum Cycles/Year
Load Following / Ramping
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minutes Not Applicable
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minutes 250 – 10,000
Voltage Support 1 – 10 (MVAR) Not Applicable Not Applicable
Distribution Deferral 500 kilowatts (kW) – 10
MW Range: 1 – 4 hours 50 ‐ 100
Power Quality 100 kW – 10 MW 10 seconds – 15 minutes 10 ‐ 200
Frequency Response 10 – 100 MW 5 seconds – 5 minutes 20 ‐ 100
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Distribution System Enhancements
DistributionCapacityExpansionTEP’slongtermdistributionsystemcapacityrequirementsarebeingsupportedbystrategicallytargetingareaswherenewsubstationscanbebuilt,increasingexistingsubstationcapacity,andtheoptimizingthereplacementofageingequipment.
New138kVSubstationsNew138kVsubstationshavebeenidentifiedintheCompany’s10yeartransmissionplan.Historically,justificationfornewsubstationsinthe10yearplanhavebeendrivenprimarilyfromcapacityneedsonthedistributionsystem.Thesenew138kV‐sourceddistributionsubstationswillnotonlyhelpsupportandincreasesystemcapacity,theywillprovideadditionalcontingencysupportfortheexistingdistributionnetwork.Thenew138kVsubstationsalsoalignwithlongrangeplansoffurtherutilizingthe138kVsystemtodirectlysourcethedistributionsystem.The138kVtransmissionsystemismorereliablethanthe46kVsub‐transmissionsystemthatisusedtosourceasignificantportionofthedistributionsystem.Thesenewsubstationsallowformoreofthedistributionsystemloadtobesourcedfromamorereliable138kVsystem.
BenefitsRealizedfromNewSubstations Reducedpeakloadingonexistingsystem Increasedcapacityforfuturecommercial,residentialandlightindustrialdevelopment Increasedcontingencysupporttoimprovesystemreliabilityandoperationalflexibility Additionalcapacitycanbeutilizedtoidentifyandevaluateimprovedserviceforcriticalcustomers Supportsothertechnologyintegrationsuchasremoteswitchingcontrol Supportslongtermplansfor4kVsystemconversionto13.8kV Retirementofageingsubstationswherefeasible Reducesdistributionsystemloses
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ExistingSubstationUpgradesContinuedfocusonutilizingtheAssetManagementGrouptoanalyzeandmonitorallofTEP’sexistingsubstationequipmentwillhelpidentifywhichageingsubstationtransformersareinneedofreplacementthroughoutthesystem.Oncethetransformershavebeenidentifiedforreplacement,theyareevaluatedinrelationtocurrentsystemconditionstodetermineaproperreplacementstrategy.Inmanycases,increasedtransformercapacityandupgradestoahigherlow‐sidevoltagearerequired.Similartowhathasbeendescribedabove,increasedtransformercapacitywillimproveoperationalflexibilityandsystemreliability.Additionally,installingnewtransformerswitha13.8kVlow‐sidevoltagealignswithlongrangeplansforupgradingthe4kVdistributionsystemtomeetexistingstandards.
4kVSystemConversionInitially,the4kVsystememergedastheprimarydistributionvoltagetoserveallresidentialandcommercialloadwithincentralTucson.Amajorityofthe4kVsystemissub‐standardwhencomparedtotheCompany’s13.8kVsystem,however,afullsystemconversionwillbeverylaborandcostintensive.
Manyoftheexistingcomponentsincludingcable,servicetransformers,poles,arms,andinsulatorsmustbereplacedtofullyconvertthesystemto13.8kV.Effortsareunderwayforidentifyingalong‐rangeplanforsystemconversionandtheseplanswillrelyonprojectsidentifiedaboverelatedtosubstationtransformerreplacements.
4KVSystemConversionBenefits Opportunityforaligningsystemconversionwithsubstationtransformerchange‐outs Increasedcircuitcapacitywithvoltageconversion Improvedsystemreliabilitybycreatingstrongertieswiththeexisting13.8kVsystem Increasedcontingencysupportwillimproveoutagerestorationtime Reducedsystemloses
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Clean Energy Standards
Beginningin1999,withtheEnvironmentalPortfolioStandard,theArizonaCorporationCommission(ACCor“Commission”)hasadoptedcleanenergystandards,whichestablishgoalsforallArizonaloadservingentitiesregulatedbytheCommission,suchasTEPto(1)utilizerenewableenergyresourcestomeetaportionofitsretailload,and(2)designandimplementEEprogramstoreducesomepercentageofcustomerenergyuse.Thesestandardswereintendedto,andinfacthave,accruedcertainbenefitstocustomers,aswellasbroadersociety,including:
Reducedemissionsofgreenhousegasesandotherairpollutantsthoughareductioninfossil‐fuel‐generation
Reducedrenewableenergyunitcostsbycontributingtoalargerandmorecertainmarketforrenewableenergymanufacturersandinstallers
Reducedoverallcustomerbills,bypromotingcost‐effectiveEEmeasures
RenewableEnergyStandardComplianceTheRenewableEnergyStandard9(RES)setsfortharequirementforallArizonaloadservingentitiestomeetapercentageoftheirretailloadusingrenewableenergyresources.Thispercentageincreasesannuallyuntilitreaches15%in2025.In2017theREStargetforTEPwillbeapproximately621GWhbasedon7.0%of2016retailsales.TEPanticipatesexceedingtheannualrequirementin2017andeachyearthereafteraspartofitsgoaltoreach30%ofretailloadusingrenewableenergyby2030.
EnergyEfficiencyStandardComplianceTheArizonaEnergyEfficiencyStandard(“EEStandard”)setsfortharequirementforallArizonaloadservingentitiestoachieveenergysavingsbasedonapercentageoftheprioryearretailload,growingtoacumulativeloadreductionof22%by2020.Table6showsTEP’sprogresstowardsmeetingthestandardannually.Asoftheendof2016,TEPhasachievedtherequiredsavingsandispoisedtocontinuethrough2017.In2017TEP’stargetforenergysavingswillbe204,341MWh,basedon14.5%of2016retailsales.Forresourceplanningpurposes,TEPhasassumedthatitmaintainscompliancewithArizonaEEStandardthrough2020whentheprogramsunsets.AssumptionsforEEsavingsafter2020areaddressedinChapter10.
9RenewableEnergyStandardandTariff,A.C.C.R14‐2‐1801
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Table6‐EnergyEfficiencyCumulativeAnnualSavingsProgresstowardstheStandard
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Standard
2010 9,291,788
2011 9,332,107 139,539 139,539 1.50% 1.25%
2012 9,264,818 105,655 245,194 2.63% 3.00%
2013 9,278,918 177,425 422,619 4.56% 5.00%
2014 8,520,347 221,215 643,834 6.94% 7.25%
2015 8,431,556 168,600 812,434 9.54% 9.50%
2016 8,387,868 197,466 1,011,900 12.00% 12.00%
2017 204,341 1,216,241 14.50% 14.50%
Utility‐SpecificStandardDerivedThroughtheIRPProcessWhiletheRESandEEstandardhaveproducedrealandtangiblebenefitsasnotedabove,cleanenergystandardsappliedatastatewidelevelareinherentlyinflexibleandfailtotakeintoaccounttheuniquecircumstancesofdifferentutilities.Thiscreatesinefficaciesinresourceacquisitionanddispatch,whichultimatelyresultsinhighercostspassedontocustomers.Intheearlyyearsoftheseprograms,whenthecleanenergygoalsweremodest,theimpactoftheseinefficiencieswasnotsignificant.However,asthesecleanenergygoalsapproachhigherpercentagesofthetotalretailload,TEPanticipatesthatthenegativeimpactoftheseinefficiencieswillbecomemorepronounced.
Properconsiderationofcostandbenefitsofvariousresourcesisafundamentalfunctionofintegratedresourceplanning.Infact,theIRPprovidesthemostholisticconsiderationoftheverygoalsthatcleanenergystandardsaimtoachieve,whilebalancingthecostofachievingthosegoals.Sinceintegratedresourceplanningwasreinstatedin2011,thegoaloftheIRPhasshiftedfromfocusingontheleast‐costportfoliotothebestcaseportfolioconsideringcost,environmentalfactors,andreducinglong‐termrisk.
AddressingcleanenergystandardswithintheIRPwouldputthecosteffectivenessofrenewableenergy,EE,andDRonalevelplayingfieldwithconventionalresourcesbasedontheirroleincreatingalow‐cost,low‐riskresourceportfolio.Addingtothelogicofthisapproachisthatmanyrenewableenergytechnologiesareatorapproachingparitywithconventionalresources,andcosteffectiveEEremainsthelowestcostresource.Finally,IRPtoolsarecontinuallybeingadaptedtoaccountforemerginghourlyandsub‐hourlyoperationalissuesthataccompanycertainrenewableenergyandDRproducts.Therefore,TEPbelievesthattheIRPwouldbeabettermechanismtodeveloputility‐specifictargetsforcleanenergystandardsthanastate‐wide,“onesizefitsall”rulemaking.
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Renewable Energy Integration
TEPistargetingarenewableportfoliothatwillsupply30%ofitsretailloadrequirementby2030.ThisaggressivetargetwillcomewithitsownsetofchallengesanditwillrequireTEPtoderiveabalanced,responsive,anddiversegenerationportfolio.ThissectionwillpointoutandexplaintheoperationalchallengesthatTEPwillfaceasitincreasesitsuseofrenewablegeneration.
OperationalChallengesHistorically,electricutilitieswithpredominantairconditioningloadsetapeakdemandbetween4:00PMto5:00PMonasummerday.Thewinterloadrequirementsarelowerthantheyareforthesummerbut,thechallengesthatemergeonadailybasis(withheavysolarpenetration)aremorepronounced.Chart11belowillustratesasamplewinterdayforTEP.Onatypicalwinterdayretailloadtendstopeakatday‐breakandagainafterthesunsetsandconsumersturnonappliancesandlighting.
Chart11–SampleOperationalChallengesduetoSolarProduction
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TheaccumulationofsolarPVintroducesoperationalchallengesonadailybasis.AswereviewChart11aboveshowingtheloadshapeofatypicalwinterday,wemakethefollowingobservations;
1. RampDown–AbsentsolarPV,thedemandprofileonatypicalwinterdayincludesapeakinthemorningandoneintheevening.Themorningpeakoccursduringthecoldesthoursasthesunrisesandwhileconsumerswake,homesandbusinessesarewarmedandcommutersheadtowork.Theretailload,onitsown,wouldtrenddownwardmodestlyasthesunrisesandtracksalongthehorizon.Thisramp‐downwastypicallymanagedwithcoalandnaturalgasresources.TheneteffectofadditionsolarPVwillcauseamoredrasticramp‐down.Fast‐responseresources,suchasRICEs,willberequiredtomanagethissteepreductioninnetload.TheseunitswilllikelybeprescheduledtocontributetothemorningpeakandthenutilizedtorampdowntogivewaytothesunandsolarPV.
2. MinimumGeneration–AssolarPVgenerationreachesitspeak,andafterramp‐down,generatingunitsmusthavethecapabilitytogenerateatreducedoutputlevelsduringthemiddayhours.Modificationsmayberequiredonunitstoallowthemtocycleoff.Ifcyclingisnotanoptionforgenerators,TEPmustrelyonmarketdemandforexcessthermalgenerationoff‐takeordevelopstrategiestodispatchbelowitsminimumgeneration.
3. Over‐Generation–TheCAISOisalreadyexperiencingnegativepricingforover‐generationduringpeakPVgeneratinghours.Adjacentutilitiesandentitieshavebeenthebeneficiariesofthispricing.TheopportunitytochargeEnergyStorageSystems(ESS),suchasbatteriesorhydropumped‐storage,presentsitselfduringthesehourstotakeadvantageofexcessgenerationatlowcost.IncreasedPVatTEPwillcontributetoover‐generationandwillrequireinnovativeideasandinfrastructuretosecuretherightmixtureofresources.
4. RampUp–Thesunbeginstoset,fast‐respondingresourcesmustnowrampuptodisplacethedemandthatsolarPVrelinquishes.It’satthispointthatautilitymustutilizeflexibleresourcestoequallyoffsetthedropinsolargeneration.Theramp‐upmaybemitigatedintheneartermbycombustionturbinesandnaturalgascombinedcyclegenerators.Astheramp‐upsteepens,itmaynecessitatetheinclusionofESS,RICE,and/orDRmechanisms.
5. PeakShift–SolarPVwillonlyreducedemanduntilthesunsets.Thisresultsinanarrowingandnetshiftofpeakdemand.CAISOhasalsodemonstratedescalatedpricingintheseeveningandnighthours.WhileESSchargesduringthe‘over‐generation’hours,thispeakperiodmaypresentanopportunitytodischargethesesystems,especiallyifweobserveatransformationofhourlypeakandoff‐peakpricing.
SolarPVhastremendousupsideandarguablyitmaycontributetoreducedlosses,toapportionedcapacityreductions(generationandtransmission),andtocarbonemissionreductions,amongotherbenefits.Werecognizefromthechartanddiscussionabovethatotherchallengesarise.Asthesunisrising,electricloadstabilizesandbeginsanascenttowardthepeak.Increasedpenetrationofsolarcreatesarapidnetdropinload;TEPmusthavegeneratorsthatarecapableoframpingdownatafastrate.Mostbaseloadunitssuchascoalandnaturalgas‐steamarechallengedtorespondtothisrampdownandsubsequentrampup.Inbetweenwemaybechallengedwithunitgenerationminimumsandnegativepricing.
Thenetreductioninloadwillcreatetheneedforrapidrespondinggeneratorstoregulatetheinitialsteepdeclineinloadfollowedbyanimmediaterise.Inaresourceplanningcontext,withtheincreasingpenetrationofsolarsystems,wemusttakeintoconsiderationtherightcombinationofresourcestorespondtothevariabilityandintermittencyofrenewablesystems.AportfoliowithahighpenetrationofsolarandotherrenewablesmaynecessitatetheinstallationofRICEsand/orstorageintheformofbatteriesornaturalgas.
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ShiftingNetPeakChart12belowrepresentsaprojected2030typicalsummerpeakdayforretaildemandandthenetretaildemandadjustedforvaryinglevelsofsolarpenetrationasestimatedintheReferenceCasePlan.ThechartillustrateshowincreasedpenetrationofsolarPVandsolarDGwillshiftthenetpeakretaildemandfromapproximately4PMtoultimately8PM.Thenetreductioninpeakwillnotexceedthedifferencebetweenthedemanddemonstratedat4PMandthedemandat8PMwhenthesunhasalreadyset.Infact,TEPanticipatesthatapproximately350MWsofPVandDGwillbeinservicebyyear‐end2017.Theimpactofthecurrentsolarportfolioisdemonstratedinthechartbelow;netpeakdemandhasalreadybeenreducedbyandthenetpeakisshiftedto7PM.
Theadditionof150MWspriortoyear‐end2020willreducethepeakminimallybutthetimeofpeakwillshiftfurthertotherightandto8PM.After2020,weobservethatsolargenerationfromPVandDGwillhavenegligiblereductiontonetpeakat8PM.Thecontributionfromsolargenerationtowarddemandreductionwillbeconstrainedwithinthemid‐dayhours.Solargenerationatlevelsdemonstratedfor2025and2030inthechart,willonlycontributetowardenergyproductionprimarilywhileotherresourcesmustbedeployedtomeetnetpeakdemand.
Chart12–PeakDemandContributionfromPV
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Net (with 2025 solar)
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WeatherForecastingtoSupportSystemDispatchWeatherforecastingisutilizedtoreduceoperatingcostsatTEP.Therearedifferentproductsthatareusedtoforecasttheweather,butthemainproductTEPpredictstheweatherwithisweatherforecastmodels.
AtTEP,weusearegionalspecificformofaNumericalWeatherPrediction(NWP)model.ANWPmodelisanumericalrepresentationofthedifferentlandandatmosphericprocessesthataffecttheweather.ThespecificversionoftheNWPmodelTEPusesisknownastheArizonaWeatherResearch&Forecast(AZWRF)model.ThismodelwascreatedbytheUniversityofArizona(UA),whichwasdonesoinpartnershipwithTEPandismaintainedwithcontinuedsupportfromTEPandanumberofotherutilities.Thismodelisunique,becauseitisa“highlycustomized”modelthatisspecifictothesouthwesternUnitedStates(US).Thisisimportant,becausetraditionalweatherforecastmodelsdonottakeintoaccounttheterrainlocatedthroughoutthesouthwesternUS.
ThemodificationstheUAmadetothemodelhasallowedittoproducebetterforecaststhanotherweatherforecastmodelscan.Itisalsorunatahigherresolutionthanotherweatherforecastmodelsare.Thisisdone,sosmallscaleweatherphenomenacanbecaptured,likethewindevents,clouds,andmonsoonalthunderstormscreatedbythesurroundingmountains.Ifweweretousetraditionalweathermodels,weathereventsarecommonlyeitheroverorunderforecasted.
PowerforecastsarecreatedbytheUAforTEP,soTEPcaneasilytaketheforecastinformationandimplementitintoitsexistingprocesses.ThispowerforecastisanensembleofmultiplerunsoftheNorthAmericanModel(NAM),theGlobalForecastSystemmodel(GFS),andtheRapidRefreshmodel(RR).ThepowerforecastalsocontainsinformationthatTEPgivestheUAaboutthedifferentutilityandresidentialscalesolarandwindsitesintheserviceterritory.Thismodelprovidesforecaststhatrangefrom48hoursupto7days.Themodelisrunupto8timesadayandisinitializedwithdifferentdataeachtime.
Atthistime,TEP’sWholesaleMarketingDepartmentusesthispowerforecasttomakedecisions,regardinghowmuchpowertobuyorsellattherealtimeanddayaheadlevel.
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Belowaretwoexamplesoftheseforecasts.ThefirstexampleisaforecastthatcoversallofTEPterritory’sutility‐scalesolarandthesecondexampleisaforecastthatcoversallofTEPterritory’sutility‐scalewind.
Chart13–TEPUtilityScaleSolarForecast
Chart14–TEPUtilityScaleWindForecast
TEPcanseehowandifthemodelsthatgointothepowerforecastagree,bylookingatthegreenshadingseenontheaboveforecasts.Theconfidenceintervalsrepresentedontheforecastsarereliablethroughthreedays.Pastthethreedaymark,however,theforecast’sconfidenceintervalsbecomelessandlessreliable.Alargemajorityoftheuncertaintyapparentafterthreedayscomesfromtheuncertaintythatisapparentinglobalweatherconditions.
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Environmental Regulations
OverviewTheelectricgeneratingsectorcurrentlyfacesnumerousregulationsrelatedtoairquality,wastegeneration,protectionofwaterways,andclimatechange.Fossilfuel‐firedpowerplants,particularlycoal‐firedpowerplants,aresignificantsourcesofsulfurdioxide(SO2),nitrogenoxides(NOx),particulatematter(PM),andcarbondioxide(CO2)aswellasmercuryandotherhazardousairpollutants.Thesepowerplantemissionsarelimitedthroughseveralstatutoryandregulatoryprograms.Astheseregulatoryprogramshaveevolved,theyhavehad,andwillcontinuetohaveimportantimplicationsforpublichealth,forthemixofU.S.generatingresources,andforeconomicgrowthbydrivinginvestmentinnewandcleanertechnologiesandcontributingtotheretirementofthemoreinefficientandhigherpollutingplants.ThediscussionbelowprovidesasnapshotofthemajorenvironmentalregulatoryprogramsfacingtheelectricgeneratingsectorthatmayhaveanimpactonTEP.
RegionalHazeTheEPA'sRegionalHazeRuleestablishesagoaltoreducevisibilityimpairmentinClassIareas(NationalParks,Monuments,etc.)tonaturalconditionsby2064.Progresstowardthislong‐termgoalismeasuredin10‐yearplanningperiods.Foreachplanningperiod,statesmustdevelopplansthatestablishgoalsandemissionreductionstrategiesforimprovingvisibilitybyreducingemissionsfromsourceslocatedwithintheirrespectivejurisdictions.BecauseNavajoandFourCornersarelocatedontheNavajoIndianReservation,theyarenotsubjecttostateoversight;theEPAoverseesregionalhazeplanningforthesepowerplants.Thesestateplansmustachieve“ReasonableProgress”towardthe2064goal,andarereviewedbyEPAinrelationtothatobjective.
Duringthefirstplanningperiod(2009‐2018)theruleincludedanadditionalrequirementreferredtoasBestAvailableRetrofitTechnology(BART).BARTappliedtocertainindustrialfacilitiesbuiltbetweenAugust1962andAugust1977.InthewesternU.S.,RegionalHazeBARTdeterminationshavefocusedoncontrolsforNOx,oftenresultinginarequirementtoinstallselectivecatalyticreduction(SCR).SeveralplantownerssubjecttoBARTdeterminationsthatcalledforSCRnegotiatedalternativetoBARTprovisionsinwhichequivalentorgreateremissionreductionswereachievedthroughunitretirementscombinedwithothermeasuresinlieuofinstallingSCR.FinalBARTprovisionsapplicabletoplantsownedbyTEParesummarizedinTable7below.
Table7‐FinalBARTNOxProvisionsforTEP‐OwnedPlants
Plant TEP Ownership
BART Provisions Alternative to BART Provisions
Four Corners 7% of Units 4 and 5
110 MW
SCR on all five units One Unit (Unit 4 or 5) by October 2016
The remaining four units by October 2017 Plant‐wide emission rate of 0.11 lbs./MMBtu
Closure of Units 1‐3 by January 2014 SCR on Units 4 and 5 by August 2018
Plant‐wide emission rate of 0.098 lbs./MMBtu
San Juan 50% of Units 1 and 2
340 MW
SCR on all four units by September 2016
Emission rate of 0.11 lbs./MMBtu
Closure of Units 2 and 3 by January 2018 SNCR on Units 1 and 4 by February 2016
Emission rate of 0.23 lbs./MMBtu
Navajo 7.5% of Units 1‐3
168 MW
SCR on all three units Emission rate of 0.055 lbs./MMBtu
Closure of one unit by January 2020 SCR on the remaining units by January 2031
Emission rate of 0.07 lbs./MMBtu
Sundt Unit 4 100%
120 MW
SNCR on Unit 4 Unit operates on coal or natural gas Emission rate of 0.36 lb./MMBtu
Unit eliminates coal as a fuel source Emission rate of 0.25 lb./MMBtu
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FutureplanningperiodswillfocusonaReasonableProgressprovisions.ReasonableProgressisanevaluationonthecosteffectivenessofemissionreductionsforasourcebasedonfourfactors10andinrelationtothevisibilityimprovementgoalsestablishedbytheStateforthatplanningperiod.TheplantsthathavebeensubjecttoBARTprovisionsarenotlikelytohavefurthercontrolrequirementsunderReasonableProgress.
SpringervilleGeneratingStationwasnotsubjecttoBART,andtherefore,willbeevaluatedforemissionreductionsunderReasonableProgress.AccordingtotheArizonaDepartmentofEnvironmentalQuality’sProposedRegionalHaze5‐YearProgressReport11,monitoringdatafromeachofthe12ClassIareasinArizonashowsthatvisibilityconditionsareexpectedtoexceedtheirrespective2018ReasonableProgressgoalsforthe20%worstdays.Inaddition,therearesignificantemissionreductionsexpectedoverthenextseveralyearsduetotheBARTdeterminationsforplantsinandnearArizona.
Oneofthekeymetricsformeasuring“costeffectiveness”underaReasonableProgressevaluationisthecostofthecontrolsdividedbyamountofemissionreductionsachievedthroughimplementationofthosecontrols(i.e.$/tonreduced).Thehigherthe$/tonreducedvalue,thelesslikelythatthosecontrolswillbedeterminedtobe“costeffective”.SpringervilleiscurrentlywellcontrolledforSO2,NOxandPMemissions(seeChapter9),meaningthereisnotalotofroomforfurtherreductions,andlowertonsreducedincreasesthe$/tonreducedvalue.
BasedontheState’sprogressinimprovingvisiblyatClassIareasinthestate,andtheanticipatedhighcostofachievingfurtheremissionreductionsatSpringerville,forpurposesofthisIRPweassumenofurtheremissionreductionswillberequiredatSpringervillethroughaReasonableProgressdetermination.
CleanPowerPlanOnOctober23,2015,theEPApublishedafinalruleregulating,forthefirsttime,CO2emissionsfromexistingpowerplants.Ingeneral,thisfinalrule,referredtoastheCleanPowerPlan(CPP),aimstoreduceCO2emissionsfromU.S.powerplantsby32%from2005levelsby2030.Morespecifically,theruleestablishesemissionguidelinesbasedonEPA’sdeterminationofthe“bestsystemofemissionreductions”,whichstatesandtribes(heretoreferredtoas“states”)mustusetosetstandardsapplicabletotheaffectedplantsintheirjurisdictions.
Arizonaisoneof27stateschallengingtheEPA’srulemakingauthorityandArizonahasfiledsuitagainsttheEPA.OnFebruary9,2016,theUnitedStatesSupremeCourtissuedastayoftheCPP,12meaningthattherulehasnolegaleffectpendingtheresolutionofthestateandindustrychallengetotherule.ThatchallengeiscurrentlybeforetheU.S.CourtofAppealsfortheD.C.Circuit,whichheardoralargumentsbeforeanenbanccourtonSeptember27,2016.Notwithstandingthestatusofthelitigation,thecurrentAdministrationhasstateditplanstosignificantlymodify,ifnotcompletelydismantletherule.
WhilerecognizingthattheultimateoutcomeoftheCPPishighlyuncertain,TEPbelievesitservesasanappropriateproxyforincorporatingCO2emissionconstraintsintolong‐termplanning.TheCPPisafinal
10CleanAirActSec.169A(g)(1)“indeterminingreasonableprogressthereshallbetakenintoconsiderationthecostsofcompliance,thetimenecessaryforcompliance,andtheenergyandnon‐airqualityenvironmentalimpactsofcomplianceandtheremainingusefullifeofanyexistingsource”11ADEQAirQualityDivision,ProposedArizonaStateImplementationPlantRevision‐RegionalHaze5‐YearProgressReport,September201512http://www.supremecourt.gov/orders/courtorders/020916zr3_hf5m.pdf
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agencyactionandwaspromulgatedunderrulespursuanttotheCleanAirAct.Inaddition,theCPPestablishesambitiousgoalsforemissionreductions.Therefore,TEPwillevaluatecompliancewiththeCPPforallportfoliosstudiedinthisIRP.
CPPOverviewTheCPPestablishesemissiongoalsfortwosubcategoriesofpowerplantsintheformofanemissionrate(lbs./MWh)thatdeclinesovertheperiodfrom2022to2030.Thosesubcategoriesare:
Fossil‐firedsteamelectricgeneratingunits(“SteamEGUs”)‐includescoalplantsandoilandnaturalgas‐firedsteamboilers
Naturalgas‐firedcombined‐cycleplants(NGCC)
Thenusingtheserates“SubcategoryRates”andtheproportionalgenerationfromsteamEGUsandNGCCplantsineachstate,theCPPderivesstatespecificgoals(“StateRates”).TheCPPalsoconvertstheseemissionrategoalstototalmass(i.e.shorttons)goalsforeachstate.EachstateisrequiredtodevelopaStatePlanthatwillregulatetheaffectedplantsintheirjurisdiction.TEPhaseffectedplantsinthreeseparatejurisdictions,Arizona,NewMexico,andtheNavajoNation,andtherefore,wouldbesubjecttothreeStatePlans.Table8belowshowstheapplicablerategoals.
Table8–CPPRateGoals
CO2 Rate (lbs/MWh) 2022‐2024 2025‐2027 2028‐2029 2030+
Subcategorized Rate ‐ Steam EGUs 1,671 1,500 1,308 1,305
Subcategorized Rate ‐ NGCC 877 817 784 771
State Rate ‐ Arizona 1,263 1,149 1,074 1,031
State Rate ‐ New Mexico 1,435 1,297 1,203 1,146
State Rate ‐ Navajo Nation 1,671 1,500 1,380 1,305
TherearethreeprimaryformsoftheStatePlanavailabletostates(withsub‐options):
Rate Plantsarerequiredtomeetanemissionratestandard(lbs./MWh)equaltotheplant’semissionsdividedbythesumofitsgenerationandthegenerationfromqualifyingrenewableenergyprojectsand/orverifiedEEsavings.Arateplancouldbeadministeredthroughtheuseofemissionratecredits(ERCs),wheresourceswithemissionsabovethestandardgeneratenegativeERCswhentheyoperate,andsourceswithemissionsbelowthestandard(ornoemissions)generatepositiveERCs.Attheendofacomplianceperiod,eachaffectedplantmusthaveatleasta“zero”balanceofERCs.
Undertherateapproach,stateshavetheoptionofmeasuringcomplianceagainsttheStateRateortheSubcategoryRates.
Mass Plantsareallocated(orotherwiseacquire)allowances,thetotalofwhichequalsthestate’smassgoal,andeachplantmustsurrenderanallowanceforeachtonofCO2emittedduringacomplianceperiod.Ownersofplantsthatdonothavesufficientallowancescanreduceemissionsbycurtailingproduction,re‐dispatchingtoalower
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emissionresource,orretiringtheplantandre‐distributingallowancestotheirremainingplants.
StateMeasures Insteadofregulatingpowerplantsdirectly,astatecouldimplementpoliciesthatwillhavetheeffectofreducingemissionsintheirstatesuchasbuildingcodes,renewableenergymandatesorEEstandards.Complianceismeasuredbasedonemissionsfromtheaffectedplants.
ArizonaTheStateofArizonawasproactivelyplanningforCPPcompliance;however,planningactivitieswereputonholdafterthepresidentialelection.MuchoftheplanningwasdonewiththeassistanceofaTechnicalWorkingGroup,formedtoevaluatetechnicalaspectsoftheplan.
TheStateofArizonahaspreviouslystateditiscommittedtodevelopingaStatePlan,andinpreparingfortheinitialplansubmittal,ADEQorganizedtheoptionsfortheformofaStatePlanintosubsetsofRateorMass,withtheintenttofocusonthemostlikelyoptions.
NavajoNationIntheproposedFederalPlanandModelRules13,EPAaskedforcommentsonwhetheritwas“necessaryorappropriate”toregulateEGUsontheNavajoNationundertheCPP.EPAhasnottakenactiononitsproposalanditisuncertainwhenorifitwilltakefinalaction.IftheEPAdeterminesthatitisinappropriateorunnecessarytoregulateEGUsontheNavajoNation,thenTEPwillberelievedofanyCPPrequirementsfortheNavajoGeneratingStationandtheFourCornersPowerPlant.IfEPAelectstoproceedwithregulatingtheseEGUsundertheCPP,itislikelythattheNavajoNationwouldadoptamass‐basedapproachtoCPPcompliance.Underamass‐basedapproach,theexcessallowancesassociatedwithTEP’sownershipshareoftheretirementoftheNavajoattheendof2019wouldbesufficienttocoveremissionsassociatedwiththeremainingplant(FourCorners)throughitsplannedretirementin2031.
NewMexicoRatherthanbesubjecttoaFederalPlan,theStateofNewMexicoislikelytosubmitaStatePlanSIPaswell,believingthataNewMexicodevelopedplanwillprovidetheflexibilityneededtominimizecostspassedontoitsresidents.TEPassumesthatNewMexicowouldalsoadoptamass‐basedapproachtoCPPcompliance.Underamass‐basedapproach,theexcessallowancesassociatedwithTEP’sownershipshareoftheretirementoftheSanJuanUnit2attheendof2017,andtheexitfromUnit1in2022wouldbesufficienttocoveremissionsassociatedwiththeremainingNewMexicoplant(Luna)wellbeyondtheplanningperiod.
13FederalPlanRequirementsforGreenhouseGasEmissionsforElectricUtilityGeneratingUnitsConstructedonorBeforeJanuary8,2014;ModelTradingRules;AmendmentstoFrameRegulations;ProposedRule[80FR64966]datedOctober23,2015.
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Chart15–ADEQRegulatoryFrameworkOptions14
PACEGlobalArizonaCPPAnalysisTohelpevaluatetherelativebenefitsofRateversusMassforArizona,theArizonautilitieshiredPACEGlobal(“PACE”)toconductamodelingassessmentoftherelativecompliancepositioncomparedtotheStateRateandMassgoalsbasedonabasecaseoutlook.Theresults15ofthatassessmentindicatethatArizonawouldlikelyfallshortoftheallowancesneededtocoveremissionsusingamassapproach.However,Arizonawasabletomeettherategoalsforthevastmajorityofthecomplianceperiodstudied.Arate‐basedplan,ingeneral,betteraccommodatestheneedtomeetfutureloadgrowthwithexistingplants,andthesubcategoryrateapproachisgenerallyconsideredbetterforresourceportfolioswithahighpercentageofcoal‐firedgeneration.
14Ibid,ADEQ“EPA’sFinalCleanPowerPlan:Overview,SteveBurr,AQD,SIPSection,September1,2015.15MoreinformationcanbefoundatADEQ’swebsitehttp://www.azdeq.gov/environ/air/phasethree.html#technical
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Figure12–PACEGlobalArizonaCPPAnalysis
BasedonthePACEwork,TEPbelievesthatArizonaismostlikelytoadoptasubcategorizedrateapproachforCPPcompliance,therefore,planningportfoliosstudiedinthisIRPwillbeevaluatedforCPPcomplianceunderasubcategorizedrateapproach.
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NationalAmbientAirQualityStandardsAcoreelementofCleanAirActistheestablishmentofNationalAmbientAirQualityStandards(NAAQS).NAAQSarelevelsofairpollutionintheambientairthataredeterminedtobeprotectiveofthegeneralpublic(includingsensitivepopulations)withanadequatemarginofsafety.NAAQShavebeenestablishedforsixspecificcriteriapollutants(ozone,particulatematter,sulfurdioxides,nitrogenoxides,lead,andcarbonmonoxide).NAAQShavetwocomponents:primarystandardstoprotectpublichealthandsecondarystandardstoprotectpublicwelfareandtheenvironment.NAAQSareimplementedthroughenforceablesourcespecificemissionlimitationsandotherairqualityregulationsestablishedbystatesviaStateImplementationPlans(SIPs).TheSIPsdetaileachstate’sstrategyto“attain”or“maintain”theNAAQS.
TheCAArequiresEPAtoreviewand,ifappropriate,reviseeachNAAQSeveryfiveyears.Theserevisionsoftenresultinmorestringentstandards,whichmayleadtofurtherrestrictionsofemissionsfrompowerplantsandothersources.
In2015EPArevisedtheprimaryNAAQSsforozone,loweringthestandardto70partsperbillion(ppb).Withinoneyearfollowingpromulgationofastandard,StatesandTribesarerequiredtosubmittoEPArecommendedboundarydesignationsfortheattainmentstatus(i.e.attainment,nonattainment,unclassifiable)ofareaswithintheirjurisdictions.ArizonasubmitteditsrecommendedboundarydesignationsinSeptember2016,recommendingthattwodistinctareasbedesignatedasnonattainment.TEPhasnooperationneartheYumanonattainmentarea.TheMaricopa‐Pinal‐GilanonattainmentareaisdelineatedonFigure13below.
Figure13‐Maricopa‐Pinal‐GilaNonattainmentAreaBoundary
Source:Enclosure1,ADEQ’s2015OzoneNAAQSBoundaryRecommendationsandTechnicalSupportDocumenthttps://www.epa.gov/sites/production/files/2016‐11/documents/az‐rec‐enc‐1.pdf
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TheGilaRiverGeneratingStationislocatedjustwithintheboundaryoftheMaricopa‐Pinal‐Gilanonattainmentareaandis,therefore,subjecttononattainmentprovisionsoftheCleanAirAct.GilaRiverUnit3,partiallyownedbyTEP,isequippedwithSCRforcontrolofNOxemissions,andtherefore,isnotexpectedtobesubjecttoanyfurtheremissionreductionsduetothearea’snonattainmentstatus.However,anyexpansionorsignificantmodificationstothefacilitywouldtriggertherequirementtoupgradetoLowestAvailableEmissionReductions(LAER)standardsandoffsetanyincreaseinemissionsataratiogreaterthan1:1.
TheTucsonmetropolitanareawasdesignatedasinattainmentperArizona’srecommendationtoEPA,withamaximummonitoredambientairqualityconcentrationof69ppb.Therefore,newsources,andmodificationsofexistingsources,willnotcurrentlybesubjecttononattainmentprovisions.Attainmentstatusismonitoredonanannualbasis.IffuturemonitoringdataindicatesthatambientairqualityintheTucsonmetropolitanareaexceedstheozonestandard,Arizonawouldberequiredtoreviseitsnonattainmentboundarydesignation.
PowerGenerationandWaterResourcesWateravailabilityisamajorissueforutilitiesoperatingpowerplants,orplanningnewresourcesintheDesertSouthwest.Forfacilitiesalreadyinoperation,utilitiesneedtobecognizantofwateruseandsupplytrendsintheareaimmediatelysurroundingthosefacilities.Whileexistingfacilitieshavelikelysecuredthelegalrightstothewaterneededforoperation,therecanbeadisconnectbetweenthelegalrighttowateranditsphysicalavailability.Forthisreasontechnologiesandstrategiestodecreasepowerplantwaterusecanbecomeanimportantplanninggoalwithintheintegratedresourceplanningprocess.Reducingpowerplantwaterusecanbeaccomplishedeitherthroughshiftingtoalowerwaterusegeneratingresourceorthroughincreasingpowerplantwateruseefficiency.ThissectionprovidesanoverviewofTEP’swateruseatitsexistinggeneratingfacilitiesanddiscussesourstrategytoreduceoverallwaterconsumption.
Chart16presentsthehistoricalannualwateruseassociatedwithTEP’sshareofownershipforitssteamelectricandNGCCgeneratingplantsandthesourceofthatwater(i.e.surfacewaterorgroundwater).
Chart16–AverageAnnualWaterConsumptionbyStation(TEPShare)
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4,000
6,000
8,000
10,000
12,000
Four Corners
Navajo
San Juan
Springerville
Sundt
Luna
Gila River
ACRE‐FEET
2012 2013 2014 2015 2016
GroundwaterSurface Water
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PowerGenerationandWaterImpactsofResourceDiversificationTEP’sresourcediversificationstrategyreplacesgenerationfromhigherwaterusecoal‐firedresourceswithacorrespondingamountofgenerationfromlowerwateruseNGCCplantsandzero‐wateruserenewableresources.SeeChart17belowforaveragewaterconsumptionratesforvariouselectricitygenerationtechnologies.Basedonthesewaterconsumptionrates,TEP’sresourcediversificationwillresultinlowerwaterconsumptionforpowergenerationoverall.
Chart17–LifeCycleWaterUseforPowerGeneration16
However,waterconsumptionhasalocalizedenvironmentalimpactaswell.Theavailabilityofwaterthatiswithdrawnfromsurfacewaters,asinthecaseoftheNavajoGeneratingStation(LakePowell),theFourCornersPowerPlant(MorganLakeandtheSanJuanRiver),andtheSanJuanGeneratingStation(SanJuanRiver),ishighlydependentonprecipitationandsnowpack,aswellasotheruses.TEP’sreferencecaseportfoliocallsforretirementoforexitfromeachofthesefacilitieswithintheplanningperiod,withthe
16AdaptedfromMeldrumet.al.“Lifecyclewateruseforelectricitygeneration:areviewandharmonizationofliteratureestimates”,publishedMarch3,2013,http://iopscience.iop.org/article/10.1088/1748‐9326/8/1/015031
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majorityoccurringwithinthenextsixyears,whichsignificantlyreducesandeventuallyeliminatesanyriskofwateravailabilityforpowergenerationfromsurfacewaters.
Theavailabilityofwaterthatiswithdrawnfromgroundwateraquifers,asinthecaseofSpringerville,Sundt,GilaRiver,andLunapowerplants,isdependentontherechargetoandotherwithdrawalsfromtheaquifer,butisalsoafunctionofthehydrogeologicalcharacteristicsoftheaquiferitself.
AtSpringerville,itistoTEP’sadvantage,byvirtueofanagreementwithalocalNativeAmericanTribe,tolimitwithdrawalsofgroundwaterattheplantto20,000acre‐feetannually.Therefore,therearewaterconservationmeasuresinplaceattheplant,andTEPisexploringadditionalwaterconservationandreusemeasures.ThecoolingtowersforUnits1and2operateathighcyclesofconcentration,upto13cyclesbeforeblowdown,whichreducestheamountofwaterusedperunitofenergygenerated.Inaddition,TEPrecentlyhostedapilotstudyatSpringerville17todemonstrateanewtechnologyforreducingwastewaterdischargesthroughvaporrecompression,whichalsoproducesadistillatethatcouldberecirculatedbacktotheplant.Additionaltechnologiesarebeingconsideredfordemonstrationprojects.
LunareducesgroundwaterwithdrawalsbysupplementingthewellwaterwithtreatedmunicipalwastewaterprovidedbytheCityofDeming,NewMexico.Lunaisabletosatisfy,onaverage,12%ofitstotalwaterdemandfrommunicipalwastewater.
GilaRiverGeneratingStationislocatedwestofPhoenix,Arizona(inproximitytothePaloVerdeNuclearGeneratingStation).Inthisareathereisover6,000MWofexistingNGCCcapacitythatislikelytoseeasignificantincreaseingenerationasutilitieslikeTEPreplacecoal‐firedgenerationwithgenerationfromNGCCplants.Thesefacilitiesaretoofaraparttohaveadirectimpactoneachotherintermsofgroundwateravailability;however,theexpectedincreasedwateruseasaresultofincreasedgenerationneedstobeevaluated.
FortheIRP,TEPwillincludeforeachportfoliothechangeinwaterconsumptionovertheplanningperiod.FortheReferenceCasePlan,theIRPwillcharttheannualamountofwaterconsumedforpowergenerationalongwiththesourceofthewater(surfacewaterorgroundwater).Increasingwaterconsumptionwithineitherofthesesourcecategorieswillbeweighedasariskfactorforthatportfolio.
17ElectricPowerResearchInstitute(EPRI)inpartnershipwithTucsonElectricPower,SaltRiverProject,andTri‐StateGenerationandTransmission,“AVARAWastewaterTreatmentDemonstrationatSpringervilleGeneratingStation”,finalresultspending.
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CHAPTER 4
A New Integration Approach to Resource Planning
Withtheincreasingcost‐competivenessofcertainrenewableresources,manyresourceplannersareintheprocessofintegratinghigherlevelsofrenewabletechnologiesasacomplementtotheirexistingconventionalgenerationfleet.Whilesomerenewabletechnologieshaveachievednotional“gridparity”undercertainconditions,suchcomparisonsdonottakeintoaccountthecostofsystemintegration.Asaresult,today’sresourceplanningeffortsarenowfocusedonintegratingnew“gridbalancing”technologiesthatwillenablethemtotakeadvantageofhigherlevelsoflowcost,cleanrenewableenergy.
Historically,utilityplannersclassifiedtraditionalgenerationresourcesintofourcategoriesbasedontheirduty‐cycleandtheirabilitytoserveload.Thesecategorieswerereferredtoasbaseload,intermittent,loadfollowingandpeaking.Aspartofthe2017IRP,TEPtakesaslightlydifferentapproachtocategorizingthecapabilitiesforeachtypeofresourceinordertobetterdescribehowtheseresourceswillplayaroleastheCompanytransformsitsresourceportfoliooverthenextdecade.
Thefourcategoriesaredescribedinmoredetailbelow:
Figure14–NewResourceCategoriestoMeetTomorrowResourceNeeds
Grid Balancing Resources
Load Serving Conventional Resources
Load Modifying Resources
Load Serving Renewable Resources
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LoadModifyingResourcesLoadmodifyingresourcesincludesEE,DG,andtimeofusetariffs,whoseeffectsareprimarily“behindthemeter”andaretherefore,largely,ifnotentirelybeyondtheviewandcontrolofthebalancingauthority.WhilebothEEandDGresourcesreduceacustomer’snetconsumption,solarPVgridsystemscanover‐generateduringthedayinhourswhenacustomer’susageislessthanthesolarproductionoutput.
RenewableLoadServingResourcesRenewableloadservingresourcesarecomprisedofbothutilityscalesolarandwindtechnologies.Bothgridscalesolarphotovoltaicsandwindarecurrentlythelowestcostresourcesfroman“energyonly”basis.AspartoftheCompany’s2017IRP,TEPplanstoaddapproximately800MWofadditionalsolarandwindresourcestoitsgenerationportfoliooverthenextfifteenyears.WhileutilityscalesolarandwindwillgiveTEPtheopportunitytodevelopatransformedportfoliooflow‐cost,zero‐carbonresources,thesetechnologiesmustbebalancedwithinaportfolioofconventionalloadservingandgridbalancingresources.
ConventionalLoadServingResourcesConventionalloadservingresourcesarecomprisedofcoal,hydro,nuclearandnaturalgastechnologiesthatareusedtoservethevastmajorityoftheenergydispatchedtomeetload.
GridBalancingResourcesGridbalancingresourcesincludenaturalgascombustionturbines,DR,naturalgasreciprocatingenginesandstoragetechnologies.Thesegridbalancingresourceswillbeusedforpeakshaving,energyarbitrageandcanbeusedbythebalancingauthoritiestomaintaingridreliability.
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TypicalSummerDayCategorizedbyResourceRequirementsChart18detailshowloadmodifying,loadserving,gridbalancingresourceswouldbeutilizedontypicalsummerday.
Chart18–ResourceRequirementsonTypicalSummerDay
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TypicalWinterDayCategorizedbyResourceRequirementsChart19detailshowloadmodifying,loadserving,gridbalancingresourceswouldbeutilizedontypicalwinterday.
Chart19–ResourceRequirementsonTypicalWinterDay
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Resources Matrix
Table9providesabriefoverviewofthetypesofresourcesthatwereevaluatedintheresourceplanningprocesswithinthe2017IRP.Eachtechnologyisdescribedbycategory,type,carbonprofile,stateoftechnology,primaryuseandwhetheritcanbedispatchedupondemand.
Table9‐ResourceMatrix
Category Type Zero Carbon Production
State of Technology
Primary Use Dispatchable by
Balancing Authority
Load Modifying Resources
Energy Efficiency Yes Mature Base
Load Reduction No Distributed Generation
Yes Mature Intermediate Load Reduction No
Rate Design (1) Mature Targeted Load
Usage / Reductions No
Load Serving Renewable Resources
Wind Yes Mature Intermediate Generation No
Solar Yes Mature Intermediate Generation
No
Load Serving Conventional Resources
Natural Gas Combined Cycle
No Mature Base Load Generation Yes
Pulverized Coal No Mature Base Load Generation Yes
Small Modular Nuclear (SMR)
Yes Emerging Base Load Generation
Yes
Grid Balancing Resources
Reciprocating Engines
No Mature 5 ‐ 10 Minute Ramping
YesCombustion Turbines
No Mature 10 ‐ 15 Minute
Ramping Yes
Pumped Hydro Storage
(1) Mature 1 Minute Ramping
Yes
Demand Response Yes Mature 1 Minute Ramping
Yes
Battery Storage (1) Emerging 1 Second Ramping
Yes
(1) Carbon intensity is dependent upon the resources that would be displaced by this rate tariff or storage technology net of charging.
ResourceBenchmarkingUtilityresourceplanningisperformedusingawidespectrumoftoolsandmethodologies.Priortorunninganydetailedsimulationmodels,theresourceplanningteamreviewedsourcesofinformationfromthird‐partiesandconsultantstodevelopup‐to‐datecostparametersforthevaryingresourcetechnologies.Inaddition,informationgatheredthroughouron‐goingcompetitivebiddingprocessesandrequestforproposalsolicitationswasalsousedtoderivecostestimatesfornewbuildresourcesandwholesalemarketalternatives.
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SourceDataBelowisalistofsourcesthatTEPreliedontocompilecostinputassumptionsfortraditionalsupply‐side,demand‐sideandrenewableresourcesmodeledinthe2017IRP:
PACEGlobalPaceGlobalFutureStatesoftheWorld‐IntegratedResourcePlanningScenarios(December2016)SeeAppendixA
BurnsandMcDonnell2017FlexibleGenerationTechnologyAssessment(March2017)SeeAppendixB
U.S.EnergyInformationAdministrationAnnualEnergyOutlook2017(August2016)https://www.eia.gov/forecasts/aeo/electricity_generation.cfm
NationalRenewableEnergyLaboratoryRenewableElectricityFuturesStudy(2016)http://www.nrel.gov/analysis/re_futures/index.html
SunshotInitiativehttps://energy.gov/eere/sunshot/sunshot‐initiative
LazardLevelizedCostofEnergyAnalysis10.0(December2016)https://www.lazard.com/media/438038/levelized‐cost‐of‐energy‐v100.pdf
LazardandEnovationPartnersLevelizedCostofStorageAnalysis2.0(December2016)https://www.lazard.com/media/438042/lazard‐levelized‐cost‐of‐storage‐v20.pdf
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Lazard’sLevelizedCostofEnergyAnalysis
OverviewonConventionalandAlternativeEnergyTechnologiesThefollowinganalysiswaspublishedaspartofLazard’sLevelizedCostofEnergy(LCOE)Analysis.18This2016reportcomparesthevariousconventionalandalternativeenergytechnologies.
Certainalternativeenergytechnologiessuchaswindandutility‐scalesolarcontinuetobecomemorecost‐competitivewithconventionalgenerationtechnologiesinsomeapplications,despitelargedecreasesinthecostofnaturalgas.Lazard’sanalysisdoesnottakeintoaccountpotentialsocialandenvironmentalexternalitiesorreliability‐orintermittency‐relatedconsiderations.
Despiteasharpdropinthepriceofnaturalgas,thecostofallformsofutility‐scalesolarPVandutility‐scalewindtechnologiescontinuetoremaincompetitivewithconventionalgenerationtechnologiesasillustratedbyrecentpublicannouncementsofbidssubmittedbyrenewableenergyprovidersinopenpowerprocurementprocesses.
Currently,rooftopsolarPVisnotcostcompetitivewithoutsignificantsubsidies,due,inpart,tothesmall‐scalenatureandaddedcomplexityofrooftopinstallations.However,theLCOEofrooftopsolarPVisexpectedtodeclineincomingyears,partiallyasaresultofmoreefficientinstallationtechniques,lowercostsofcapitalandimprovedsupplychains.Importantly,LazardexcludesfromtheiranalysisthevalueassociatedwithcertainusesofrooftopsolarPVbysophisticatedcommercialandindustrialuserssuchasdemandchargemanagement,whichappearsincreasinglycompellingtocertainlargeenergycustomers.
Thepronouncedcostdecreaseincertainrenewableenergytechnologies,combinedwiththeneedsofanagingandchangingpowergridintheU.S.,hassignificantlyincreaseddemandforenergystoragetechnologiestofulfillavarietyofelectricsystemneeds.Industryparticipantsexpectthisincreaseddemandtodrivesignificantcostdeclinesinenergystoragetechnologiesoverthenextfiveyears.Increasedavailabilityoflower‐costenergystoragewilllikelyfacilitategreaterdeploymentofrenewableenergytechnologies.Energystorageapplicationsandcostsarediscussedbelow.
18 Lazard is a preeminent financial advisory and asset management firm. More information can be found at https://www.lazard.comLazard’sLevelizedCostOfEnergyAnalysis10.0canbefoundathttps://www.lazard.com/media/438038/levelized-cost-of-energy-v100.pdf
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Lazard’sLevelizedCostofStorageAnalysis
OverviewonEnergyStorageTechnologiesThefollowanalysiswaspublishedaspartofLazard’sLevelizedCostofStorage(LCOS)Analysis.19This2016reportcomparesthevariousenergystoragetechnologiesbycostanduse.Energystoragehasavarietyofuseswithverydifferentrequirements,rangingfromlarge‐scale,powergrid‐orientedusestosmall‐scale,consumer‐orienteduses.Lazard’sanalysisidentifiesanumberof“usecases”andassignsdetailedoperationalparameterstoeach.Thisapproachenablesmeaningfulcomparisonsofstoragetechnologiesacrossanumberofusecases.
CostCompetitiveStorageTechnologiesSelectenergystoragetechnologiesarecost‐competitivewithcertainconventionalalternativesinanumberofspecializedpowergriduses,butnonearecost‐competitiveyetforthetransformationalscenariosenvisionedbyrenewableenergyadvocates.
Althoughenergystoragetechnologyhascreatedagreatdealofexcitementregardingtransformationalscenariossuchasconsumersandbusinesses“goingoffthegrid”ortheconversionofrenewableenergysourcestobaseloadgeneration,itisnotcurrentlycostcompetitiveinmostapplications.However,someusesofselectenergystoragetechnologiesarecurrentlyattractiverelativetoconventionalalternatives;theseusesrelateprimarilytomanagingfrequencyregulationandtransmissioninvestmentdeferral.
Today,energystorageappearsmosteconomicallyviablecomparedtoconventionalalternativesinusecasesthatrequirerelativelygreaterpowercapacityandflexibilityasopposedtoenergydensityorduration.Theseusecasesincludefrequencyregulationand—toalesserdegree—transmissionanddistributioninvestmentdeferral,demandchargemanagementandmicrogridapplications.Thisfindingillustratestherelativeexpenseofincrementalsystemdurationasopposedtosystempower.Putsimply,“batterylife”ismoredifficultandcostlytoincreasethan“batterysize.”Thisislikelywhythepotentiallytransformationalusecasessuchasfullgriddefectionarenotcurrentlyeconomicallyattractive—theyrequirerelativelygreaterenergydensityandduration,asopposedtopowercapacity.
TheLazardstudyfindsawidevariationinenergystoragecosts,evenwithinusecases.Thisdispersionofcostsreflectstheimmaturityoftheenergystorageindustryinthecontextofpowergridapplications.Thereisrelativelylimitedcompetitionandamixof“experimental”andmorecommerciallymaturetechnologiescompetingattheusecaselevel.
19 Lazard’s Levelized Cost Of Storage Analysis 1.0 can be found at https://www.lazard.com/media/2391/lazards‐levelized‐cost‐of‐storage‐analysis‐10.pdf Lazard’s Levelized Cost Of Storage Analysis 2.0 can be found at https://www.lazard.com/media/438042/lazard‐levelized‐cost‐of‐storage‐v20.pdf
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FutureEnergyStorageCostDecreasesIndustryparticipantsexpectcoststodecreasesignificantlyinthenextfiveyears,drivenbytheincreasinguseofrenewableenergygeneration,governmentpoliciespromotingenergystorageandtheneedsofanagingandchangingpowergrid.
Industryparticipantsexpectincreaseddemandforenergystoragetoresultinenhancedmanufacturingscaleandability.Theeconomiesofscalecreatedwilldrivecostdeclinesandestablishaproductioncostcycleinwhichenergystoragecostdeclinesfacilitatewiderdeploymentofrenewableenergytechnology.Theresultwillcreatemoredemandforstorageandspurringfurtherinnovationinstoragetechnology.
Costdeclinesprojectedbyindustryparticipantsvarywidelybetweenstoragetechnologies—lithiumisexpectedtoexperiencethegreatestfiveyearbatterycapitalcostdecline(~50%),whileflowbatteriesandleadareexpectedtoexperiencefiveyearbatterycapitalcostdeclinesof~40%and~25%,respectively.Leadisexpectedtoexperience5%fiveyearcostdecline,reflectingthefactthatitisnotcurrentlycommerciallydeployed.
Themajorityofnear‐tointermediate‐costdeclinesareexpectedtooccurasaresultofmanufacturingandengineeringimprovementsinbatteries,ratherthaninbalanceofsystemcosts.Therefore,usecaseandtechnologycombinationsthatareprimarilybattery‐orientedandinvolverelativelysmallerbalanceofsystemcostsarelikelytoexperiencemorerapidlevelizedcostdeclines.Asaresult,someofthemost“expensive”usecasestodayaremost“levered”torapidlydecreasingbatterycapitalcosts.Ifindustryprojectionsmaterialize,someenergystoragetechnologiesmaybepositionedtodisplaceasignificantportionoffuturegas‐firedgenerationcapacity,inparticularasareplacementforpeakinggasturbinefacilities,enablingfurtherintegrationofrenewablegeneration.
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2017IntegratedResourcePlanLevelizedCostComparisonsThecalculationofthelevelizedcostofenergyprovidesacommonmeasuretocomparethecostofenergyacrossdifferentdemandandsupply‐sidetechnologies.TheLCOEtakesintoaccounttheinstalledsystempriceandassociatedcostssuchascapital,operationandmaintenance,fuel,transmission,taxincentivesandconvertsthemintoacommoncostmetricofdollarspermegawatthour.ThecalculationfortheLCOEisthenetpresentvalueoftotalcostsoftheprojectdividedbythequantityofenergyproducedoverthesystemlife.
Becauseintermittenttechnologiessuchasrenewablesdonotprovidethesamecontributiontosystemreliabilityastechnologiesthatareoperatorcontrolledanddispatched,theyrequireadditionalsysteminvestmentforsystemregulationandbackupcapacity.Aswithanyprojection,thereisuncertaintyaboutallofthesefactorsandtheirvaluescanvaryregionallyandacrosstimeastechnologiesevolveandfuelpriceschange.Furtherresourceutilizationisdependentonmanyfactors;theportfoliomix,regionalmarketprices,customerdemandandmust‐runrequirementsaresomeconsiderationsoutsideofLCOE.
LCOEAssumptions–AllResources AllLCOEcostsarein2017dollars.Futureyearcostswillbebasedonyearprojectisinstalledwhichwillincorporateinflationandtechnologyinnovationassumptions.
Analysisexcludesintegrationcosts(e.g.,gridandconventionalgenerationinvestmenttoovercomesystemintermittency)forintermittenttechnologies.
Analysisdoesnotincludeanydecommissioningcosts.
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2017LevelizedCostofAllResourcesChart20belowprovidesacomparisononthelevelizedcostsofallresourcesusedinthe2017IRP.Allcostsreflectthe2017LCOE$/MWh.
Chart20‐LevelizedCostsofAllResources
$15
$44 $51 $53 $65 $68 $77 $104 $105
$130 $157
$192
$257
$503
$‐
$100
$200
$300
$400
$500
$600En
ergy Efficiency
Solar PV ‐ Tracking
Solar PV ‐ Fixed
Tilt
Wind Resources
Natural G
as Combined
Cycle (NGCC)
Solar PV ‐ Commercial and Industrial
Natural G
as Combined
Cycle (NGCC)
Small M
odular Nuclear
Solar PV ‐ Residen
tial
Reciprocating En
gines (RICE)
Combustion Turbine (Large Fram
e Class)
Combustion Turbine (Sm
all Frame Class)
Battery Storage (Lithium)
Dem
and Response
2017 LCOE $/M
Wh
Fuel Capital Property Tax & Insurance Fixed O&M Variable O&M
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LoadModifyingResources–CostAssumptionsTable10includestheloadmodifyingresourcecostsforthe2017IntegratedResourcePlan.
Table10–LoadModifyingResources–CostAssumptions
Energy Efficiency
Solar PV – Residential
Solar PV – Commercial and
Industrial Rate Design
Customer Efficiency Programs
Residential DG Programs
Commercial & Industrial DG Programs
Targeted Load Usage / Reductions By Time of Use
Energy Efficiency
Solar PV – Residential
Solar PV – Commercial and
Industrial Rate Design
Based on Various Customer Demand Side Programs
Based on Various
Residential DG Programs
Based on Various Commercial & Industrial DG Programs
Based on Various Rate Tariff by Customer Class
$15 $105 $68 Depends of Tariff
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Chart21‐LoadModifyingResources–CostAssumptions
LCOEAssumptionsforLoadModifyingResources EnergyefficiencybasedonTEP’sprojectedprogramcostsbasedontheaveragelifetimeoftheprograms.
SolarPV–ResidentialbasedonLazard’sLCOEAnalysis–Version10. SolarPV–Commercial&IndustrialbasedonLazard’sLCOEAnalysis–Version10.
$15
$105
$68
0
20
40
60
80
100
120
Energy Efficiency Solar PV ‐ Residential Solar PV ‐ Commercial andIndustrial
2017 $/M
Wh
Capital or Program Cost
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RenewableLoadServingResources–CostAssumptionsTable11includestheloadservingrenewableresourcecostsforthe2017IntegratedResourcePlan.
Table11–RenewableLoadServingResources–CostAssumptions
Plant Construction Costs Units Solar Thermal –
No Storage
Solar Thermal –
Ten Hour Storage
Solar PV –
Fixed Tilt
Solar PV –
Tracking
Wind
Resources
Project Lead Time Years 3 3 0.75 0.75 1
Installation Years First Year 2020 2020 2018 2018 2018
Peak Capacity , MW MW 100 110 50 50 50
Plant Construction Cost 2017 $/kW $6,500 $10,300 $1,300 $1,450 $1,475
Resource Life Years 25 35 25 25 20
Operating Characteristics Units Solar Thermal –
No Storage
Solar Thermal –
Ten Hour Storage
Solar PV –
Fixed Tilt
Solar PV –
Tracking
Wind
Resources
Fixed O&M 2017 $/kW $66.30 $81.60 $9.18 $12.24 $40.80
Variable O&M 2017 $/MWh $0.00 $0.00 $0.00 $0.00 $0.00
ITC Percent 30% 30% 30% 30% ‐
PTC $/MWh ‐ ‐ ‐ ‐ $18.40
Annual Capacity Factor Annual % 28% 52% 23% 30% 33%
Annual Output GWh 245.3 501.1 100.7 132.7 144.5
Net Coincident Peak NCP% 100% 34% 34% 65% 23%
Water Usage Gal/MWh 800 ‐ ‐ ‐ ‐
Levelized Cost of Energy $/MWh $228 $179 $51 $44 $53
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Chart22‐RenewableLoadServingResources–CostAssumptions
LCOEAssumptionsforLoadServingResources–Renewables ITCandPTCshownarefor2017inservicedates(commenceconstructionpriorto12/31/16). SolarresourcesassumehighsolarinsulationforprojectssitedintheDesertSouthwest. WindresourcesassumenoITC.PTCreflects$23/MWhescalatedat1.5%foratermof10years.CapacityfactorsreflectprojectssitedinEasternArizonaorWesternNewMexico.
Transmissionwheelingcostsarenotreflectedincostofdeliveryforbothsolarandwindprojects.
$51
$44
$53
$0
$10
$20
$30
$40
$50
$60
Solar PV ‐ Fixed Tilt Solar PV ‐ Tracking Wind Resources
2017 $/M
Wh
Capital Property Tax & Insurance Fixed O&M Variable O&M
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ConventionalLoadServingResources–CostAssumptionsTable12includestheloadservingconventionalresourcecostassumptionsforthe2017IntegratedResourcePlan.
Table12‐ConventionalLoadServingResources–CostAssumptions
Plant Construction Costs Units Baseload NGCC
Intermediate NGCC
Small Modular Nuclear (SMR)
Project Lead Time Years 3 3 12
Installation Years First Year Available 2020 2020 2029
Peak Capacity , MW MW 550 550 500
Plant Construction Cost 2017 $/kW $1,100 $1,100 $5,100
Resource Life Years 30 30 30
Operating Characteristics Units Baseload NGCC
Intermediate NGCC
Small Modular Nuclear (SMR)
Fixed O&M 2017 $/kW $33.97 $33.97 $148.75
Variable O&M 2017 $/MWh $2.04 $2.04 $3.06
Gas Transportation 2017 $/kW $16.80 $16.80 ‐
Heat Rate Btu/kWh 7,400 7,400 9,500
Annual Capacity Factor Annual % 75% 50% 95%
Expected Annual Output GWh 3614.5 2,409.0 4,161.0
Fuel Source Fuel Source Natural Gas Natural Gas Uranium
Unit Fuel Cost $/mmBtu $5.04 $5.04 $0.90
Net Coincident Peak NCP% 100% 100% 100%
Water Usage Gal/MWh 350 350 800
Levelized Cost of Energy $/MWh $65 $77 $104
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Chart23–ConventionalLoadServingResources–2017LCOE$/MWh
LCOEAssumptionsforLoadServingResources–Conventional NaturalgaspricesarebasedonPACEGlobal’sBaseCase(CleanPowerPlan)Scenariothatassumespriceswillaverage$5.04/mmBtufrom2017through2032.
Conventionalresourcesdonotincludeanydecommissioningcosts.
$104
$65
$77
$0
$20
$40
$60
$80
$100
$120
Small Modular Nuclear Base Load NGCC Intermediate NGCC
2017 $/M
Wh
Fuel Capital Property Tax & Insurance Fixed O&M Variable O&M
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GridBalancingResources–CostAssumptionsTable13includesthegridbalancingresourcecostassumptionsforthe2017IntegratedResourcePlan.
Table13–GridBalancingResources–CostAssumptions
Plant Construction Costs Units Combustion Turbine
(Aeroderivative)
Combustion Turbine
(Small Frame Class)
Combustion Turbine
(Large Frame Class)
Reciprocating Engines (RICE)
Battery Storage (Lithium)
Demand Response
Project Lead Time Years 2.5 2.5 2.5 1.5 0.5 Customer Load
Control Programs
Installation Years Year Available 2020 2020 2020 2018 2018
Peak Capacity , MW MW 45 75 220 100 100
Construction Cost 2017 $/kW $1,300 $800 $650 $1,200 $2,568
Resource Life Years 30 30 30 30 20
Operating Characteristics Units Combustion Turbine
(Aeroderivative)
Combustion Turbine
(Small Frame Class)
Combustion Turbine
(Large Frame Class)
Reciprocating Engines (RICE)
Battery Storage
Demand Response
Fixed O&M 2017 $/kW $29.89 $30.65 $28.05 $12.24 $9.18
Based on Various Direct Load
Control Programs
Variable O&M 2017 $/MWh $3.57 $3.83 $3.57 $4.59 $37.35
Gas Transportation 2017 $/kW $16.80 $16.80 $16.80 $16.80 ‐
Heat Rate Btu/kWh 9,800 10,500 9,900 8,000 ‐
Capacity Factor Annual % 15% 8% 12% 20% 16%
Annual Output GWh 59.1 52.6 231.3 175.2 140.2
Fuel Source Fuel Source Natural Gas Natural Gas Natural Gas Natural Gas System
Unit Fuel Cost $/mmBtu $5.04 $5.04 $5.04 $5.04 ‐
Net Coincident Peak NCP% 100% 100% 100% 100% 100%
Water Usage Gal/MWh 150 150 150 50 System Levelized Cost of Energy $/MWh $192 $239 $157 $130 $257 $503
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Chart24–GridBalancingResources–CostAssumptions
LCOEAssumptionsforGridBalancingResources NaturalgaspricesarebasedonPACEGlobal’sBaseCase(CleanPowerPlan)Scenariothatassumespriceswillaverage$5.04/mmBtu.
Reciprocatingenginesareassumedtobedispatchwithnaturalgasata20%capacityfactorbasedonTEP’sresourceportfoliowithemphasisonsupportingtheintegrationofrenewableresources.Assumesreplacementcostof65%ofinitialcapitalafter25,000hoursofoperation.
DLCcostsarebasedonaverageestimatedprogramcostofthird‐partyloadaggregators.Annualcapacityfactorsbasedonlimitedcustomerinterruptability.Theseprogramsassumealimitof30interruptibleeventsdispatchedover6hourstotaling180hoursperyear(or2%capacityfactor).
$503
$257
$192$157
$130
$0
$100
$200
$300
$400
$500
$600
DemandResponse
Battery Storage(Lithium)
CombustionTurbine (SmallFrame Class)
CombustionTurbine (LargeFrame Class)
ReciprocatingEngines (RICE)
2017 $/M
Wh
Fuel Capital Property Tax & Insurance Fixed O&M Variable O&M
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RenewableElectricityProductionTaxCredit(PTC)Thefederalrenewableelectricityproductiontaxcreditisaninflation‐adjustedper‐kilowatt‐hour(kWh)taxcreditforelectricitygeneratedbyqualifiedenergyresourcesandsoldbythetaxpayertoanunrelatedpersonduringthetaxableyear.Thedurationofthecreditis10yearsafterthedatethefacilityisplacedinserviceforallfacilities.
InDecember2015,theConsolidatedAppropriationsActextendedtheexpirationdatefortheproductiontaxcredittoDecember31,2019,forwindfacilitiescommencingconstructionwithaphase‐downbeginningforwindprojectscommencingconstructionafterDecember31,2016.TheActextendedthetaxcreditforothereligiblerenewableenergytechnologiescommencingconstructionthroughDecember31,2016.TheActappliesretroactivelytoJanuary1,2015.
Thetaxcreditamountisadjustedforinflationbymultiplyingthetaxcreditamountbytheinflationadjustmentfactorforthecalendaryearinwhichthesaleoccurs,roundedtothenearest0.1cents.TheInternalRevenueService(IRS)publishestheinflationadjustmentfactornolaterthanApril1eachyearintheFederalRegistrar.For2015,theinflationadjustmentfactorusedbytheIRSis1.5336.
Applyingtheinflation‐adjustmentfactorforthe2014calendaryear,aspublishedintheIRSNotice2015‐20,theproductiontaxcreditamountisasfollows:
$0.023/kWhforwind,closed‐loopbiomass,andgeothermalenergyresources $0.012/kWhforopen‐loopbiomass,landfillgas,municipalsolidwaste,qualifiedhydroelectric,and
marineandhydrokineticenergyresources.
ThetaxcreditisphaseddownforwindfacilitiesandexpiresforothertechnologiescommencingconstructionafterDecember31,2016.Thephase‐downforwindfacilitiesisdescribedasapercentagereductioninthetaxcreditamountdescribedabove:
Table14–ProductionTaxCreditPhaseDown
Construction Year (1) PTC Reduction
2017 PTC amount is reduced by 20%
2018 PTC amount is reduced by 40%
2019 PTC amount is reduced by 60%
(1) For wind facilities commencing construction in year.
Notethattheexactamountoftheproductiontaxcreditforthetaxyears2017‐2019willdependontheinflation‐adjustmentfactorusedbytheIRSintherespectivetaxyears.Thedurationofthecreditis10yearsafterthedatethefacilityisplacedinservice.
Seehttp://energy.gov/savings/renewable‐electricity‐production‐tax‐credit‐ptcformoredetails.
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EnergyInvestmentTaxCredit(ITC)TheConsolidatedAppropriationsAct,signedinDecember2015,includedseveralamendmentstothefederalBusinessEnergyInvestmentTaxCreditwhichapplytosolartechnologiesandotherPTCeligibletechnologies.Notably,theexpirationdateforthesetechnologieswasextended,withagradualstepdownofthecreditsbetween2019and2022.
TheITChasbeenamendedanumberoftimes,mostrecentlyinDecember2015.Thetablebelowshowsthevalueoftheinvestmenttaxcreditforeachtechnologybyyear.Theexpirationdateforsolartechnologiesandwindisbasedonwhenconstructionbegins.Forallothertechnologies,theexpirationdateisbasedonwhenthesystemisplacedinservice(fullyinstalledandbeingusedforitsintendedpurpose).
Table15–InvestmentTaxCreditsbyYearandTechnology
Technology 2017 2018 2019 2020 2021 2022 Future Years
PV, Solar Water Heating, Solar Space Heating/Cooling,
Solar Process Heat 30% 30% 30% 26% 22% 10% 10%
Geothermal Electric
10% 10% 10% 10% 10% 10% 10%
Large 24% 18% 12% ‐ ‐ ‐ ‐
Wind
SolarTechnologiesEligiblesolarenergypropertyincludesequipmentthatusessolarenergytogenerateelectricity,toheatorcool(orprovidehotwaterforusein)astructure,ortoprovidesolarprocessheat.Hybridsolarlightingsystems,whichusesolarenergytoilluminatetheinsideofastructureusingfiber‐opticdistributedsunlight,areeligible.Passivesolarsystemsandsolarpool‐heatingsystemsarenoteligible.
Seehttp://energy.gov/savings/business‐energy‐investment‐tax‐credit‐itcformoredetails.
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ImpactsofDecliningTaxCreditsandTechnologyInstalledCostsChart25andChart26shownbelowreflectthenear‐termcapacitypricedeclinesona$/kWbasisfrom2017‐2023associatedwiththereductionintheinstalledcostsofsolartechnologiesrelativetothelevelizedcostrealizedona$/MWhassumingdifferentlevelsofinvestmenttaxcreditsbyyear.ThesolarITCassumptionsarebasedonthefederalinvestmenttaxcreditassumptionsshowninTable15above.
Chart25–SolarPVFixed,ImpactsofDecliningTaxCreditsandTechnologyInstalledCosts
Chart26–SolarSAT,ImpactsofDecliningTaxCreditsandTechnologyInstalledCosts
$47.5
$48.0
$48.5
$49.0
$49.5
$50.0
$50.5
$51.0
$51.5
$52.0
$1,180
$1,200
$1,220
$1,240
$1,260
$1,280
$1,300
$1,320
2017 2018 2019 2020 2021 2022 2023
LCOE, $/M
Wh
Installed Cost, $/kW
Solar ‐ Fixed PV
LCOE, $/MWh Installed Cost, $/kW
$41.0
$41.5
$42.0
$42.5
$43.0
$43.5
$44.0
$44.5
$45.0
$1,320
$1,340
$1,360
$1,380
$1,400
$1,420
$1,440
$1,460
2017 2018 2019 2020 2021 2022 2023
LCOE, $/M
Wh
Installed Cost, $/kW
Solar ‐ Single Axis Tracking (SAT)
LCOE, $/MWh Installed Cost, $/kW
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ImpactsofDecliningPTCandTechnologyInstalledCostsChart27shownbelowreflectsthenear‐termcapacitypricedeclinesona$/kWbasisfrom2017‐2023associatedwiththereductionintheinstalledcostsofwindresourcesrelativetothelevelizedcostrealizedona$/MWhassumingdifferentlevelsofproductiontaxcreditsbyyear.ThewindPTCassumptionsarebasedonthefederalproductiontaxcreditassumptionsshowninTable14above.
Chart27–Wind,ImpactsofDecliningProductionTaxCreditsandTechnologyPriceInstalledCosts
$53$59
$65
$77 $78
$79
$79
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$1,450
$1,460
$1,470
$1,480
$1,490
$1,500
$1,510
$1,520
$1,530
$1,540
2017 2018 2019 2020 2021 2022 2023
LCOE, $/M
Wh
Installed Cost, $/kW
Wind Resources
LCOE, $/MWh Installed Cost, $/kW
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CHAPTER 5
LOAD MODIFYING RESOURCES
EnergyEfficiencyTEPrecognizesenergyefficiency(EE)anddemandresponse(DR)ascost‐effectivewaystoreduceourrelianceonfossilfuels.TEPoffersavarietyofenergysavingoptionsforcustomersencouragingbothhomeownersandbusinessestoinvestinEEupgradesthroughDemandSideManagement(DSM)incentivizedprograms.
TEPhasmadegreatstridestowardsachievingthegoalssetbyArizona'sEEStandard.TheEEStandardcallsoninvestor‐ownedelectricutilitiesinArizonatoincreasethekilowatt‐hoursavingsrealizedthroughcustomerratepayer‐fundedEEprogramseachyearuntilthecumulativereductioninenergyachievedthroughtheseprogramsreaches22percentofthepreviousyear’sretailsalesby2020.
TheEEsectionpresentsadetailedoverviewoftheproposedelectricDSMprogramstargetedattheresidential,commercialandindustrial(C&I),andutilityimprovementsectors,aswellastheirassociatedproposedimplementationcosts,savings,andbenefit‐costratios.
TEP,withinputfromotherpartiessuchasNavigantConsulting,Inc.(“Navigant”),ResidentialUtilityConsumerOffice(RUCO)andtheSouthwestEnergyEfficiencyProject(SWEEP),hasdesignedacomprehensiveportfolioofprogramstodeliverelectricenergyanddemandsavingstomeetannualDSMenergysavingsgoalsoutlinedintheEEStandard.Theseprogramsincludeincentives,direct‐installandbuy‐downapproachesforenergyefficientproductsandservices;educationalandmarketingapproachestoraiseawarenessandmodifybehaviors;andpartnershipswithcontractorstoobtainthemostcost‐effectivereturnontherate‐payerdollarsinvestedinDSMprograms.
2017ImplementationPlan,Goals,andObjectivesTEP’shigh‐levelEE‐relatedgoalsandobjectivesareasfollows:
Implementonlycost‐effectiveEEprograms. Designandimplementadiversegroupofprogramsthatprovideopportunitiesforallcustomerstoparticipatein.
AchieveenergysavingsgoalssetintheEEStandardthrough2020. Whenfeasible,maximizeopportunitiesforprogramcoordinationwithotherefficiencyprograms(e.g.SouthwestGasCorporation,ArizonaPublicServiceCorporation)toyieldmaximumbenefits.
Maximizeprogramsavingsataminimumcosttotheratepayerthroughcomprehensiveandcost‐effectiveprograms.
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ProvideTEPcustomersandcontractorswithdirectwebaccesstodetailedinformationonallefficiencyprograms(residentialandcommercial)forelectricitysavingsopportunitiesathttp://www.tep.com
ExpandtheEEinfrastructureinthestatebyincreasingthenumberofavailablequalifiedcontractorsthroughtrainingandcertificationinspecificfields.
Usetrainedandqualifiedtradealliessuchaselectricians,HVACcontractors,builders,manufacturers,architects,andengineerstotransformthemarketforefficienttechnologies.
Informandeducatecustomerstomodifybehaviorsthatenablethemtouseenergymoreefficiently.
PlanningProcessTEP’sportfolioofprogramsincorporateselementsofthemostsuccessfulEEprogramsacrossNorthAmerica.ProgramsaredesignedinconsiderationoftheTucsonmarketandprovidecost‐effectiveprogramsforTEPcustomers.Asubstantialamountofinformationincludingevaluations,programplansandstudieswereusedtodevelopspecificprogramsforTEP.WithinputfromNavigant,RUCOandSWEEP,TEPalsousedabenchmarkingprocesstoreviewthemostsuccessfulEEprogramsfromacrossthecountry,withafocusonsuccessfulDesertSouthwestprogramstohelpshapetheportfolio.
TEPusedthefollowingstrategiestoproducethelowestcostportfolioofEEprograms:
ImplementingprimarilyindustryacceptedprogramsthathavebeensuccessfullyappliedbyotherutilitiesintheSouthwestandacrossthecountry.
Implementingprogramsthroughacombinationofthird‐partycontractorsandTEPstaff.TEPutilizesimplementationcontractorswheretheyprovideparticularindustryexpertiseand/ortools.
ProgramScreeningTEPusesrigorousmodelstoevaluatethecosts,benefits,andrisksofEEandDSMprogramsandmeasures.ThesemodelsaredesignedtoestimatethecapacityandenergyvaluesofEEandDRmeasuresatanhourlylevel.Byexaminingprojectedprogramperformanceandcosteffectivenessoverawidevarietyofweatherandcostconditions,TEPisabletomeasuretherisksandbenefitsofemployingEEandDSMmeasuresversustraditionalgenerationcapacityadditions,andfurther,toensurethatDSMresourcesarecomparedtosupplysideresourcesrelatively.
TheanalysisofEEandDSMcost‐effectivenesshastraditionallyfocusedprimarilyonthecalculationofspecificmetrics,oftenreferredtoastheSocietalCostTest(SCT).AsdetailedinTable16‐ComparativeBenefit‐CostTests,therearefivemajorbenefit‐costtestscommonlyutilizedintheEEindustry,eachofwhichaddressesdifferentperspectives.TheEEStandardestablishedthatthesocietalcosttestshouldbeusedasthekeyperspectivefordeterminingthecost‐effectivenessofEEmeasuresandprograms.Regardlessofwhichperspectiveisused,benefit‐costratiosgreaterthanorequalto1.0areconsideredcost‐effective.Whilevariousperspectivesareoftenreferredtoastests,thefollowinglistofcriteriademonstratesthatdecisionsonprogramdevelopmentgobeyondapass/failtest.
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Table16‐ComparativeBenefit‐CostTests
SOCIETAL COST TEST
TOTAL RESOURCE COST TEST
UTILITY RESOURCE COST TEST
PARTICIPANT COST TEST
RATE IMPACT MEASURE
TEST
BENEFITS
Reduction in Customer's Utility Bill
Incentive Paid by Utility
Any Tax Credit Received
Avoided Supply Costs Avoided Participant Costs
Participant Payment to Utility External Benefits
COSTS
Utility Administration Costs Participant Costs
Incentive Costs
External Costs
Lost Revenues
UtilityResourceCostTestTheUtilityResourceCostTest(UCT),alsoreferredtoastheProgramAdministratorTest(PAT),measuresthenetbenefitsofaDSMprogramasaresourceoptionbasedonthecostsandbenefitsincurredbytheutility(includingincentivecosts)andexcludinganynetcostsincurredbythecustomerparticipatingintheefficiencyprogram.Thebenefitsaretheavoidedsupplycostsofenergyanddemand,thereductionintransmission,distribution,generationandcapacityvaluedatmarginalcostsfortheperiodswhenthereisaloadreduction.Thecostsaretheprogramcostsincurredbytheutility,theincentivespaidtothecustomers,andtheincreasedsupplycostsfortheperiodsinwhichloadisincreased.
TotalResourceCostTheTotalResourceCost(TRC)isatestthatmeasuresthetotalnetresourceexpendituresofaDSMprogramfromthepointofviewoftheutilityanditsratepayers.Resourcecostsincludechangesinsupplyandparticipantcosts.ADSMprogramthatpassestheTRCtest(i.e.,hasaratiogreaterthan1)isviewedasbeneficialtotheutilityanditscustomersbecausethesavingsinelectriccostsexceedtheDSMcostsincurredbytheutilityanditscustomers.
ParticipantCostTestTheParticipantCostTest(PCT)illustratestherelativemagnitudeofnetbenefitsthatgotoparticipantscomparedwiththenetbenefitsachievedfromotherperspectives.Thebenefitsderivedfromthistestreflectreductionsinacustomer’sbillandenergycostsplusanyincentivesreceivedfromtheutilityorthirdparties,
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andanytaxcredit.Savingsarebasedongrossrevenues.Costsarebasedonout‐of‐pocketexpensesfromparticipatinginaprogram,plusanyincreasesinthecustomer’sutilitybills.
RateImpactMeasureTestTheRateImpactMeasure(RIM)Testmeasuresthechangeinutilityenergyratesresultingfromchangesinrevenuesandoperatingcosts.HigherRIMtestscoresindicatetherewillbelessimpactonincreasingenergyrates.WhiletheRIMresultsprovideaguideastowhichtechnologyhasmoreimpactonrates,generallyitisnotconsideredapass/failtest.Instead,theamountofrateimpactisusuallyconsideredatapolicylevel.Thepolicyleveldecisioniswhethertheentireportfolio’simpactonratesissodetrimentalthatsomenetbenefitshavetobeforgone.
SocietalCostTestTheSCTissimilartotheTRCtest,butitisalsointendedtoaccountfortheeffectsofexternalities(suchasreductionsinCO2,nitrogenoxidesNOx,andsulfurdioxideSO2.OneadditionaldifferencebetweentheTRCandtheSCTisthattheSCTusesasocietaldiscountrateinitsanalysis.TheSCTistheregulatedbenefit/costanalysisrequiredintheEEStandard.TEPhasprovidedaSCTthataccountsforthesocietaldiscountrate.
CurrentEnergyEfficiencyandDSMProgramsTEP’s2016EnergyEfficiencyPlanwasfiledonJune1st,2015,inaccordancewithSectionR14‐2‐2405oftheEEStandard,forapprovalofEEandDSMprogramswiththeACC(DocketNo.E‐01933A‐15‐0178).TEPreceivedthefinalorderforapprovalfortheseprogramsfromtheACCinDecisionNo.75450onFebruary11,2016augmentingDecisionNo.74885(December31,2014).TEPhasrequestedthattheACCcontinuetheimplementationplanapprovedinDecisionNo.75450toprogramyear2017.
TEPusesEEprogramstoefficientlyandcost‐effectivelyaltercustomerenergydemandandconsumptionandreducethelong‐termsupplycostsforenergyandpeakdemand.TEP’sportfolioofprogramsisdividedintoresidential,commercial,behavioral,support,andutilityimprovementsectorswithadministrativefunctionsprovidingsupportacrossallprogramareas.Theseprogramscanvarygreatlyintheirdispatchcharacteristics,sizeanddurationofloadresponse,certaintyofloadresponse,andlevelandfrequencyofcustomerparticipation.Ingeneral,programsareofferedintwoprimarycategories,1)EEprogramsthatreduceenergyconsumption,and2)DRprogramsthatreducepeakdemand.Table17belowliststheCommission‐approvedEEandDRprogramscurrentlyintheTEPportfolio.Detailsoftheseprogramscanbefoundinthe2016EnergyEfficiencyPlan
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Table17‐CurrentEnergyEfficiencyPrograms
Residential Sector
Appliance Recycling
Efficient Products
Existing Homes
Low Income Weatherization
Multi‐Family Homes
Residential New Construction
Shade Trees
Behavioral Sector Behavioral Comprehensive
Home Energy Reports
Commercial & Industrial Sector
Bid for Efficiency
Combined Heat & Power
C&I Comprehensive
Commercial New Construction
Commercial Schools
Retro‐Commissioning
Small Business Direct Install
Support Sector Consumer Education and Outreach
Energy Codes and Standards
Utility Improvement Sector
C&I Direct Load Control
Conservation Voltage Reduction
Generation Improvement and Facilities Upgrade
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Chart28showstheactualsegmentationofenergysavingsacrosssectorsasaresultfromthe2016implementation.
Chart28–2016DSMPortfolioCompositionbySector
Resource Planning Integration
DSMForecastingConsistentwiththeACC’sDecisionNo.71435onResourcesPlanning,TEPforecastedcumulativeenergysavingsforTEP’sDSMportfolioovera15‐yeartimeperiodfrom2017–2032includingmeetingArizona’sEEStandard,whichconcludesin2020.TEPpreparedamonthlyenergyandpeakreductionforecastsforallyearsintheIRPplanningperiod.Thesavingsweredistributedbasedontheactualhourlyshapeofallhistoricalmeasuresinstalledfrom2011through2015andarecarriedforwardfortheplanningperiod.CostdispatchmodelingusingthisshapewillapproximatetheimpactsofEEsavingsontheactualsystemload.Inaddition,TEPpreparedanhourlysavingsdistributionbasedontheimpactsofEEin2015andcomparedEEsavingsdistributiontotheshapedistributionoftheactualTEPsystemloadfor2015.
InordertointegratethehourlysavingsimpactofTEP’sportfolioofDSMprogramsinto15‐yearplanninghorizon,TEPdeterminedthehourlysavingsofeachindividualEEmeasuresandthenaggregatedthemattheportfolio‐levelbycustomerrateclass.Thehourlysavingsresolutioncanbesummedintomonthlyenergyandusedtofindpeakdemandsavings.
TEPconsideredseveralavailableresourcesandoptionsfordeterminingEEmeasurehourlylevelsavingsdata.Oneoptionwastoconductlong‐termend‐usemeteringandanalysisforthemeasuresinstalledat
7%
34%
47%
12%
Behavoiral Commercial Residential Utility Improvement
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customers’premises,whichwouldbemulti‐yearprojectsandverycostly.Anotheroptionwastoutilizedatamadeavailablefromnationalandotherstate‐levelfundedmulti‐yearstudiesandresearchthatincorporatedbestpracticesfordetermininghourlylevelmeasuresavings.TEPfoundthislatteroptiontobemoreprudentgiventhetimesensitivityandexpense.
TEPreliedupon8,760hourlysavingsloadshapestakenfromwidelyreferencedandrecognizedindustrysourcesforindividualEEmeasuresthatcomprisedeachparticularDSMprogram.Thesesourcesinclude:
California’sDatabaseforEnergyEfficientResources(DEER),whichisdevelopedbytheCaliforniaPublicUtilitiesCommission
California’sCommercialEnd‐UseSurvey(CEUS),whichwaspreparedbyItron,Inc.fortheCaliforniaEnergyCommissionincooperationwithCalifornia’sinvestor‐ownedutilities(i.e.,PacificGasandElectric,SanDiegoGasandElectric,SouthernCaliforniaEdison,SouthernCaliforniaGasCompany),andtheSacramentoMunicipalUtilitiesDistrict
BuildingAmerica–NationalResidentialEfficiencyMeasuresDatabase,whichisdevelopedbytheNationalRenewableEnergyLaboratory(NREL)withsupportfromtheU.S.DepartmentofEnergy(DOE)
Theseloadshapesweredevelopedthroughextensivebuildingend‐usemeteringandenergysimulationmodelingandwerenormalizedforhistoricalweatherconditionsandpatternsapplicabletoparticularclimateregions.Theloadshapesselectedfromthesesourcesaddresstheresidentialandnon‐residentialsectorsseparatelywithdifferentbuildingend‐usesthatrelatetotheEEmeasuresintheprograms.TEPselectedtheloadshapescarefullytoaccountforseasonalordiurnalvariationsinoperationalorend‐usepatternsfordifferentmeasures.TEPutilizedtheCalifornia‐basedDEERandCEUSloadshapesonlyasameanstodevelop8,760hourlyshapingontheEEmeasures.TheannualsavingsvaluesthatwillbeattributedtothesehourlysavingsloadshapearecalculatedspecificallyforTEP’sprogramsthroughprogramdesignandthird‐partyMeasurement,Evaluation,andResearch(MER).
Sincetheweather‐sensitiveEEmeasureloadshapesfromDEERandCEUSweredevelopedforCalifornia,TEPhadtoapplyadjustmentfactorsforitsserviceterritoryinArizona.First,forweathercalibrationpurposes,TEPutilizedtypicalmeteorologicalyear(TMY3)weatherdataforTucson,ArizonaandcomparedthattotheloadshapesdevelopedforCalifornia’sClimateZone15,whichistheclosestgeographicallyaswellasthemostcompatibleweatherregioninCaliforniatoTEP’sserviceterritory,andthenadjustedhourlyindexedvaluesasneeded.Thisapproachofweathercalibrationensuresthatweather‐sensitiveEEmeasuresthathaveseasonalordiurnalvariationsinenergysavingswouldhavetheappropriateeffectforTEP’sclimateregion.Furthermore,theTMY3weatherdatasets,whichweredevelopedbyNRELwithsupportfromDOE,arebasedonclimatedatafromaperiodfrom1991‐2005.Utilizingrecenthistoricalweatherdatahelpstoweathernormalizethesavingseffectsofweather‐sensitiveEEmeasuresatthehourlylevel.TheBuildingAmericadatabaseincludedmeasuresavingsloadshapesdevelopedutilizingTMY3weatherdataforTucson;therefore,nosuchweatheradjustmentswereneededfortheseloadshapes.
Afterdeterminingthemeasureshapes,TEPappliedameasure’sannualenergysavingsvaluewiththeappropriatemeasureend‐useloadshapetodetermineauniquemeasure‐specificsavingsloadshape.TEPwasthenabletoaggregatethehourlysavingsvalueforallgivenmeasuresinaparticularprogramtodetermineaprogram‐levelsavingsloadshape.Fromthesecompositeprogram‐levelsavingsloadshape,TEPwasabletoapplyitsdefinitionofpeakperiodstodeterminecoincidentandnon‐coincidentpeakdemandsavings.
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WhilethefocusofthisIRPisonfutureresourcesplanning,TEPalsoacknowledgestheimportanceofattributingverifiedsavingsvaluesforindividualmeasuresandprogramsfromMERresults.TEPhasretainedtheservicesofNaviganttoserveasthethird‐partyevaluationcontractorforTEP’sportfolioofDSMprograms.NavigantverifiesenergysavingsforprogramsutilizingrigorousindustryevaluationstandardsandprotocolsoutlinedbytheInternationalPerformanceMeasurementandVerificationProtocol(IPMVP),FederalEnergyManagementPlan(FEMP)andtheUniformMethodsProject(UMP)oftheNREL.
LoadShapeResultsThehourlysavingsdeterminedthroughtheMethodologySectionaboveallowedTEPtoforecastannualenergyandpeakdemandsavingsforTEP’s2017portfolioofDSMprogramsbothtodeterminea15‐yearoutlookonresourcesandtomeettheEEStandardsavingstargetsby2020.
Toestimatethelevelofcost‐effectiveenergysavingsbeyond2020,TEPreliedonareportpublishedbytheEPRItitled“U.S.EnergyEfficiencyPotentialThrough2035”.FurtherdetailsonTEP’sassumptionsforfutureEEareincludedinChapter10.
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Chart29showstheEEannualsavings(MWh)requiredtomeettheStandard(includingcredits)through2020,andthecorrespondingestimatedactualreductioninretailsalesthrough2032.
Chart29–EEAnnualEnergyGoals(TheStandard)vs.EPRIEstimatedRetailSalesReduction(MWh)
InordertoevaluateEEasaresourceforreplacementofgenerationinthecontextoftheIRP,thespecifictypesofmeasuresbeingimplementedaremodeled,likeotherresourcesagainsttheforecastedsystemload.ModelingEEmeasuresasaresourceinTEP’scostproductionmodelwillprovideamoreaccurateindicationofthepotentialcostsavingsassociatedwiththesemeasures,throughdisplacingenergy(i.e.fuel)orcapacityfromconventionalresources.Usingtheseresults,TEPcantargetmeasuresthatcoincidewithhighcostresourcesorthesystempeaks,bothdailyandannually.Chart30providesasampleofhowcurrentEEmeasuresinteractwithTEP’ssystemloads.
‐
50,000
100,000
150,000
200,000
250,000
2017 2020 2023 2026 2029 2032
Annual Energy Efficiency Targets (MWh)
Tracking to Standard Retail Sales Reduction
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Chart30–TEP’sTypicalDaySummerLoadShapevs.CumulativeEELoadShape
Tucson’sclimatehasagreatimpactonthesystem’sgenerationneeds.Asexpected,TEPisasummerpeakingutility,generallyexperiencingitsgreatestdemandoccurringinJuly.AsshownChart30thecumulativeimpactofEEforTEPin2015peakedduringthe8:00PM‐12:00AMtimeframe.However,theTEPsystemloadpeakisbetween1‐8PM.Inordertotrulyreplacegenerationneeds,EEtargetsandgoalswouldneedtofocusmoreontheinstallationofEEmeasuresthatcoincidewiththesystempeak.Chart30depictstheforecastedcumulativeannualpeakdemandsavingsforTEP’sportfolioofprogramsthrough2032,basedontheEEshapederivedfrom2015data.
0.000%
0.005%
0.010%
0.015%
0.020%
0.025%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Percent of Hourly Load
Hour of the Day
Typical Summer Day Load Shape
Typical Summer Energy Efficiency (Negative Load Shape)
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EnergyEfficiencyTechnologySummary
Technology Wide range of technologies and customer incentives. Technologies range from customer installed high efficiency electrical devices to design and construction of high efficiency building standards.
Characteristics TEP offers a variety of EE programs designed for both the residential and commercial customers. The primary objective of these programs is to provide customers with consumption based information and financial incentives to reduce overall energy consumption. EE programs give customers opportunities to reduce their monthly electric bills by providing incentives for customers to invest in high efficiency technologies such as home appliances, compact fluorescent lighting, pumps, motors and HVAC equipment. Other programs provide incentives for builders to design and construct both residential and commercial buildings based on higher EE construction standards.
Benefits Lowest cost resource. Potential environmental benefits include reductions in air emissions and water consumption. The effect of EE reduces system demand and losses and may contribute to deferring the need to construct new power plants and transmission lines.
Risks
Challenges include customer participation, market potential and sustained load reduction.
Resource Lead Time 1‐2 Years
ThecumulativeannualpeakdemandsavingsfromTEP’sDSMprogramsdoesreducethesystempeakwiththeincreaseincumulativeannualsavingstargetgoalsintheStandardandbeyond.
TheimplementationofTEP’sDSMprogramswillhelpTEPmeetthecumulativeannualsavingstargetsintheEEStandardandincorporateEEintoits15‐yearresourceplanningtime‐frame.EEisanimportantpartofTEP’sfutureresourcemix.Furthermore,stratifyingmeasure‐levelenergysavingsonanhourlylevelwillhelptheplanningprocesstoidentifyEEmeasuresandprogramsthatbestfitTEP’sresourceneeds.TEPwillcontinuetomonitorDSMprogramactivityandresearchEEindustrybestpracticestodeterminethemostcost‐effectiveportfolioofprogramsthatprovidesEEsolutionstoitscustomersandincorporatesDSMinvestmentsinTEP’sresourceplanning.
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Distributed Energy Resources
DistributedEnergyResources(DER)includeDistributedGeneration(DG),whicharesmall‐scale,typicallyrenewableresourcesoftensitedonutilitycustomerpremises.TheArizonaRESrequiresthataportionofrenewableenergyrequirementsbeobtainedfromresidentialandcommercialDGsystems.TherequiredpercentageofDGintheArizonaRESTis30%ofthetotalrenewableenergyrequirement.ThissectionprovidesabriefoverviewonbothresidentialPVsystemsandsolarhotwaterheatingtechnologies.
Figure15–TypicalResidentialDistributedPVSystems
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SolarPhotovoltaicDGSystemsOverviewSolarPVDGsystemsconvertsunlightdirectlyintoelectricity.AresidentialPVpowersystemenablesahomeownertogeneratesomeoralloftheirdailyelectricalenergyneedsontheirrooforsometimesusingaground‐mountedsystem.ThemostcommontypeofPVsystemtodayisreferredtoasa“gridtied”system,whichparallelstheutilitysystemandreferencestheutilityvoltageandfrequencytoinsurethatthePVinverter(s)areoperatingproperly.WithagridtiedPVsystem,thePVsystemremainsconnectedtotheutilitygridsothatpowerandenergycanbedrawnfromtheutilityifthePVsystemcannotmeetthedemand.PVsystemsmayalsoincludestand‐alonebatterybackuporUninterruptiblePowerSupply(UPS)capabilitytoprovidepowerandenergyintheeventofautilityoutage.Todaythereareanewgenerationofbatterysystemsthatarecapableofgridtiedoperation,andthiswillallowsignificantoperationalbenefitsinthefutureandmayallowgridsupportoperationsasbatteriescansupplementtheutilitysupplyduringpeakdemandtimes.
Everyhomeandbusinessthatisconnectedtotheelectricutilityhasamainservicepanel,anelectricalmeter,andalinetotheutilitygrid(aservicedrop).Powerflowsfromthegridthroughthemetertotheservicepanelwhereitisdistributedthroughoutthehomeorbusiness.WhenPVgenerationisaddedtoabuilding,additionalpowerfromthatsourcewillalsoflowtothemainservicepanelandisdistributedthroughoutthebuilding.Intheeventofautilityoutage,agridtiedPVsystemisdesignedtoshutdownuntilutilitypowerisrestored.Asimplegrid‐tiedPVsystemdiagramisshowbelow:
Figure16–ResidentialPVSystemSchematic
TypicalSystemComponents:
PVArray:PVsystemsusesolarcellstoconvertsunlightdirectlyintoelectricity.Themostcommonlyusedsolarcellsaremadefromhighlypurifiedcrystallinesilicon.GroupsofsolarcellsarepackagedintoPVmodules,whicharesealedtoprotectthecellsfromtheenvironment.Modulesarewiredtogetherinseriesandparallelcombinationstomeetthevoltage,current,andpowerrequirementsofthePVsystem.ThisgroupingisreferredtoasaPVarray,andthePVarrayproducesDCpowerwhichisthenconvertedtoACpowerbyaninverter.PVmodulestypicallyrangeinsizefrom5‐to‐25squarefeetandweighabout3‐4lbs./ft2.
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BalanceofSystem(BOS):TheremainderofthePVsystemcomponents,asidefromthePVmodules,iscalledtheBalance‐of‐System,orBOS.BOSincludesmountinghardwareandwiringsystemsusedtointegratethesolarmodulesintothestructuralandelectricalsystemsofthehomeorbusiness.ThewiringsystemsmayincludedisconnectsfortheDCandACsidesoftheinverter(moststringinvertershaveACandDCdisconnectsintegratedintothedevice),ground‐faultprotection,andovercurrentprotectionforthesolarmodules.ManyPVsystemsincludeacircuitcombinertointegratestringsofPVmodules.Someinvertersincludethisfusingandcombiningfunctionwithintheinverterenclosure.Micro‐invertershavebecomecommoninthePVarenaoverthepastfewyears,andthePVmoduleissometimescalledan“ACModule”.Withmicro‐inverters,theDCtoACconversionisachievedoneachmodule,typicallyatthe300wattpowerlevel.PVsystemsthatutilizemicro‐invertershavenoDCdisconnects,nocombiners,andthedesigncanlookquitedifferentthanthe“typicalgridtiedPVsystem”shownbelow.Benefitsofmicro‐invertersincludethefactthatoneinverterfailurewillnothaveasignificantimpactonenergyproduction,shadingofoneorseveralmodulesmaynotbeasignificantproblemasitiswithtraditionalPVsystems,andthewiringofthePVsystemrequiresnoDCcomponents,butonlyACwiring,whichisthetypicalwiringthatelectriciansareaccustomedtoworkingon,installingandservicing.
ConfigurationofTypicalPVSystemsFigure17–TypicalGridTiedPVSystem
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SolarHotWaterHeatersSolarHotWater(SHW)heatingsystemsincludestoragetanksandsolarcollectors.TherearetwotypesofSHWsystems:1)active,whichhavecirculatingpumpsandcontrols,and2)passive,whichdon'thavecirculatingpumpsandcontrols.Mostsolarwaterheatersrequireawell‐insulatedstoragetank.Solarstoragetankshaveanadditionaloutletandinletconnectedtoandfromthecollector.Intwo‐tankheatingsystems,thesolarwaterheaterpreheatswaterbeforeitenterstheconventionalwaterheater.Inone‐tanksystems,theback‐upheateriscombinedwiththesolarstorageinonetank.Solarwaterheatingsystemsaredescribedusingfourcommonterms:
Activesystems:usepumpstomovefluidsthroughthesystem Passivesystems:relyonthebuoyancyofwarmwaterandgravitytomovefluidsthroughthesystemwithouttheneedforpumps
Directsystems:heatwaterthatfeedsdirectlyintothedomestichotwatersystem.Directsystemsalwaysusepotablewaterastheheattransferfluid.Inareaswithhighlevelsofdissolvedminerals,carbondioxide,orotherwaterqualityproblems,thesesystemsmayrequirewatersoftenersorotherwaterqualitymitigation
Indirectsystems:haveindependentpipinganduseheatexchangerstoisolatesolarfluidsfrompotabledomestichotwater.Systemsusingpropyleneglycolmustuseheatexchangers,however,watermayalsobeusedinindirectsystemswithheatexchangers
Figure18‐TypicalSolarHotWaterHeaterSystem
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Thefollowingsystemdescriptionsincludeexampleillustrationsofsystemdesigns.Inpractice,systemsmaybeconfiguredinmanydifferentways.
IntegralCollectorStorage(ICS)PassiveDirectSystemICSsystemsarebothpassiveanddirect.Thetankandcollectorarecombined.PotablewaterisheatedandstoredintheICScollector.Ashotwaterisused,coldwaterfillsthecollectorfromthebottom.Thesesystemsworkbestwhenhotwaterdemandsareinthelateafternoonandevening.Heatgainedduringthedaymaybelostatnightifnotused,anddependsonlocalweatherconditions.Acheckvalve,orthearrangementofpiperuns,stopsreversethermosiphoningwhereheatislostfromthedomestichotwatersystemtothenightsky.Thesesystemsaretheleastexpensiveofsolarthermalsystemdesignsandoneofthemostpopulartypesofdesignsontheworldmarket.However,theymayonlybeusedinareasthatdonotexperienceregularhardfreezes.ICScollectorshavemoredepththanflatplatecollectorstoaccommodateintegraltanks.Somebuildershaveplacedthesecollectorsdirectlyontheroofdeckandbuiltuparoundthemwithparapetsortileroofsystems.
ThermosiphonPassiveDirectSystemThermosiphonsystemsarepassivewithastoragetanklocatedhigherthanthesolarcollector,andsomesystemsmaycomepackagedwithtankspre‐mountedtocollectors.Inthesesystemsthetanksitsontheoutsideoftheroof,whileothersystemshavetankslocatedinsideatticspacesabovethecollectors.Thesesystemsaredirect,usingpotablewaterastheheattransferfluid.Waterpipesandtankscontainingwatermustbeprotectedfromfreezingorlocatedinaconditionedspaceinclimatesthatfreeze.
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TypicalInstallationsIngeneral,SHWsystemsaremountedonasouth‐facingroof(inthenorthernhemisphere),oradjacenttothehouseatgroundlevel.IneithercasetheSHWsystemisgenerallyremotefromthebackupandsupplementarystoragewaterheateranditstank.Thisdistance,ortheamountoffinishedspacetheloopmusttraverseinaretrofitinstallation,impactsthemethodandcostofinstallation.Themostfundamentaldistinctionisbetweensystemsthatmustresistfreezing(closed‐loopsystems)andthoselocatedinclimateswherefreezingisveryrarelysevereenoughtothreatentheintegrityofthesystem(open‐loopsystems).Becauseclosed‐loopsystemsrequireeitherdrain‐backprovisionsoraseparatefreeze‐protectedlooptoindirectlyheatwaterinthestoragetank,theygenerallyhaveactivecomponents(pumps)andaremorecomplex.
DistributedGenerationTechnologySummary
Technology and Fuel Distributed Generation; Predominantly Rooftop Solar PV
Characteristics PV cells convert sunlight directly into electricity. Cells are arranged in modules, and modules into arrays, which can be mounted in a fixed position or onto structures that enable them to track the sun.
Benefits
O&M costs are very low and not subject to future fuel prices. Emits no air pollution and consumes no water. Energy generally produced during high‐demand periods. Scalability provides greater cost control and cost risk mitigation.
Risks
Unless coupled with energy storage, solar energy is only available during daylight hours and is subject to variable output during the day, depending on cloud cover.
Construction Lead Time
0.75 years
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CHAPTER 6
LOAD SERVING RESOURCES
RenewableEnergyTheresourceplanningteamreliedonanumberofindustryexpertssuchasBlackandVeatch,UnitedStatesDepartmentofEnergy,andtheNationalRenewableEnergyLaboratorytohelpdeveloptheoperationalandcostassumptionsforrenewabletechnologies.Thischapterprovidesanoverviewontheassumptionsusedintheresourceplanningevaluations.Forthe2017resourceplanthefollowingrenewabletechnologieswereconsidered:
Solar–Photovoltaic(PV) Solar‐ConcentratingPVTechnology(CPV) Solar‐ConcentratingSolarPowerTechnology(CSP) WindTurbines Bio‐Resources
Renewableresourceassumptionswerebasedonthefollowingdatasources:
1. DOE,EnergyEfficiency&RenewableEnergy,SunShotInitiativeWebsitehttp://www1.eere.energy.gov/solar/sunshot/https://energy.gov/eere/sunshot/about‐sunshot‐initiative
2. DOE,ElectricityAdvisoryCommitteeReportsandmeetings,news,etc.through2016https://energy.gov/oe/services/electricity‐advisory‐committee‐eac/electricity‐advisory‐committee‐2016‐meetings
3. NRELWebsitehttp://www.nrel.gov/
4. PACEGlobalInsights
5. TEP’scompetitiveprocurementprocessandon‐goingR&Defforts.
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SolarPVTechnologySolarPVcellsconvertsunlightdirectlyintoelectricity.ThesePVcellsarethebuildingblocksofPVmodules,orpanels,andthesemodulesarethebuildingblocksforaPVarray,whichcanproducekilowattstomegawattsofpower.
PVgetsitsnamefromtheprocessofconvertinglight(photons)toelectricity(voltageandcurrent),whichiscalledthe PVeffect.ThePVeffectwasfirstobservedin183920byAlexandreEdmondBecquerel,andprovenwiththefirstpracticalsiliconsolarcellin1954,whenscientistsatBellLabsdiscoveredthatsilicon(anelementfoundinsand)createdanelectricchargewhenexposedtosunlight.Soonafter,solarcellswereusedtopowerspacesatellitesandeventuallypoweredsmalleritemslikecalculatorsandwatches.Today,hundredsofthousandsofAmericans,andmillionsacrosstheworldpowertheirhomesandbusinesseswithgridtied21solarPVsystems.UtilitycompaniesarealsousingPVtechnologyforlargepowerstations,manyinthe100sofmegawattsduringpeakpowertimes.
Traditionalsolarcellsmadefromsiliconaretypicallyflat‐plate,andgenerallyarethemostefficient22.Second‐generationsolarcellsarecalledthin‐filmsolarcellsbecausetheyaremadefromamorphoussiliconornon‐siliconmaterialssuchascadmiumtelluride.Thinfilmsolarcellsuselayersofsemiconductormaterialsonlyafewmicrometersthick.Becauseoftheirflexibility,thinfilmsolarcellscandoubleasrooftopshinglesandtiles,buildingfacades,ortheglazingforwindows.AllofthesebuildingmaterialtechnologiesaregenerallyreferredtoasBuildingIntegratedPhotovoltaic.
Next‐generationsolarcellsarebeingmadefromvarietyofmaterialsotherthansilicon,includingsolarinksthatmayuseconventionalprintingtechnologies,solardyes,andconductiveplastics.SomesolarPVcellsuseplasticlensesormirrorstoconcentratesunlightontoaverysmallpieceofhighefficiencyPVmaterial.ThePVmaterialisgenerallymoreexpensive,butbecausesolittleisneeded,thesystemsareseenasbecomingcosteffectiveforusebyutilitiesandindustry.However,becausethelensesmustbepointedatthesun,theuseofconcentratingcollectorsislimitedtothesunniestpartsofthecountrythatincludeCalifornia,Nevada,andArizona.
Solarmodulesandarraysusedtopowerhomesandbusinessesaretypicallymadefromsolarcellscombinedintomodulesthatholdabout40cells.Atypicalhomewillhaveanarrayof10to20solarpanelstopowerthehome,withanaverageresidentialPVsystemsizeof5kW23.Themodulesareoftenmountedatafixedanglefacingsouth,ortheycanbemountedonatrackingdevicethatfollowsthesun,allowingthemtocapturethemostsunlight.Forlargeelectricutilityorindustrialapplications,hundredsofsolararraysareinterconnectedtoformalargeutility‐scalePVsystemofteninthe10sor100sofMWofnameplatecapacity.
20https://www1.eere.energy.gov/solar/pdfs/solar_timeline.pdf21GridTiedPVsystemsarePVsystemsthatareconnectedinparalleltotheelectricutilitygrid,wheresomeoralloftheenergyisconsumedlocallyandsomeoralloftheenergyissentbacktotheutilitysystemforusebyotherconsumers22Formoreonefficiencyseehttp://www.nrel.gov/pv/materials‐devices.html23http://www.seia.org/research‐resources/solar‐photovoltaic‐technology
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SolarResourceCharacteristicsSeveralformsofsolarpowertechnologyareavailabletodayinordertocaptureenergyfromthesun.Oneform,solarPV,convertssunlightintodirectcurrentpower.Adevicecalledaninverterthenconvertsthedirectcurrentpowerintoalternatingcurrentpowertobeusedbyconsumersandtiedtotheelectricgrid.AnotherformofsolarisCSP,whereCSPuseslargereflectorsandtrackingsystemstogatherenergyfromsunlightandfocusittogenerateheat.Heatfromtheconcentratedsunlightmaybeusedtoproducesteamthatturnsaturbinegeneratortogeneratealternatingcurrentpower.SomeCSPsystemsmayheatmoltensaltsorothermaterialstobeusedafterthesungoesdown,andwhenthatpowerisneeded.Thisisanothertypeofenergystoragethatisbeingstudiedanddevelopedthroughouttheworld,andmayhelpsolvesomeofthechallengesrelatedtothediurnalnatureofthesun.
Incertainrespects,thetechnologicaldevelopmentandcommercializationofutility‐scalesolarpoweriscurrentlyatastagesimilartothatofwindpowerpriortoitsrecentperiodofrapidgrowthandwidespreadadoptionbytheelectricutilityindustry.Forexample,largeamountsofcapitalarebeinginvestedinresearch,designanddemonstrationeffortstoimprovesolarpowergeneratingtechnologiesandachieveimprovedeconomiesofscale.ExamplesincludeintensiveR&DonadvancedformsofsolarPVtechnologies,andconstructionofdemonstrationprojectsbasedonlarge‐scaleconcentratingsolargeneratingtechnology.
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PhotovoltaicSolarPowerTechnologyAsnotedabove,thetwoprimaryformsofsolarpowergeneratingtechnologiesaresolarPVandconcentratingsolarpower.PVsystemsmakeupthebulkofexistinginstalledsolargeneratingfacilities,andcanbebuiltatpracticallyanysize–fromonekilowattto100sofmegawatts.PVmodulescanbeconnectedingroupstobecomeanarray,andaPVarraycanbeconfiguredinmanydifferentlayoutsbasedontheavailablerooftoportheavailablelandtoplacethesearrays.
Source:NREL:NationalRenewableEnergyLaboratory
A single PV cell produces a small amount of power. To produce more power, cells are electrically interconnected and physically mounted to a frame to form modules, which can in turn be connected into arrays to produce yet more power. Because of this modularity, PV systems can be designed to meet many electrical requirements, both large and small. PV systems can even be designed to have battery storage systems connected, providing power and energy when it is needed or for emergencies.
Flat‐PlatePhotovoltaicArray
Source: Renewable Energy Atlas of theWest: A Guide to the Region’s Resource Potential
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Flat‐PlatePVSystemsThemostcommonPVarraydesignusesflat‐platePVmodules(sometimesreferredtoasPVpanels).ThesePVpanelscaneitherbefixedinplaceorallowedtotrackthemovementofthesun.Trackingsystems,whicharemoreexpensivetoinstallandhavehighermaintenancerequirements,canbesingleaxistrackingordualaxistracking,andgenerallyresultinasignificantincreaseinenergyproduction.
Onetypicalflat‐platemoduledesignusesasubstrateofmetal,glass,orplastictoprovidestructuralsupportintheback;anencapsulantmaterialtoprotectthecells;
andatransparentcoverofplasticorglass.Source:NREL
PVsystemsrespondtosunlightthatiseitherdirectordiffuse.Eveninclearskies,thediffusecomponentofsunlightaccountsforbetween10%and20%ofthetotalsolarradiationonahorizontalsurface.Onpartlysunnydays,upto50%ofthatradiationisdiffuse.Andoncloudydays,100%oftheradiationisdiffuse.
Illustrationofthedirectsolarradiationandtheindirect,diffuseradiationthatcontributetoaPVarray.Source:NREL
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MountingStructuresPVarraysmustbemountedonastable,durablestructurethatcansupportthearrayandwithstandwind,rain,hail,andotheradverseconditions.However,stationarystructuresaretypicallydesignedwithflat‐platesystems.ThesestructurestiltthePVarrayatafixedangledeterminedbythelatitudeofthesite,therequirementsoftheload,andtheavailabilityofsunlight.Amongthechoicesforstationarymountingstructures,rackmountingmaybethemostversatile.Itcanbeconstructedfairlyeasilyandinstalledonthegroundoronflatorslantedroofs.
Theadvantagesoffixedarraysarethattheylackmovingparts,thereisvirtuallynoneedforextraequipment,andtheyarerelativelylightweightcomparedtotrackingsystems.Thesefeaturesmakethemsuitableformanylocations,includingmostresidentialroofs.Becausethepanelsarefixedinplace,theirorientationtothesunisusuallyatananglethatprovideslessthanoptimalenergyproductionandmaximumenergyproductiontimeofday.Therefore,lessenergyperunitareaofaPVarrayiscollectedcomparedwiththatfromatrackingarray.However,thisdrawbackmustbebalancedagainstthehighercostofthetrackingsystem.Chart50illustratestheincreasedenergyproductionofasingle‐axistracking(SAT)system,whichisdependentonlocation,butcanprovideanincreaseinannualenergyproductionofupto20‐40%.
SingleAxisandDualAxisTrackingSystemsSometimes,thesolarmountingstructureisdesignedtotrackthesun.Therearetwobasickindsoftrackingstructures:one‐axisandtwo‐axis.TheSATPVsystemsaretypicallydesignedtotrackthesunfromeasttowest.Theyareusedwithflat‐platesystemsandsometimeswithconcentratorsystems.Thetwo‐axistypeisusedprimarilywithPVconcentratorsystems.Theseunitstrackthesun'sdailycourseanditsseasonalcoursebetweenthenorthernandsouthernhemispheres.Naturally,themoresophisticatedsystemsarethemoreexpensiveones,andtheyusuallyrequiremoremaintenance.
Chart31‐ComparisonofSolarPVSystems
(FixedPanelvs.SingleAxisTracking)
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1:00 AM 4:00 AM 7:00 AM 10:00 AM 1:00 PM 4:00 PM 7:00 PM 10:00 PM
% of Nam
eplate Solar PV Cap
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Solar PV (Fixed) Solar PV (Single‐Axis)
On an annual basis, single axis tracking systems provide 40%
more energy versus fixed
During summer coincident peak , a tracking system
provide 60% more capacity versus fixed
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SolarPVTechnologySummary
Technology and Fuel Solar PV Technology
Characteristics PV cells convert sunlight directly into electricity. Cells are arranged in modules, and modules into arrays, which can be mounted in a fixed position or onto structures that enable them to track the sun.
Benefits
O&M costs are very low and not subject to future fuel prices. Emits no air pollution and consumes no water. Energy generally produced during high‐demand periods. Scalability provides greater cost control and cost risk mitigation.
Risks
Unless coupled with energy storage, solar energy is only available during daylight hours and is subject to variable output during the day, depending on cloud cover.
Construction Lead Time
0.75 years
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U.S.SolarMapThismapshowsthenationalsolarPVresourcepotentialfortheU.S.,andisbasedonthemonthlyaveragedailytotalsolarresourcepotentialongridcells.Theinsolationvaluesrepresenttheresourceavailabletoaflatplatecollector,suchasaPVpanel,orientedduesouthatananglefromhorizontaltoequaltothelatitudeofthecollectorlocation.ThisistypicalpracticeforPVsysteminstallation,althoughotherorientationsarealsoused.AdditionalmapsareavailableattheNRELwebsitelocatedathttp://www.nrel.gov/gis/solar.html
Map2‐U.S.PVSolarResourceMap
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ArizonaSolarPowerMapTheGlobalHorizontalResourceofArizonamapprovidesmonthlyaverageandannualaveragedailytotalsolarresourceaveragedoversurfacecellsof0.038degreesinbothlatitudeandlongitude,ornominally4kminsize.TheinputsarebasedonthePATMOS‐Xmodelthatuseshalf‐hourlyradianceimagesinvisibleandinfraredchannelsfromtheGOESseriesofgeostationaryweathersatellites.
Map3‐GlobalHorizontalSolarResourceofArizona
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NewMexicoSolarPowerMap
TheNewMexicoNRELSolarInsolationMapisbasedonestimatesmonthlydailytotalradiation,averagedfromhourlyestimatesofdirectnormalirradianceovereightyears.TheinputsarebasedonhourlyvisibleirradiancefromtheGOESgeostationarysatellites,andmonthaverageaerosolopticaldepth,precipitablewatervapor,andozonesampledata10kmresolution.
Map4‐NewMexicoNRELSolarInsolationMap
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ConcentratingPhotovoltaics(CPV)Concentratingphotovoltaicsystemsuselensesormirrorstoconcentratesunlightontohigh‐efficiencysolarcells.Thesesolarcellsaremoreexpensivethanconventionalcellsusedforflat‐platePVsystems.However,theincreasedcellefficiencyrequireslesscellareatoproduceagivenamountofpower.
CPVtechnologyoffersthefollowingadvantages:
Potentialforsolarcellefficienciesgreaterthan40% Nomovingparts Nointerveningheattransfersurface Near‐ambienttemperatureoperation Nothermalmass;fastresponse Reductionincostsofcellsrelativetooptics Scalabletoarangeofsizes
Becauseoftheirrelativelyhighcost,CPVsystemsrequiretheuseofconcentratedsunlighttobecost‐competitivewithothersolarpoweroptions.Thus,groupssuchasNRELhavefocusedonthedevelopmentofmulti‐cellpackages(densearrays)toimproveoverallperformance,improvecooling,andinstallreliableprototypesystems.
CPVsystemsarenotincludedinTEP’slong‐termresourceplanatthistimeduetotheirhighcosts,astheyaretypicallytwotothreetimeshigherthanmoretraditionalsolarandwindresourcesonalevelizedcostbasis.Also,marketpricesandcostdataaredifficulttoobtainbecausetheCPVmarketisyoungandtherearearelativelylownumberofinstallationsandcompaniesinthefield.Recently,theCPVindustryhasstruggledtocompetewithPVprices,leadingCPVcompaniesexitingthemarket,whileothersfacechallengesinraisingthecapitalrequiredtoscale.24
CPVTechnologySummary
Technology and Fuel Concentrating Photovoltaics (CPV)
Characteristics Uses mirrors or lenses on a single‐axis or dual‐axis tracking system to concentrate sunlight onto high‐efficiency PV cells.
Benefits
Performs best in high‐sunlight regions. Efficiency is not affected by high ambient temperatures. Trackers allow for high levels of power production through the day. Less land and land disturbance required relative to conventional PV systems.
Risks
Costs are two to three times higher than more conventional solar technologies. CPV market is still young and not well developed.
Construction Lead Time
1 year
24Phillips,Simonetal.CurrentStatusofConcentratorPhotovoltaic(CPV)Technology,Version1.2,February2016.
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ConcentratingSolarPowerTechnology(CSP)ConcentratingSolarPowerisanothertypeofsolarpowergeneration,andisconsideredanidealtechnologyforwarmclimatesthatareprevalentinArizona.Concentratingsolarpowerusesmirrorstoreflectandconcentratesunlightontoreceiversthatcollectthesolarenergyandconvertitintothermalenergy.Thisthermalenergycanthenbeusedtoproduceelectricityviaasteamturbineorheatenginedrivingagenerator.Invirtuallyallapplications,CSPislargeinscale,ontheorderof100MWorlarger.Theselargesystemsaresimilarinmanyrespectstotraditionalcoal,naturalgas,ornucleargeneratorsystemsandutilizesynchronousgeneratorstoproduceelectricity.WhiletheCSPsystemsgenerallydonotoperate24/7becauseofthediurnalnatureofthesun,theydoprovidegridsupportwhentheyareoperationalbecauseofthesynchronousgeneration.ThisimportantfeatureofgridsupportisanimportanttechnicalfactorwhencomparingCSPtoPVgenerationsystemsthatutilizeinverters,whichdonotcurrentlyprovideinertiatothegrid.
TherearethreegenericCSPsystemarchitectures:line‐focus(troughsystems),point‐focuscentralreceiver(powertowers),andpoint‐focusdistributedreceiver(dish‐enginesystems).
PowerTowerCSPSystemsPowertowersystemsconsistofafieldoflarge,nearlyflatmirrorassemblies,knownasheliostats,whichtrackthesunandfocusthelightontoareceiveratthetopofatower.Inatypicalconfiguration,aheat‐transferfluid,suchaswater,waterandglycolmixtures,ormoltennitratesaltsispumpedthroughthereceiver,andusedtogeneratesteamtopoweraconventionalsteam‐turbinepowercyclegeneratingelectricity.Insomesystems,excessthermalenergycanbestoredduringdaylighthourstoprovideelectricityattimeswhenthesunisnotavailableandatnight.Anadvantageofpowertowersystemsoverlinearconcentratorsystemsisthathighertemperaturescanbeachievedintheworkingfluid,leadingtohigherefficienciesandlower‐costelectricity.Sunlightcanbeutilizedfromalargearea,andconcentratedonasmallareaonthetower,andthatapproachreducesthedistancethatheatcapturingfluidsmusttraveltogeneratepowerandenergy.
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CSPTechnologySummaryTechnologyandFuel ConcentratingSolarPowerTechnology(CSP)
Characteristics
Mirrorsconcentratesunlightontoafluidthatcangeneratesteamforelectricgenerators.
Benefits
Electricgeneratorscanbesynchronizedtothegrid,therebyprovidinginertia.ForsomeCSPtechnologies,thermalstoragecanbeusedtoaddressintermittencyissuesandprovidepoweraftersunset.
Risks
Costsaretwotothreetimeshigherthanmoreconventionalsolartechnologies.
ConstructionLeadTime
4to5years
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IvanpahSolarElectricGeneratingStation
Figure19‐Figure8‐IvanpahSolarElectricGeneratingStation(392MW)
TheIvanpahSolarElectricGeneratingStationislocatedinIvanpahDryLake,Calif.,approximately40milessouthwestofLasVegas.BrightSourcebegandevelopmentin2006,andconstructioncommencedinOctober2010,ledbyengineering,procurement,andconstructionpartnerBechtel.ThestationwasfirstconnectedtothegridinSeptember2013andwentintocommercialoperationinlate2013.Thestationiscomprisedofthreeseparateunitsandhaslong‐termPPAsinplacewithPacificGas&Electric(Units1and3)andSouthernCaliforniaEdison(Unit2).Image
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TheIvanpahSolarElectricGeneratingSystemiscomprisedofthreeseparateunitswithatotalcapacityof392MW.IvanpahisajointeffortbetweenNRGEnergy,Google,Bechtel,andBrightSourceEnergy.Thestationusesover300,000software‐controlledheliostatsthatconcentratesunlightontothree459‐foottowers.Fourtypesofheliostatsareuseddependingonthedistancefromthetower;thefurthestoutaremorethanhalfamileaway.Theheliostatsarecapableofwithstanding85‐mphwinds.
Eachtowersupportsa2,100‐tonboilerthatdirectssteamintoaturbinegeneratoratgroundlevel.Naturalgasisusedtowarmtheboilerupfromacoldstart,butinnormaluse,itretainsenoughheatfromthepreviousdaytostartuponsunlightalone.A110‐toncounterweightiscontinuallyrepositionedtokeepthetowerstable.Theconcentratedsunlightgeneratessteaminthetower‐topboilers.Thefacilityreliesonair‐cooledcondenserstocondensetheturbineexhaust,reducingwaterconsumptionbyasmuchas95%lessthanawet‐cooledthermalplant.Theplant’sonlywaterrequirementsareboilermakeupwaterandforcleaning,andthewaterisobtainedfromtwowellsonthesite.
IvanpahComputerControlledHeliostats IvanpahSolarReceiverandCondensers
OneofThree130MWSolarPower CloseupofSolarReceiver
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Ivanpah’s$2.2billioncostwassupportedby$1.6billioninloanguaranteesfromtheDOE’sLoanProgramsOffice25(LPO).Theplantisjustaportionofthe2.8GWofLPO‐financedlarge‐scalesolar(CSPandPV)thatiscurrentlyoperatingorunderconstruction.TheLPOcurrentlyoverseesaportfolioofmorethan$30billioninloans,loanguarantees,andcommitmentsthatsupportmorethan30closedandcommittedprojects.LPO‐supportedfacilitiesincludeoneoftheworld’slargestwindfarmsaswellasseveraloftheworld’slargestsolargenerationandthermalenergystoragesystems.
StirlingEngineDishTechnology
ThesolarStirlingEngineiswellbeyondtheresearchanddevelopmentphase,withmorethan20yearsofrecordedoperatinghistory.TheStirlingtechnologyisbasedonanelectricalsolardishsystem,whichconsistsofauniqueradialsolarconcentratordishstructurethatsupportsanarrayofcurvedglassmirrorfacets,designedtoautomaticallytrackthesun,collectandconcentratesolarenergyontoaPowerConversionUnit(PCU).ThePCUiscoupledwith,andpoweredby,aSESStirlingenginethatgeneratesgrid‐qualityelectricity.
Figure20‐StirlingEngineDish
25https://energy.gov/sites/prod/files/2014/11/f19/DOE‐LPO‐Financial%20Performance%20November%202014.pdf
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TheconversionprocessinthePCUinvolvesaclosed‐cycle,high‐efficiencyfour‐cylinder,reciprocatingSolarStirlingEngineutilizinganinternalworkingfluidthatisrecycledthroughtheengine.TheSolarStirlingEngineoperateswithheatinputfromthesunthatisfocusedbythedishassemblymirrorsontothePCU’ssolarreceivertubesthatcontainhydrogengas.ThePCUsolarreceiverisanexternalheatexchangerthatabsorbstheincomingsolarthermalenergy.Thisheatsandpressurizesthegasintheheatexchangertubing,andthisgasinturnpowersthesolarStirlingEngine.
Figure21‐SolarParabolicDish‐EngineSystem‐25kW(NREL)
AgeneratorisconnectedtothesolarStirlingEngine,andwasteheatfromtheengineistransferredtotheambientairviaaradiatorsystem.Thegasiscooledbyaradiatorsystemandiscontinuallyrecycledwithintheengineduringthepowercycle.Theconversionprocessdoesnotconsumewater,asisrequiredbymostthermal‐poweredgeneratingsystems.
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ParabolicTroughPowerPlants(PTPP)26APTPPsystemistypicallyorientedinanorth‐southdirectionandtracksthesunfromeasttowestfocusingsolarenergyonalongtubularreceiver.Theworkingfluidinatroughsystemisusuallyasyntheticoilthatisheatedtoapproximately390°C(734°F).ThehotoilisusedtogeneratesteamforuseinaconventionalRankinecyclesteamturbinesystem.ThepredominantCSPsystemsinoperationintheUnitedStatesarelinearconcentratorsusingparabolictroughcollectors.Inaddition,troughsystemscanbehybridized(naturalgasco‐firing)ormayusethermalstorageinordertodispatchpowerwhenmostvaluabletoelectricutilities,whichisusuallyduringpeakloadtimesduringthelateafternoons.
26Formoreinformation,seehttps://www.mtholyoke.edu/~wang30y/csp/PTPP.html
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Figure22‐HarperLakeSolarCSPProject(NREL)
Figure23‐SchematicofaParabolicTroughPowerPlant(PTPP)withthermalstorage.
(MountHolyokeCollege)
Source:https://www.mtholyoke.edu/~wang30y/csp/PTPP.html
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ParabolicTroughPowerPlantTechnologyAsshowninthePTPPexamplebelow,thesolartroughfieldheatssynthetictransferoilthatisusedtogeneratesuperheated,high‐pressuresteamthatisdeliveredtoasteamturbine.Thisturbinepowersanelectricalgenerator,creatingelectricitythatcanbedeliveredtothebulkpowersystemforutilityuse.
Figure24‐SolarPTPPSchematic
MojavePTPPProjectTheMojaveSolarProjectconsistsoftwo125MWparabolictroughpowerplantsforatotalof250MW.TheMojaveSolartechnologyusesmirrorstoconcentratethethermalenergyofthesuntodriveaconventionalsteamturbine.Theplantislocatedabout20milesfromBarstow,California,andwascompletedinDecemberof2014byAbengoa.Abengoasecureda$1.2billionloanguaranteefromtheUSDOE.PacificGas&Electrichasagreedtopurchasethepowergeneratedfromthesolarthermalfacilityaspartofa25yearPPAwithAbengoaSolar.
Figure25‐MohaveSolarCollectors
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HybridizedConfigurationwithNaturalGasCo‐FiringISCCtechnologycombinesthebenefitsofsolarenergywiththebenefitsofacombinedcycle.Theoperationofasolarcombinedhybridplantissimilartoaconventionalcombinedcycleplant.Thefuel(preferablynaturalgas)isburnedgenerallyonacombustionchamberofagasturbine.Theheatcomingfromthesolarfieldisaddedtoescapegasesthataredirectedtotheheatretriever,resultinginincreasedsteamgenerationand,consequently,anincreaseofelectricityproductionfromthesteamturbine.
Figure26‐SolarCSPHybridwithNaturalGasCo‐Firing
StorageConfigurationbasedonTwo‐TankMoltenSaltSystemConcentratingsolarpowertechnologiesarebeingenhancedwiththeadditionofenergystoragesystems.Withtheuseofathermalenergystoragesystem,solarplantsareabletoproduceenergyoutputduringnon‐daylighthours.Oneofthematerialsbeingusedtostorethesun’sthermalcapacitanceismolten‐nitratesalt.Inthisdesignconfiguration,largeinsulatedtanksfilledwithmoltensaltareusedwithPTPPtechnologytostoretheheatfromthesynthetictransferoil.Thisstoredheatisusedtoimprovethedispatchabilityofthesolarresourcebyprovidingpowerafterthesungoesdown.Systemsemployingthisstoragetechnologymaybenefitfromthestoredheatandproducepowerfor6‐8hoursaftersundown.
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Figure27‐SolarCSPwithThermalStorage
SolanaGeneratingStationSolanasolarthermalplant,aPTPPconcentratingsolarpowerCSPplantandthefirstintheU.S.withthermalenergystoragebegancommercialoperationsinOctober2013.27
The280‐MWplant,nearGilaBendinArizona,employsmoltensalttostoreaboutsixhoursofthermalenergyatfullpower,allowingthefacilitytocontinueoperatingduringperiodsofpeakeveningdemand.Theadditionofthermalstoragealsoallowsthefacilitytosmoothoutanyintermittencyingenerationasaresultofcloudyperiodsduringtheday,whichallowstheplanttooperatemorelikeatraditionalthermalgeneratingsystem.
Thethree‐squaremilefacilityemploys2,700parabolictroughmirrorsandapairof140‐MWsteamturbines.Heatedoilfromthemirrorsisusedtoheatmoltensaltinsixpairsofhotandcoldtankswithacapacityof125,000metrictons.
SolanasellsallitspowertoArizonaPublicService,thestate’slargestutility,througha30‐yearPPA.Thefacilitycostapproximately$2billiontobuild,andwasfinancedinpartwitha$1.45billionloanguaranteefromtheDepartmentofEnergy.
27Formoreinformationseehttps://www.nrel.gov/csp/solarpaces/project_detail.cfm/projectID=23
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AerialViewofSolanaSolarField
Solana’sPowerBlocks
ParabolicTroughCollector
ThermalEnergyStorageTanks
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WindPower
ResourceCharacteristicsWindpoweristheprocessofmechanicallyharnessingkineticenergyfromthewindandconvertingitintoelectricity.Themostcommonformofutility‐scalewindtechnologyusesahorizontal‐axisrotorwithturbinebladestoturnanelectricgeneratormountedatthetopofatalltower.Forutility‐scalewindpowerproduction,dozensofwindturbinesmaybegroupedtogetheratawindfarmproject.Powergeneratedbythewindturbinesiscollectedatasubstationwheretransformersincreasethevoltageandthepoweristhenfedintothetransmissionsystem.
Becauseairhaslowmass,thewinditselfhaslowenergydensity.Theamountofwindpowerthatcanbeproducedatagivenprojectsiteisdependentonthestrengthandfrequencyofwind.Windvelocitydeterminesquantityofpowerthatcanbeproduced.Forexample,adoublingofwindspeedallowsroughlyeighttimesasmuchpowertobeproduced.
Overthelasttwentyyears,theuseofwindpowerhasincreasedrapidly,makingitthepredominantformofnewrenewablegenerationresource,withmanylarge‐scaleinstallationsaroundtheworld.Majoradvancesinwindpowertechnologywereachievedinthe1990sand2000s,allowingmuchlargerturbinestobedeveloped.Forexample,windturbineswithacapacityof1.5megawattsto5megawattsarenowcommonandwindturbineslargerthan8megawattsarebeingdeveloped.Thishascreatedeconomiesofscale,drivingdowntheunitcostofenergyfromwindpowerresources.
Figure28‐KingmanWindFarm(10MWProject)
UNSElectricWind Project
AsmallwindfarmoutsideofKingman,ArizonadevelopedbyWesternWindEnergyCorporation.
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U.S.WindResourceMap
Map5‐U.S.WindResourceMap
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ArizonaWindResourceMap
TheU.S.DepartmentofEnergy'sWindProgramandtheNRELpublishedan80‐meter(m)heightwindresourcemapforArizona28.TheArizonaWindResourceMapshowsthepredictedmeanannualwindspeedsatan80‐mheight.Areaswithannualaveragewindspeedsaround6.5meterspersecondandgreaterat80‐mheightaregenerallyconsideredtohavearesourcesuitableforwinddevelopment.Utility‐scale,land‐basedwindturbinesaretypicallyinstalledbetween80mand100mhigh.NRELpublisheswindresourcemapsatelevationsof30m,50m,80m,90m(offshore),and100m.
Map6‐ArizonaNRELWindResourceMap
28http://www.nrel.gov/gis/wind.html
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ArizonaWindResourcePotentialItisestimatedthatArizona’swindresourcecapacitypotentialisapproximately10,900MWbasedonanannualcapacityfactorof30%.Onanannualbasisthisresultsin30,600GWhofpotentialannualwindgenerationforthestate.
Chart32‐ArizonaNRELWindResourcePotential
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NewMexicoWindResourceMapTheU.S.DepartmentofEnergy'sWindProgramandtheNRELpublishedan80‐mheightwindresourcemapforNewMexico.TheNewMexicoWindResourceMapshowsthepredictedmeanannualwindspeedsatan80‐mheight.Areaswithannualaveragewindspeedsaround6.5meterspersecondandgreaterat80‐mheightaregenerallyconsideredtohavearesourcesuitableforwinddevelopment.Utility‐scale,land‐basedwindturbinesaretypicallyinstalledbetween80and100mhigh.Asmentionedabove,NRELpublisheswindresourcemapsatelevationsof30m,50m,80m,90m(offshore),and100m.
Map7‐NewMexicoNRELWindPowerMap–80m
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NewMexicoWindResourcePotentialItisestimatedthatNewMexico’swindresourcecapacitypotentialisapproximately492,000MWbasedonanannualcapacityfactorof30%.Onanannualbasisthisresultsin1,645,000GWhofpotentialannualwindgenerationforthestate.
Chart33–NewMexicoWindResourcePotential
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WindResourceTechnology
Asthewindstartstoblow,yawmotorsturnaturbine’snacellesothattherotorandbladesfacedirectlyintowind.Thebladesareshapedwithanairfoilcrosssection(similartoanaircraftwing)andthiscausesairtomovemorequicklyoveronesidethantheother.Thisdifferenceinspeedcausesadifferenceinpressure,whichinturncausesthebladetomove,therotortoturn,andarotationalforce(ortorque)tobegenerated.
Therotorisconnectedtoagearbox(onmostturbines)andinturntoageneratorhousedinthenacellethatconvertsthetorqueintoelectricity.Theelectricityisthenfedintoatransformerlocatedeitherinsideorjustoutsidetheturbinewhichstepsupthevoltagetoreducelossesinthetransmissionofelectricity.Fromtheretheelectricitytravelsthroughundergroundcablestoanelectricitysub‐station,usuallyonornearthewindfarmsite,wherethevoltageissteppedupwithpowertransformersandexportedtothelocalgrid.
Therearefourtypesofutility‐scalewindturbinesnowinuse,withthemajorityofnewinstallationsbeingtypesIIIandIVduetotheiruseofpowerelectronicstocontrolbehaviorandgenerateatamuchwiderwindowofwindspeeds.
TypeI:Squirrelcageinductiongenerator
TypeII:Wound‐rotorinductiongeneratorwithadjustableexternalrotorresistance
TypeIII:Doubly‐fedinductiongenerator
TypeIV:Inductiongeneratorwithfullconverterinterface
Typicallyturbinesbegintogenerateelectricityatwindspeedsof3‐4m/s(7‐9mph).Theamountoftorque(andthuselectricity)generatedincreaseswithwindspeeduptoaround15m/s(34mph)wherethemaximum(orrated)capacityoftheturbineisreached.Outputisthenmaintainedatthisleveluntilaturbineisshutdownwhenthewindreacheshighspeedsofaround25m/s(57mph)toprotectitfromexcessiveloads‐thoughtheturbinesareinfactdesignedandcertifiedtowithstandwindspeedsupto70m/s(157mph).
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Figure29‐3DDrawingofNordexN80/2500kWWindTurbine
WindTechnologySummaryTechnologyandFuel WindPower
Characteristics
Kineticenergyofthewindistransformedintomechanicalenergythrougharotor,andthenintoelectricalenergybyageneratorhousedinsidethenacelleofawindturbinetower.
BenefitsHistoricallyoneofthecheapestformsofrenewableenergyinmostoftheUS.Canprovideenergyatanytimeoftheday/night.
Risks
Generallymoreintermittentandlesspredictable thantheoutputfromsolarfacilities.
ConstructionLeadTime
1year.
HOWAWINDTURBINEWORKS
1.Rotorassemblyofthreebladesmountedonahubthatisconnectedviathemainshafttothegearbox.
2.Pitchmotorschangetheangleofattachofthebladessoastocontrolrotationalspeedandtorque.
3.Gearboxconvertstherotationalspeedoftherotortoasuitablespeedforthegenerator.
4.Yawmotorscontinuallyturnthenacellesoastoensuretherotorfacesintothewind.
5.Towersupportsthenacelleandrotor.Thetowercontainselectricalcablesandaccessladders.
6.Generatorconvertsthetorquegeneratedbytherotortoelectricalenergy.
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Bioenergy/Bio‐ResourcesBiofuelsareasetofenergyresourcesthatareproducedusingbiologicalprocesses,andcanbederiveddirectlyfromplantsorindirectlythroughotherprocessesincludingagriculturalwaste.
Sometypesofbiofuelpowerplantsutilizetheheatproducedfromthecombustionofbiologicalmaterialstoproduceelectricity.Biofuelgeneration,frommultiplesources,isarelativelymature,proventechnology.Inaddition,biomassresources,likeotherformsofrenewableenergy,canbeatornearcarbon‐neutral.Beingcarbon‐neutralreferstoachievingnetzerocarbonemissionsbybalancingameasuredamountofcarbonreleasedwithanequivalentamountsequesteredoroffset.
TheNationalRenewableEnergyLaboratorypublishesmapsthatprovidedatarelatedtotheavailableannualbiomassforfuelandotheruse.MostofthisbiomassisbasedonagriculturalwastefromU.S.farms.
Map8–U.S.NRELBiomassMap
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ArizonaBiomassMapTheArizonaNRELBiomassMapillustratesthebiomassresourcesavailableinArizonabycounty.BiomassfeedstockdataareanalyzedbothstatisticallyandgraphicallyusingaGeographicInformationSystem(GIS).Thefollowingfeedstockcategoriesareevaluated:cropresidues,forestresidues,primaryandsecondarymillresidues,urbanwoodwaste,andmethaneemissionsfrommanuremanagement,landfills,anddomesticwastewatertreatment.
Map9–ArizonaNRELBiomassMap
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NewMexicoBiomassMapTheNewMexicoNRELBiomassMapillustratesthebiomassresourcesavailablebycountyinNewMexico.BiomassfeedstockdataareanalyzedbothstatisticallyandgraphicallyusingaGIS.Thefollowingfeedstockcategoriesareevaluated:cropresidues,forestresidues,primaryandsecondarymillresidues,urbanwoodwaste,andmethaneemissionsfrommanuremanagement,landfills,anddomesticwastewatertreatment.Themapshowstheavailablebiomassresources,asdotheothermapsshowninthisreportforvariousregions,butdoesnotindicateactualuseofthoseresources.
Map10–NewMexicoNRELBiomassMap
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BiomassTechnologyOverviewBiofuelenergysourcescanbedividedintotwobroadcategories:biomassandbiogas.
Biomass:Thiscategoryincludesallsolidbiologicalmaterials.Themostcommonsourceofbiomassfueliswood.Howeverthiscategorycanalsoincludemanure,sewagesludge,agriculturalwaste,andevencultivatedbiomassagriculturalproductssuchasgrasses.
Biomasspowerplantsoperateinamannerverysimilartocoalandnaturalgaspowerplants.Ingeneral,theheatproducedfromcombustionofthebiomassisusedtoproducesteamthatinturnisusedtospinaturbineandproduceelectricity.Inadditiontodedicatedbiomasspowerplants,thereisalsothepotentialforusingbiomasssourcesasaco‐firingfuelwithtraditionalresourcessuchascoal.
Biogas:Thiscategoryincludesthecaptureofgassesnaturallyproducedasapartofbiologicalprocesses.Oneofthemostcommonbiogasismethane,andisoftencollectedfromtheprocessofdecayatlandfills.Anotherpotentialsourceisthemethaneproducedfrombacterialdigestionofmanure.
Biogasresourcesmaybeusedtoproduceelectricityaspartofadedicatedplantinthesamemannerasatraditionalnaturalgasplant,andbiogasesaresometimesusedtosupplementotherfuelsources.
TransmissionandSitingRequirementsBiofuelresourcesmayormaynotrequiresignificantelectrictransmissionupgradesdependingonthelocationofthesourceoffuel.Forinstance,plantsutilizingwoodwasteorgasproducedasapartofsewagetreatmentwouldlikelybelocatednearloadcentersandrequireminimaladditionaltransitionresources.Ontheotherhand,aplantutilizingagriculturalorforestthinningwastewouldlikelybelocatedasignificantdistancefromloadcentersandmayrequireelectrictransmissionupgrades.
DispatchCharacteristicsOneofthepotentialadvantagesfortheadoptionanduseofbiomasspowerplantsisthatitcanbeusedasadispatchable,reliable,baseloadresource(incontrasttomanyotherrenewables).Direct‐firedbiomasspowerplantsoftenoperateatcapacityfactorsof85%andabove,similartocoalandnaturalgaspoweredplants.
EnvironmentalAttributesTheprincipalenvironmentaladvantageforusingbiofuelsisthatbiofuelsareconsideredcarbon‐neutral.WhiletheprocessofburningbiofuelsdoesreleaseCO2,anearlyequalamountofCO2isabsorbedfromtheatmosphereasthebiologicalsourceofthefuelgrows.Whiletheburningofbiofuelsiscarbon‐neutral,itdoesentailsignificantemissionsofNOxandPM,requiringtheuseofscrubbingtechnologyatthepowerplant.Inadditiontosomeunfavorableemissions,theuseofbiomassalsorisksothernegativeenvironmentalimpactsifthefuelisnotcollectedinasustainablemanner.Ingeneral,however,biofuelsareharvestedfromwastesources,andsustainabilityisgenerallyaninsignificantissue.
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BiomassTechnologySummary
Technology and
Fuel
Biomass
Characteristics Electricity generated through the combustion of biologic material or biologic material
byproducts (i.e., biogas).
Benefits Similar in concept to traditional thermal‐based power plants. Carbon emissions can be
partially or fully offset through CO2 sequestration by the replacement feedstock.
Risks
Currently about twice the cost of other renewable energy sources.
Construction Lead
Time
5 years.
NaturalGasResourcesAdvancesinnaturalgasexplorationanddevelopment,suchasdirectionaldrillingandhydraulicfracturing,havedramaticallyincreasedtheamountofprovenreservesintheUSandconsequentlybroughtpricesdowntoaboutone‐fourthoftheirpeakin2008.This,plustheincreasingcostsofcontrollingemissionsfromcoal‐firedpowerplants,hasledtoanincreaseinelectricitygenerationfromnaturalgas‐firedpowerplants,whichnowexceedsgenerationfromcoal‐firedpowerplantsnationally.
Thereareanumberofwaysnaturalgascanbeusedtogenerateelectricity.Aswithotherfossilfuels,itcanbeburnedinboilerstogeneratesteam.Amoreefficientprocess,andtheoneusedpredominantlytogenerateelectricityfromnaturalgas,isthecombinedcycleprocess,whichisdescribedbelow.Finally,naturalgascanbeusedinsimplecyclecombustionturbinestoproduceelectricity.Thistechnologyisnotasefficientascombinedcyclebuthasoperationaladvantagesoversteamandcombinedcycletechnologies,suchascyclingonandoffmorefrequently(andatlesscost)andchangingitsoutputmorerapidlytofollowrapidloadchangesortocompensateforrapidpowerchangesfromsolarandwindresources.CombustionturbinesthushavethemostvaluewhenusedasgridbalancingresourcesandarediscussedfurtherinChapter7.
Naturalgascombinedcycletechnologyisthemostefficientandcost‐effectivewayofgeneratingelectricityfromnaturalgas.ThebasicprincipleofNGCCistoproducepowerinagasturbinewhichcanbeconvertedtoelectricpowerbyacoupledgenerator,andtousethehotexhaustgasesfromthegasturbinetoproducesteaminaheatrecoverysteamgenerator(HRSG).Thissteamisthenusedtodriveaturbineandgeneratortoproducemoreelectricpower.Theuseofbothgasandsteamturbinesinasingleplantresultsinhigherconversionefficienciesandloweremission.Additionally,naturalgascanbefiredintheHRSGtoproduceadditionalsteamandassociatedoutputformeetingpeakloads–aprocesscommonlyreferredtoasductfiring.Theheatratewillincreaseduringduct‐firedoperation,butthisincrementalduct‐firedheatrateisgenerallylessthantheresultantheatratefromasimilarlysizedsimplecyclenaturalgaspowerplant.
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NGCCTechnologySummaryTechnology and Fuel Natural Gas Combined Cycle (NGCC)
Characteristics
Uses natural gas to power one or more combustion turbines whose exhaust is used
to generate steam for an additional turbine, resulting in a highly‐efficient electricity‐
generation process.
Benefits
Produces electricity more efficiently and with fewer emissions than other fossil‐
fired technologies. Capable of changing out put more rapidly and following load
more closely than other fossil‐fired technologies.
Risks Over the long term, costs are subject to natural gas prices and greenhouse gas
regulations.
Construction Lead Time
3 years.
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CoalResourcesAsshownonChart34,below,thepercentageofU.S.electricpowergenerationfromcoalhasbeenonadeclinesince2008.Thisdeclineislargelyduetoreducedcostsofcompetingsourcesofgenerationsuchasnaturalgas,solarandwind.However,in2017and2018,asnaturalgaspricesareexpectedtoincrease,coalispredictedtoregainsomeshareoftheelectricitygenerationmix,andcoalproductionisexpectedtoincreaseslightly.
Chart34‐U.S.NetElectricityGeneration
Source:U.S.EnergyInformationAdministration,Short‐TermEnergyOutlook,February201729
TheU.S.EnergyInformationAdministrationexpectstheshareofU.S.totalutility‐scaleelectricitygenerationfromnaturalgaswillfallfrom34%lastyear(2016)toanaverageof32%in2017asaresultofhigherexpectednaturalgasprices.Theforecastnaturalgasshareisforecasttoriseslightlyto33%in2018.Coal'sgenerationsharerisesfrom30%in2016toaverage31%inboth2017and2018.Non‐hydropowerrenewablesareforecasttoprovide9%ofelectricitygenerationin2017and10%in2018.
29https://www.eia.gov/todayinenergy/detail.php?id=29872#
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Thousands of MWhs
Axis Title
Coal Gas Solar
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PulverizedCoalTechnologySummaryandCosts
Technology and Fuel Sub‐Critical Design, Pulverized Coal
Characteristics
Unit capacity can range in size from 250 to 600 MW. Performance characteristics
range anywhere from 9,500 to 10,500 Btu per kWh. Annual capacity factors for
these units range from 80 to 90% Units
Benefits
Mature technology. Fuel price stability and abundant supply. Resources are
used to serve base load obligations. Coal plant plants are often used for system
regulation and meeting spinning reserve requirements.
Risks
Coal plants are typically sited in remote locations requiring high capital
investment in both plant and transmission. High CO2 emissions risk and high
cooling water requirements.
Construction Lead Time
7 Years
IntegratedGasificationCombined‐Cycle(IGCC)
Technology and Fuel Combined Cycle Plants, Coal Gasification
Characteristics
Newer technology. Unit capacity can range in size from 400 to 600 MW.
Performance characteristics range anywhere from 9,000 to 11,000 Btu per kWh.
Annual capacity factors for these units average 75%
Benefits Designs that incorporate carbon capture and storage (CCS) are projected to be
less expensive than coal facilities equipped with CCS.
Risks
Higher capital costs than other coal and natural gas resources. Carbon capture
and storage technology unproven.
Construction Lead Time
8 Years for IGCC without CCS, 9 Years for IGCC with CCS
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CoalMarketPricesTEPcurrentlyhasownershipsharesinfourcoal‐firedpowerplantsinArizonaandNewMexico,mostofwhichareunderlong‐termcontractsforcoalsupply.
Chart35–TEPCoalPriceAssumptions
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
2016 2018 2020 2022 2024 2026 2028 2030 2032 2034
Nominal $/m
mBtu
Baseline High Technology High Economy
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NuclearResourcesWhenlarge‐scalenuclearpowerplantswentonlineover60yearsago,itwasapromisingtechnologythatdeliveredsafe,reliableandmostimportantly,cleanenergy.In2015,nuclearenergyproductionwasapproximately800TWhor20%ofthetotalU.S.electricgeneration.Thedownsidetonuclearpowerplantsisthecost.Theplantsareexpensivetodevelop,constructandexpensivetooperate.Asthecostofrenewableenergycontinuestodeclineandnewtechnologiesdeliverlowcarbonpowermorereliably,thecostsofnuclearplantsbecomemoreunattractive.Combinethesefactorswithprojectedlownaturalgasprices,nuclearbecomesevenmorecostlybycomparison.Inthelast5years,ahandfulofnuclearpowerplantshavebeenretired,includingSanOnofreinsouthernCaliforniain2012and2013.PacificGas&Electric,ownerandoperatorofDiabloCanyonPowerPlant,announcedthatitwillretire2,160MWwhenlicensesexpireinin2024and2025.
SmallModularNuclearReactorsSmallmodularnuclearreactors(SMR),approximatelyone‐thirdthesizeofcurrentnuclearplants,arecompactinsize(300MWorless)andareexpectedtooffermanybenefitsindesign,scale,andconstruction(relativetothecurrentfleetofnuclearplants)aswellaseconomicbenefits.Asthenameimplies,beingmodularallowsforfactoryconstructionandfreighttransportationtoadesignatedsite.Thesizeofthefacilitycanbescaledbythenumberofmodulesinstalled.Capitalcostsandconstructiontimesarereducedbecausethemodulesareself‐containedandreadytobe“dropped‐in”toplace.
AWorldNuclearAssociation2015reportonSMRstandardizationoflicensingandharmonizationofregulatoryrequirements,saidthattheenormouspotentialofSMRsrestsonanumberoffactors:
Becauseoftheirsmallsizeandmodularity,SMRscouldalmost becompletelybuiltinacontrolledfactorysettingandinstalledmodulebymodule,improvingthelevelofconstructionqualityandefficiency.
Theirsmallsizeandpassivesafetyfeaturesmakethemfavorabletocountrieswithsmallergridsandlessexperiencewithnuclearpower.
Size,constructionefficiencyandpassivesafetysystems(requiringlessredundancy)canleadtoeasierfinancingcomparedtothatforlargerplants.
Moreover,achieving‘economiesofseriesproduction’foraspecificSMRdesignwillreducecostsfurther.
TheWorldNuclearAssociationliststhefeaturesofanSMR,including:
Smallpower,compactarchitectureandusuallyemploymentofpassiveconcepts(atleastfornuclearsteamsupplysystemandassociatedsafetysystems).Therefore,thereislessrelianceonactivesafetysystemsandadditionalpumps,aswellasACpowerforaccidentmitigation.
Thecompactarchitectureenablesmodularityoffabrication(in‐factory),whichcanalsofacilitateimplementationofhigherqualitystandards.
Lowerpowerleadingtoreductionofthesourcetermaswellassmallerradioactiveinventoryinareactor(smallerreactors).
Potentialforsub‐grade(undergroundorunderwater)locationofthereactorunitprovidingmoreprotectionfromnatural(e.g.seismicortsunamiaccordingtothelocation)orman‐made(e.g.aircraftimpact)hazards.
Themodulardesignandsmallsizelendsitselftohavingmultipleunitsonthesamesite.
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Lowerrequirementforaccesstocoolingwater–thereforesuitableforremoteregionsandforspecificapplicationssuchasminingordesalination.
Abilitytoremovereactormoduleorin‐sitedecommissioningattheendofthelifetime
Figure3050MWeNuScalePowerModule
TheWorldNuclearAssociationwebsitehasdetailedinformationrelatedtoSMRs.Thewebsiteislocatedat:http://www.world‐nuclear.org/info/nuclear‐fuel‐cycle/power‐reactors/small‐nuclear‐power‐reactors/
NuScalePowerTMisdeveloping50MWemodulesthatcanbescaledupto600MWe(12modules).ThescalabilityofSMRsallowsforsmallutilitieslikeTEPtoconsidertheirviabilitywhilelesseningthefinancialrisk.InDecemberof2013,NuScalewasawardedagrantbytheDOEthatwouldcoverhalf(upto$217million)tosupportdevelopmentandreceivecertificationandlicensingfromtheNuclearRegulatoryCommission(NRC)onasinglemodule.
Inthefallof2014,NuScalesignedteamingagreementswithkeyutilitiesintheWesternregion,whichincludeEnergyNorthwestinWashingtonStateandtheUtahAssociationofMunicipalPowerSystems(UAMPS),representingmunicipalpowersystemsinUtah,Idaho,NewMexico,Arizona,Washington,Oregon,andCalifornia.Thisinitialproject,knownastheUAMPSCarbonFreePowerProject,wouldbesitedineasternIdahoandisbeingdevelopedwithpartnersUAMPS,whichwillbetheplantowner,andEnergyNorthwest,whichwillbetheoperator.Theteamexpectsthatthe12‐moduleSMRwillbeoperationin2024.
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Figure31‐NuScaleCross‐sectionofTypicalNuScaleReactorBuilding
PermittingandTimetoCommercialOperationAsmentionedabove,theUAMPSCarbonFreePowerProjectisexpectedtobeinoperationby2024.Theprojecttimelineandmilestonetargetsaretightlycoordinatedtocompletetheprojectin11years.Designandengineeringiscompleteinthefirst7yearsanditoverlapswiththelicensingtimeline.Constructionandfabricationspanstheremaining5yearsoftheschedule.
SMRTechnologySummaryTechnology and Fuel Small Modular Nuclear Reactor (SMR), Plutonium
Characteristics
Unit Capacity can range in size and modules are combined to achieve economy
of scale. SMR is typically considered under 300 MW. Base‐load type capacity
factors (95%). NuScale Power is developing a power plant with funding and
partnership with the DOE.
Benefits Zero emissions and high capacity factors. Modular and factory‐built,
assembled on site.
Risks
High capital costs and no large scale production. Prototypes are being
developed. Spent nuclear fuel disposal and maximum security required.
Construction Lead Time 11 years
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CHAPTER 7
GRID BALANCING AND LOAD LEVELING RESOURCES
EnergyStorageNewchallengespresentedbygreateramountsofrenewablegenerationhavepromptedagreaterinterestinelectricenergystorage.ThetermEnergyStorageSystem(ESS)coversmanydifferenttypesoftechnology.Eachtechnologyhasspecificattributesandapplicationsthatleadtousingthembasedonindividualsystemrequirementsforanidentifiedneed.Theenergystoragetechnologiesaremadeupofsystemssuchaspumpedhydro,compressedairenergystorage,varioustypesofbatteries,andflywheels.
PumpedHydro‐PowerThistechnologyhasbeeninusefornearlyacenturyworldwide.PumpedhydroaccountsformostoftheinstalledstoragecapacityintheUnitedStates.Pumpedhydroplantsuselowercostoff‐peakelectricitytopumpwaterfromalow‐elevationreservoirtoahigherreservoir.Whentheutilityneedstheelectricityorwhenpowerpricesarehigher,theplantreleasesthewatertoflowthroughhydroturbinestogeneratepower.
Typicalpumpedhydrofacilitiescanstoreenoughwaterforupto10ormorehoursofenergystorage.Pumpedhydroplantscanabsorbexcesselectricityproducedduringoff‐peakhours,providefrequencyregulation,andhelpsmooththefluctuatingoutputfromothersources.Pumpedhydrorequiressiteswithsuitabletopographywherereservoirscanbesituatedatdifferentelevationsandwheresufficientwaterisavailable.Pumpedhydroiseconomicalonlyonalarge(250‐2,000MW)scale,andconstructioncantakeseveralyearstocomplete.
Theround‐tripefficiencyofthesesystemsusuallyexceeds70percent.Installationcostsofthesesystemstendtobehighduetositingrequirementsandobtainingenvironmentalandconstructionpermitspresentsadditionalchallenges.Pumpedhydroisaproventechnologywithhighpeakusecoincidence.
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CompressedAirEnergyStorage(CAES)Aleadingalternativeforbulkstorageiscompressedairenergystorage.CAESisahybridgeneration/storagetechnologyinwhichelectricityisusedtoinjectairathighpressureintoundergroundgeologicformations.CAEScanpotentiallyoffershorterconstructiontimes,greatersitingflexibility,lowercapitalcosts,andlowercostperhourofstoragethanpumpedhydro.ACAESplantuseselectricitytocompressairintoareservoirlocatedeitheraboveorbelowground.Thecompressedairiswithdrawn,heatedviacombustion,andrunthroughanexpansionturbinetodriveagenerator.Thedispatchtypicallywilloccurathighpowerpricesbutalsotomeetsystemneeds.
CAESplantscanuseseveraltypesofair‐storagereservoirs.Inadditiontosaltcaverns,undergroundstorageoptionsincludedepletednaturalgasfieldsorothertypesofporousrockformations.EPRIstudiesshowthatmorethanhalftheUnitedStateshasgeologypotentiallysuitableforCAESplantconstruction.Compressedaircanalsobestoredinabove‐groundpressurevesselsorpipelines.Thelattercouldbelocatedwithinright‐of‐waysalongtransmissionlines.Respondingrapidlytoloadfluctuations,CAESplantscanperformrampingdutytosmooththeintermittentoutputofrenewablegenerationsourcesaswellasprovidespinningreserveandfrequencyregulationtoimproveoverallgridoperations.
BatteriesSeveraldifferenttypesoflarge‐scalerechargeablebatteriescanbeusedforESS,includingleadacid,lithiumion,sodiumsulfur(NaS),andredoxflowbatteries.Batteriescanbelocatedindistributionsystemsclosertoenduserstoprovidepeakmanagementsolutions.Anaggregationoflargenumbersofdispersedbatterysystemsinsmart‐griddesignscouldevenachievenearbulk‐storagescales.
Inaddition,ifelectricandplug‐inhybridelectricvehiclesbecomewidespread,theironboardbatteriescouldbeusedforESS,byprovidingsomeofthesupportingor“ancillary”servicesintheelectricitymarket,suchasprovidingcapacity,spinningreserve,orregulationservices,orinsomecases,byprovidingload‐levelingorenergyarbitrageservicesbyrechargingwhendemandislowtoprovideelectricityduringpeakdemand.
FlywheelsTheserotatingdiscscanbeusedforpowerqualityapplicationssincetheycanchargeanddischargequicklyandfrequently.Inaflywheel,energyisstoredbyusingelectricitytoacceleratearotatingdisc.Toretrievestoredenergyfromtheflywheel,theprocessisreversedwiththemotoractingasageneratorpoweredbythebrakingoftherotatingdisc.
Flywheelsystemsaretypicallydesignedtomaximizeeitherpoweroutputorenergystoragecapacity,dependingontheapplication.Low‐speedsteelrotorsystemsareusuallydesignedforhighpoweroutput,whilehigh‐speedcompositerotorsystemscanbedesignedtoprovidehighenergystorage.Amajoradvantageofflywheelsistheirhighcyclelife—morethan100,000fullcharge/dischargecycles.
Scale‐powerversionsofthesystem,a100kWversionusingmodifiedexistingflywheelswhichwasaproofofconceptonapproximatelya1/10thpowerscale,performedsuccessfullyindemonstrationsfortheNewYorkStateEnergyResearchandDevelopmentAuthorityandtheCaliforniaEnergyCommission.
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EnergyStorageApplicabilityAlthoughthelistofenergystoragetechnologiesdiscussedaboveisnotall‐inclusive,itbeginstoillustratethepointthatnoteverytypeofstorageissuitableforeverytypeofapplication.Typicaluseapplicationsforenergystoragetechnologiesmayinclude:
EnergyManagement–Batteriescanbeusedtoprovidedemandreductionbenefitsattheutility,commercialandresidentiallevel.Batteriescanbedesignedtoreplacetraditionalgaspeakingresources.Theycanalsobeusedasshort‐termreplacementduringemergencyconditions.
LoadandResourceIntegration–Energystoragesystemscanbedesignedtosmooththeintermittencycharacteristicsofspecificloadsand/orrenewableenergysystems.
AncillaryServices–Flywheels,batteriesandpumpedhydrohavethepotentialtobalancepowerandmaintainfrequency,voltageandpowerqualityatspecifiedtolerancebands.
GridStabilization–PumpedHydro,CAESandvariousbatteriescanimprovetransmissiongridperformanceaswellasassistwithrenewablegenerationstabilization.
NextEraEnergyResources(10MW)
Lithiumnickel‐manganese‐cobaltbattery
DeMossPetrieSubstation
In‐serviceJanuary2017
AncillaryServiceTarget:
FrequencyResponse10MWIn10secondsto15minutes(2.5MWh)
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Becauseofthedifferentusecasepotentialsthetechnologiescanbeimplementedinaportfoliostrategy.
Therearefourchallengesrelatedtothewidespreaddeploymentofenergystorage:
CostCompetitiveEnergyStorageTechnologies(includingmanufacturingandgridintegration) ValidatedReliability&Safety EquitableRegulatoryEnvironment IndustryAcceptance
TEPshowstheneedtodevelopaportfoliooffuturestoragetechnologiesthatwillsupportlong‐termgridreliability.Theneedforfuturestoragetechnologiesisfocusedonsupportingtheneedforquickresponsetimeancillaryservices.Theseservicesarelistedbelow:
LoadFollowing/Ramping Regulation VoltageSupport PowerQuality FrequencyResponse
Figure32–EnergyStorageValueProposition
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EnergyStorageTechnologySummary
Batteries
Technology and Fuel Batteries
Characteristics Various storage chemistries and energy/power configurations are available.
Benefits
High degree of flexibility in terms of siting, application (e.g., energy vs ancillary
services), and scalability. Single systems can serve multiple purposes. Prices for
most battery types are rapidly declining.
Risks
Levelized costs are still higher than other forms of energy storage, industry
standards are still evolving, and some benefits can be difficult to monetize.
Construction Lead Time 6 months.
PumpedHydro
Technology and Fuel Pumped Hydro
Characteristics Water is pumped from a lower reservoir to a higher reservoir, and the energy is
recovered by releasing the water through hydro turbines.
Benefits Mature technology capable of storing large amounts of energy for use over
many hours at a time.
Risks Requires suitable topography for the upper and lower reservoirs and a large up‐
front capital investment.
Construction Lead Time 5 years.
CompressedAirEnergyStorage
Technology and Fuel Compressed Air Energy Storage (CAES)
Characteristics Air is compressed, typically in underground geologic formations, and the energy
is recovered by using the compressed air to supply a combustion turbine.
Benefits Mature technology capable of storing large amounts of energy for use over
many hours at a time.
Risks Very little commercial experience and requires a large up‐front capital
investment.
Construction Lead Time 3 years.
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FastResponseThermalGenerationTEP’s30%by2030renewableenergytargetwillnecessitatetheconstructionoracquisitionoffast‐respondinggeneratingresources.Reciprocatinginternalcombustionengines(RICE)andcombustionturbines(CTs)arethepreferredtechnologythatwillassistinmitigatingrenewableenergyintermittencyandvariability.RICEhavequickerstart‐upandrampingcapabilitiesthanmostCTs.AeroderivativeCTsarebasedonaircraftjetenginedesignwithincreasedcyclingcapabilities.Theseunitscanrampfasterthanlargeframecombustionturbinesmakingthemwell‐suitedforpeakingandload‐followingapplications.LargeframeCTshavehigherheatratesthanaeroderivativeandRICEbuttheyproducehighertemperatureexhaust,soitmakesthemmoresuitableforcombinedcycleconfigurations.
ReciprocatingInternalCombustionEnginesRICEaresimplycombustionenginesthatareusedinautomobiles,trucks,railroadlocomotives,constructionequipment,marinepropulsion,andbackuppowerapplications.Moderncombustionenginesusedforelectricpowergenerationareinternalcombustionenginesinwhichanair‐fuelmixtureiscompressedbyapistonandignitedwithinacylinder.RICEarecharacterizedbythetypeofcombustion:spark‐ignited,likeinatypicalgaspoweredvehicleorcompression‐ignited,alsoknownasdieselengines.
Figure33–Wartsila‐50SG
Anemerginguseoftheseenginesisinlarge‐scaleelectricutilitygeneration.Thecombustionengineisnotanewtechnologybutadvancesinefficiencyandtheneedforfast‐responsegenerationmakeitaviableoptiontostabilizevariableandintermittentelectricdemandandresources.RICEhasdemonstratedanumberofbenefits;
FastStartTimes–Theunitsarecapableofbeingon‐lineatfullloadwithin5minutes.Thefastresponseisidealforcyclingoperation.RICEcanbeusedto‘smooth’outintermittentresourceproductionandvariability.
RunTime‐Theunitsoperateoverawiderangeofloadswithoutcompromisingefficiency,andcanbemaintainedshortlyaftershutdown.Aftershutdown,theunitmustbedownfor5minutes,ataminimumtoallowforgaspurging.
ReducedO&M–CyclingtheunithasnoimpactonthewearofRICE.Theunitisimpactedbyhoursofoperationandnotbystartsandcyclingoperationsasisthecasewithcombustionturbines.
FastRamping–Atstart,theunitcanramptofullloadin2minutesonahotstartandin4minutesonawarmstart.Oncetheunitisoperational,itcanrampbetween30%and100%loadin40seconds.Thisrampingiscomparabletotheratethatmanyhydrofacilitiescanrampat.
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MinimalAmbientPerformanceDegradation–ComparedtoAeroderivativeandFrametypecombustionturbines,RICEoutputandefficiencyisnotasdrasticallyimpactedbytemperature.ThesitealtitudedoesnotsignificantlyimpactoutputonRICEbelow5,000feetmeansealevel.
GasPressure–RICEcanrunonlowpressuregas,aslowas85PSI.MostCT’srequireacompressorforpressureat350PSI.
ReducedEquivalentForcedOutageRate(“EFOR”)–EachRICEhasanEFORoflessthan1%.AfacilitywithmultipleRICEwillhaveacombinedEFORthatisexponentiallylessbyafactorofthenumberofunitsatthefacility.
LowWaterConsumption–RICEuseaclosed‐loopcoolingsystemthatrequiresminimumwater. Modularity–EachRICEunitisbuiltatapproximately2to20MWsandisshippedtothesite.
AnintriguingapplicationforRICEisitspotentialforregulatingthevariabilityandintermittencyofrenewableresources.
Figure34–ReciprocatingInternalCombustionEngineFacility
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RICETechnologySummaryTechnology and Fuel Reciprocating Internal Combustion Engine (RICE), Natural Gas or Diesel
Characteristics
Unit capacity can range in size, TEP is evaluating 10 and 20 MW sized units that
run on natural gas. Expected heat rate is approximately 8,000 Btu/kWh. These
engines have a proven performance record as they’ve been used in marine crafts
for decades. The units scaled for electric generation will deliver load‐serving and
grid‐balancing services. The units are quick starting and fast responding.
Benefits
RICE meets the need for peak capacity and more importantly for fast response to
renewable intermittency and variability. The units use circulating water for
cooling and therefore require minimal water. RICE is modular in size and can
start within 2 to 5 minutes.
Risks
Natural gas price volatility
Construction Lead Time
2 years
LargeFrameCombustionTechnologySummary
Technology and Fuel Combustion Turbines (Large Frame), Natural Gas
Characteristics
Unit capacity can vary from 50 to 350 MW. Expected heat rate can range from
9,300 Btu/kWh for the larger units while the smaller units demonstrate a heat
rate near 11,000 Btu/kWh. Typical start time is slower than RICE or
Aeroderivative but equipment options from manufacturers can bring them
closer.
Benefits
Large frame CTs can meet a need for intermediate and base‐load applications.
The units can be coupled for combined‐cycle generation. Capital cost per kW are
below Aeroderivative and RICE.
Risks Natural gas price volatility
Construction Lead Time 2.5 years
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AeroderivativeCombustionTurbineTechnologySummary
DemandResponseDemandResponsereferstoaclassofprogramsofferedbytheutilitytoincentivizecustomers,generallyC&Icustomerswithhighenergydemand,toreducetheirenergydemand(kW)basedonsystemneeds.DRprogramsmaybeusedtosupportstandardbenefitswhichincludeavoidedfirmcapacityrequiredtomeetreserverequirements,reducedoravoidedopen‐marketpowerpurchasesduringperiodsofhighenergyprices,andgreatergridstabilityandreductioninoutagesduetoreducedgriddemand.AlthoughDRhastraditionallybeenfocusedonproviding“capacity”throughareduction(i.e.curtailment)incustomerdemandduringpeakperiods,itisincreasinglybeingconsideredforadditionalservicessuchasrampingorloadleveling,whereinenergydemandis“rescheduled”versuscurtailed.
CustomersenterintoDRagreementsvoluntarilyandindoingsoreceiveafinancialincentive,suchasareducedelectricityrate,inexchangeforcommittingsomeportionoftheirenergydemandtotheutility’scontrol.Theseagreementstypicallyhavelimitationsincludingtheamountofenergydemandthecustomercommitstotheutility,aswellasthenumberanddurationofeventsduringwhichtheutilitycancallonthedemandreductions.Someagreementsevenprovidecustomerstheoptionto“optout”ofaparticularcallevent,whichmakescertainportionoftheDRcapacitylessthan100%dispatchable.
StrategiesusedbycustomersunderDRagreementsinclude:
ReductionofHVACload Reductionofothermechanicalload(compressors,motors) Reductionoflightingload Curtailmentofproductionlines
Technology and Fuel Combustion Turbines (Aeroderivative), Natural Gas
Characteristics
Unit capacity can vary from 20 to 100 MW. Performance during summer peak
conditions is approximately 10,000. Faster start and ramp than large frame
simple cycle CTs
Benefits
Meet the need for peaking capacity and load following applications. The units
can be sited locally and help to reduce transmission infrastructure. Reduced
water consumption.
Risks Natural gas price volatility
Construction Lead Time 3 years
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ThespecificstrategiesthatcustomersusetomeettheirDRcommitmentswilldependoncertainexternalconditionssuchastimeofday,season,weather,etc.,andcanalsodependontheamountofadvancenoticeprovidedbytheutility.Becausecustomershaveenergyneedsspecifictotheirlineofbusiness,DRprogramsaremosteffectiveatmeetingpredictableutilityneedssuchassummerpeakwhereautilitycanprovideaday‐aheadnoticebasedonhighforecasttemperatures.DRislesseffective(i.e.lessdispatchable)atmeetingunexpectedorintermittentenergydemands.
DemandResponseTechnologySummary
Technology Utility installed thermostats and switches at customer site used to control customer
demand.
Characteristics The goal of DR is to reduce customer peak demand rather than overall energy use.
Programs target summer peak periods to offset the utilities’ need to procure
additional resource capacity. Programs may utilize cycling methodologies, load
shifting, or direct interruption during summer peaks or system emergencies.
Benefits Depending on program design, DLC is often utilized as a dispatchable resource as part
of utility operations. Can decrease utility ramping demand as well as well as load
leveling and providing peak capacity, potentially deferring or delaying the need for
additional generation or transmission capacity.
Risks
Challenges include limited customer participation, minimum yearly call options and
low dispatch duration.
Program Lead Time 1 Year
RateDesignOneelementoftheprovisionofelectricutilityservicesthataffectscustomerusagepatternsand,therefore,impactsfuturecapacityneedsisretailratedesign.However,considerationoftheimpactofratedesignonresourceplanningisoftenneglectedintheIRPprocess.ThissectionprovidesanoverviewofapproachestoretailratedesignthatmayaffectfutureresourceneedsandshouldbeconsideredascomponentsoftheIRPprocess.Thetwobroadratedesigncategoriesdiscussedinthissectionaredemandratesandtime‐varyingrates.ThatisfollowedbyabriefdiscussionoftheeffectsofincreasedpenetrationofDGonsystemoperationsandfuturecapacityneedsandtheimplicationsforratedesign.ThesectionendswithanoverviewofTEP’sapproachretailratedesignasitrelatestoresourceplanning.
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DemandRatesThemostbasicelectricutilityratedesignisthetwo‐partrate,whichconsistsofafixedbasicservicechargeandvolumetricenergychargesassessedonthekWhconsumedduringabillingperiod.Mostresidentialandsmallcommercialcustomersreceiveserviceonatwo‐partratestructure.
Demandrates,orthree‐partrates,assesschargesonacustomer’speakdemandduringabillingperiodinadditiontoafixedchargeandvolumetricenergycharges.Thepeakdemanduponwhichthecustomerisbilledmaybemeasuredasthecustomer’smaximumkWovertimeintervalsrangingfrominstantaneoustoaone‐hourinterval.Billingdemandmayalsobedefinedasthemaximumdemandovertheentirebillingperiodoronlyduringdefinedon‐peakperiodsandmayincorporateademandratchet.Ademandratchetfurtherdefinesbillingdemandasthemaximumofmeasureddemandandsomepercentageofmaximumbillingdemandforasetnumberofpriorbillingperiods.Becausesystempeakdemandisamajordriverintheneedforadditionalgeneratingcapacity,chargingcustomersdirectlyfortheircontributiontosystempeakmayprovideapricesignalthatreducespeakdemandandthereforeresultsindelayingtheneedforfuturecapacityadditions.Mediumandlargecommercialcustomersandindustrialcustomersusuallytakeserviceonsomevariationofathree‐partdemandrate.
Time‐VaryingRatesTime‐varyingrates,ifdesignedproperly,maybeusedtoinduceloadshiftingfrompeaktooff‐peakperiodsbyprovidingapricesignalthatresultsinhigherpricesduringpeakperiodsandlowerpricesduringoff‐peakperiods.Shiftingloadsmayreducetheneedforadditionalcapacitybyreducingtheneedforenergysupplyatpeaktimes.Time‐varyingratesmayalsobeusedinathree‐partdemandratestructureandboththedemandandenergycomponentsoftheratedesigncanhavetime‐varyingelements.
Time‐varyingelectricratesincludeTime‐of‐use(TOU)rates,criticalpeakpricing,andreal‐timepricing(RTP).TOUisthemostbasicandbyfarthemostcommonlyusedoftime‐varyingapproachestoretailelectricpricingandconsistsofpre‐definedpeakandoff‐peaktimeperiodswithdifferentiatedpricingforeach.RTPisthemostsophisticatedandvariableapproach,withhourlypricesdeterminedbyday‐aheadmarketpricesorreal‐timespotmarketpricesforelectricity.Criticalpeakpricingratesarefixedrateswherecustomersarechargedhigherpricesduringpeakdemandeventsthatareannouncedinadvance.Avariationofcriticalpeakpricingisapricingregimewherecustomersreceivearebateforreducingusageduringapre‐announcedpeakdemandevent.
DistributedGenerationTheincreasedpenetrationofDG,predominantlyrooftopsolar,intheTEPserviceareacreatessomechallengesforbothsystemoperationsandsystemcapacityplanningandtheCompanyrecognizestheneedtoadaptitsratedesigntoaddressthesechallenges.ThepeakperiodforrooftopsolarproductionoccursduringmiddayanddoesnotcoincidewiththeTEPsystempeakperiods,whichoccurinthelateafternoonduringthesummerandmorningandlateafternoontoearlyeveningduringthewinter.Asaresult,rooftopsolarenergyoutputishighestonthesystemduringmiddaywhenenergyresourcesareabundant.However,increasingsolargenerationmayhaveonlyaminorimpactonreducingsystempeakdemand.Therefore,futureratedesignsshouldfocusmoreonshiftingconsumptionawayfromthesystempeakperiodsintotheperiodsofpeaksolarproduction,whichhasthebenefitofimprovingsystemloadfactorandoperationsandalsoalleviatestheneedforfuturecapacityadditionstoservepeakdemand.Fromaratedesignperspective,combiningTOUrateswithdemandratesandexpandingoff‐peakhourstoincludemorehourswithabundantrooftopsolarenergywillservetomodernizeutilityratedesignandaddressthechallengesputforthbyincreasedDGdevelopment.
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TEPRateDesignCurrently,TEPoffersoptionalTOUratestoallretailcustomerclassesexceptLargePowerService(LPS)customerswhotakeserviceonlyonaTOUrate.ResidentialandSmallGeneralServicecustomershavehistoricallytakenserviceontwo‐partratesandtheLGSandLPScustomerclasseshavemandatorythree‐partdemandratestructures.TEPhasformedaMediumGeneralService(MGS)customerclasswherecustomerswillbemovedpredominantlyfromtheSmallGeneralServiceclassandplacedonathree‐partdemandratefollowingatransitionperiod.
TEPrecognizestheimpactsthatincreasingrooftopsolarpenetrationwillhaveonsystemloadshapesandthechallengesthatposesforsystemoperationsandcapacityplanning.IntheCompany’s2015ratecase,TEPproposed,andtheACCapproved,severalchangestoitsexistingretailratestoaddressthesechallengeswithamoremodernratedesign.Forexample,TEPexpandedrateoptionsforResidentialandSmallGeneralServicecustomerstoincludethree‐partdemandrates.TheserateoptionsalsohaveTOUvariantsforenergychargesandbillingdemandisdefinedasthemaximumone‐hourmeasuredkWdemandduringon‐peakperiodsforalloptions.Inaddition,TEPexpandedthesummerandwinteroff‐peakhoursinitsResidentialTOUandResidentialTOUdemandratetariffs.
MoreinformationcanbefoundatTEP’swebsite:https://www.tep.com/rates/
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DesertSouthwestWholesalePowerMarkets‐TransformationWholesalePowerMarketOverview
Historically,thewholesalepowermarketshaveservedtheDesertSouthwestasanefficientmechanismforutilityoperatorstobuyandsellstandardmarket‐basedproductsasameanstooptimizetheirresourceportfolios.However,withtherapidincreaseinrenewableresourcepenetrationthroughouttheregion,atransformationofmarketfundamentalsiscurrentlyunderwayandischanginghowbothload‐servingentitiesandwholesalemerchantstransactwithinthesemarkets.Whilethesechangeswillhaveeconomicimplicationsforday‐aheadandreal‐timeoperations,resourceportfoliosofthefuturewillalsoneedtoadaptwithfaststart,fast‐ramping,flexiblegenerationinordertotakeadvantageofshortdurationpricefluctuationsinordertominimizeportfoliocostsforcustomers.
Non‐DispatchableRenewableMustRunResources
Becausemostsolarandwindresourcesarenon‐curtailableresources,utilityoperatorsmustdispatcharoundthesolarandwindoutput.Intoday’swholesalepowermarkets,solargenerationtypicallydisplaceson‐peakgeneration,causingadownwardshiftinmarketpricesfromthehoursof8AMto4PM.Insomehoursthroughouttheyear,thissurpluspowerresultsinthemarketclearingpricegoingnegativeduetogenerationexceedingsystemdemand.
Chart36–ImpactofSolarSurplusontheWholesalePowerMarkets
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ImpactsonBaseloadGenerationResourcesInadditiontosurplusrenewablegeneration,lowcostshalegasproductionhasalsoplayedasignificantroleintransformingthesupplyanddemandeconomicsofnaturalgas.Aswesawin2015and2016,expandednaturalgasproductionfromshaleformationsisdirectlyimpactingtheeconomicviabilityofmanybaseloadcoalandnuclearresources.Unlikerenewables,mostthermalplantslikecoalandnuclear,havehigheroperatingcoststhatcannotbefullyrecoveredinthewholesalemarket.Thus,theultimateeffectofhighpenetrationsofrenewablesandlowcostnaturalgaswilllikelybeanacceleratedretirementofolderandhighercostcoalandnuclearresources.Alternatively,resourceslikeNGCCunitsthathaveloweroperatingcostsaremorecompetitiveintoday’swholesalepowermarkets.ThiscompetitiveadvantagewilllikelysetthestageforNGCCunitstodisplacecoalandnuclearasbaseloadresourcessincetheyarebetterpositionedtomaintainprofitabilityinamarketdrivenbylownaturalgasprices.
Chart37‐ComparisonsofCoalvs.NaturalGasCombinedCycleResources
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ReductioninOverallNaturalGasDemandandCommodityPricesInadditiontothemarketchangeslistedabove,renewableresourcesaredramaticallyreducingthepowersector’soveralldemandfornaturalgasconsumption.30Lowloadgrowthcoupledwithahigherpenetrationofrenewableenergyandhistoricallylownaturalgasprices,haveresultedinlowwholesalepowerpricesduringthelasttwoyears.Thistrendislikelytocontinueforsometimeduetotheincreasedefficienciesinshaleproductionandthedecliningcostofrenewableenergyresources,whicharebelowthecostoftraditionalfossilfuelresourcesonalong‐termlevelizedbasis.AsnotedintheWoodMacKenzieBaseCase,despiteuncertaintyregardingU.S.energypolicychanges,recentanalysissuggestslownaturalgaspricesareoneofthebiggestdisruptorsofthepowersector.Thislowpricetrajectorywillcausenaturalgastoincreasinglydisplacecoalintheforeseeablefuture.Becauseofthistrendandsteadygrowthinrenewables,wholesalepowerpriceswilllikelystaydepressedoverthelongterm.31
30NRELStudy:ARetrospectiveAnalysisoftheBenefitsandImpactsofU.S.RenewablePortfolioStandards.https://emp.lbl.gov/sites/all/files/lbnl‐1003961.pdf31 Long‐termforecastprojectionsbasedonWood‐Mackenzie,NorthAmericaGas,PowerandCoalMarkets–NoCarbonCase.February2017.
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ArizonaGasStorageProject
AsTEPreducesitsrelianceoncoal,cleaner,moreefficientnaturalgaswillplayabiggerroleinmaintainingtheCompany’sgridoperations.Today,TEPreliesontheElPasoandTranswesternpipelinenetworkstodelivernaturalgasprimarilyfromtheSanJuanandPermiansupplybasinstosupportitslong‐term,aswellasreal‐timepowergenerationneeds.Inotherregionsofthecountry,naturalgasstorageprovidesareliabilitybackstoptoamultitudeofpipelineoperationalconstraintsthatcanimpactthedeliveryofnaturalgas.However,inArizonatherearecurrentlynonaturalgasstoragefacilities.AspartoftheCompany’s2017IRPintegrationstrategy,TEPisintheprocessofevaluatinglocalnaturalgasstorageasaresourcewhichmayinimproveTEP’ssystemreliabilitybymeetingitsfuturehourlygasbalancingandgenerationrampingrequirementsastheCompanyintegrateshigherlevelsofrenewableresources.
KinderMorgan2017OpenSeason
OnJanuary31,2017,KinderMorganissuedanopenseason32foranArizonabasednaturalgasstorageprojectthatwouldofferstoragerelatedservicesincludingno‐noticetransportation(NNT)33.AGSprojectwillconsistoffourtoeightnaturalgassaltstoragecavernstobelocatedinPinalCountyArizona,nearEloyhavinganinitialdesignworkinginventoryofone(1)billioncubicfeet(Bcf)percavernforatotalcapacityofatleastfourBcfandhavingaprojectedminimumaggregateinjectioncapacityof168,000‐183,000thousandcubicfeet(Mcf)perdayandaprojectedminimumaggregatewithdrawalcapacityof400,000Mcfperday.TEPisstillevaluatingtheproposalfromKinderMorganandwillcontinuetoevaluateproposalsfromentitieswhichpresentthegreatestopportunityforincreasingsystemflexibility,andprovidingthegreatestsupportforreliabilityattheleastcost.
32Anaturalgasconstructionprojectcantakeanaverageofaboutthreeyearsfromthetimeitisfirstannounceduntiltheprojectisplacedinservice.Thefirststepintheprocessistoconductanopenseasontodeterminemarketinterest.Anopenseasonisheldfor1‐2months,givingpotentialcustomersanopportunitytoenterintoanagreementtosignupforaportionofthecapacityrightsthatwillbeavailable.Ifenoughinterestisshownduringtheopenseason,thesponsorswilldevelopapreliminaryprojectdesignandmoveforward.Ifnotenoughinterestisevident,theprojectwillmostlikelybedroppedorplacedonindefinitehold.http://passportebb.elpaso.com/WesternPipes‐Notices/EPNG‐Notices/NOTICE_16834_Arizona_Gas_Storage_Project.pdf33No‐noticetransportationservicesallowLDCsandutilitiestoreceivenaturalgasfrompipelinesondemandtomeetpeakserviceneedsforitscustomers,withoutincurringanypenalties.Theseservicesincludeaccesstostoragefacilitiesthatprovideincreasedflexibilitytoreceiptanddeliverypointsonareal‐timebasis.
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CHAPTER 8
REGIONAL TRANSMISSION PLANNING
OverviewNinthBiennialTransmissionAssessmentTEPparticipatesintheBiennialTransmissionAssessment(BTA)conductedbytheCommissiontoassesstheadequacyofArizona’stransmissionsystemtoreliablymeetexistingandfutureenergyneedsofthestate.The9thBTAconcludedthattheexistingandplannedtransmissionsystemisadequatetoreliablyservetheneedsofthestateduringthestudyperiod.
ReliabilityMustRun(RMR)AssessmentAnRMRconditionexistsfortheTucsonloadpocketbecausetheTEPloadexceedsthesystemimportlimitoftheexistingandplannedtransmissionsystem.However,theprojectedloadcanbeservedthroughacombinationofpowerimportsandlocalgeneration.Inthe7thBTA,theCommissionorderedthesuspensionofRMRstudiespendingreviewofcriteriathatwilltriggerrestartingRMRstudies.TEPhasnotmetanyofthecriteria,therefore,RMRstudieswerenotperformedforthe9thBTA.
TenYearSnapshotStudyTEPparticipatedintheTenYearSnapshotStudyconductedbytheSouthwestAreaTransmissionArizonaSubcommittee(SWAT‐AZ)participants.ThisstudyconcludedthattheArizona2025transmissionplanisrobustandcanwithstandsimulatedcontingenciesandthatdelayinganysingleplannedprojectbeyond2025didnothavesignificantimpactonsystemperformance.
ExtremeContingencyStudyTEPconductedpowerflowanalysisofoutagesinvolvingTEPcorridorsthatinclude3ormorelinesandTEPsubstationsthatinclude3ormoretransformerswithalowsidevoltageof100kVandhigher.ThisevaluationisconsideredCriticalEnergyInfrastructureInformation(CEII)andwasfiledwiththeCommissionunderaconfidentialityagreement.
EffectsofDistributedGenerationandEnergyEfficiencyProgramsAsrequiredinthe8thBTA,TEPperformedasensitivityanalysistodeterminetheeffectsofDGandEEprogramsonfuturetransmissionneeds.Thisanalysisdeterminedthatnoadditionaltransmissionfacilitiesarerequiredduetotheseprograms.
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WestConnectTEPactivelyparticipatesinWestConnectregionalplanningandinterregionalcoordinationactivitiesincompliancewithFERCOrder1000.WestConnectisoneoffourplanningregionsthatwasestablishedtodevelopandimplementFERCapprovedregionalplanningprocessesdesignedtofacilitatejointregionaltransmissionplanningamongthetransmissionowningentitiesthatparticipateintheWestConnectPlanningRegion.
ParticipantsmayjoinoneoffivesectorsconsistingoftheTransmissionOwnerwithLoadServingObligations(TOLSO)34,TransmissionCustomer,IndependentTransmissionDeveloper(ITD),StateRegulatoryCommissionandKeyInterestGroup.Currentlythereareeighteen(18)TransmissionOwnersintheTOLSOsector,eight(8)developersintheITDsectorandone(1)participantintheKeyInterestGroup.TheTransmissionCustomerandStateRegulatoryCommissionsectorshavenoparticipants.MembersofsectorsparticipateinWestConnectgovernancethatconsistsofthePlanningManagementCommittee(PMC)withsubcommitteesincludingPlanningSubcommittee(PS),CostAllocationSubcommittee(CAS),ContractsandComplianceSubcommitteeandLegalSubcommittee.TEPisactiveonthePMC,PSandCASaswellasonvarioustaskforcesasrequired.WestConnect’sregionalplanningprocessisbiennialandisimplementedaccordingtothefollowingtimeline.
Figure35‐WestConnectPlanningTimeline
CoordinationwiththeotherthreeWesternPlanningRegions(CAISO,ColumbiaGrid(CG)andtheNorthernTierTransmissionGroup(NTTG))occursthroughouttheprocessbeginningwithdevelopmentofthestudyplan.ThefootprintsoftherespectiveWesternPlanningRegions(WPR)areshowninthefollowingWesternPlanningRegionsmap.
34TEP/UNSEisanenrolledmemberofTOLSO.
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Map11‐WesternPlanningRegions
ParticipatinginWestConnectandinterregionalcoordinationactivitiesisessentialtomaintainingdataandmodelingaccuracyandtoensuringconsistencyamonglocal,regionalandWesternInterconnection‐widetransmissionplans.CoordinationwithWECC,asdescribedinthefollowingsectionisevolving.
WECCTEPparticipatesonthePlanningCoordinatingCommittee(PCC)andTransmissionExpansionPlanningPolicyCommittee(TEPPC),aswellastheirrespectivesubcommittees.ThesecommitteesareintheprocessofbeingreplacedbytheReliabilityAssessmentCommittee(RAC)asapprovedbytheWECCBoardonDecember6,2016.Theapprovedproposalstates,“TheRACwouldreplacethecurrentTEPPCandPCCandassumeresponsibilityforallproductscurrentlyunderthepurviewofbothcommittees.TheRACwouldbeasinglereliability
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assessmentorganizationwithinWECCthatwouldfacilitateaunifiedapproachtoevaluatingpotentialreliabilityrisksandefficientlyusestakeholders’expertise”.35
RACgovernanceisaccomplishedthroughfoursubcommitteesconsistingoftheScenarioDevelopment,Studies,ModelingandDataSubcommitteesreportingtotheRAC.RepresentationoneachofthesubcommitteesincludesasinglememberrepresentingthefourWPRplustwoInternationalPlanningRegions(IPR)36,alongwiththeotherparticipantsasdescribedintheWECCBoardapprovedRACproposal.
ThekeydeliverableofRACisaprocesstocreateanAnchorDataSet(ADS)thatwillbeginandconcludewiththebiennialTransmissionPlansoftheWPR.TheADSwillbeacombinationofsolvedpowerflowandproductioncostmodelsthatmaybeusedbyWECC,theWPR’sandotherentitiesasaconsistentstartingpointforreliabilityassessmentandotherregionalstudies.TEPparticipatedwithWestConnectondevelopmentoftheADSprocessincollaborationwiththeotherthreeWPRandWECC.
Multi‐Regional&Interconnection‐WideTransmissionPlanningTEPparticipatesintheSouthwestAreaTransmission(SWAT)Groupthatiscomprisedoftransmissionregulators/governmentalentities,transmissionusers,transmissionowners,transmissionoperatorsandenvironmentalentities.SWATTransmissionOwnermembershipsystemsareincludedinthestatesofTexas(ElPaso),NewMexico,Arizona,NevadaandCalifornia.SWATparticipatesintheWestConnectregionalplanningprocess,representingitsmembers,primarilyincoordinatingmodeldevelopment.TheinitialinvestigationoftheimplicationsofpendingEPAruleswascoordinatedthroughSWAT.ThisstudyeffortwassubsequentlyexpandedtothesystemsinWestConnect,Californiaandbeyond.
SWATcreatedaCoalReductionAssessmentTaskForce(CRATF)inFebruary2013forthepurposeofassessingthereliabilityimpactsofanticipatedaswellashypotheticalcoalretirementsinthesouthwest.IntheEighthBTA,theCRATFreportedonthefirstphaseofareliabilitystudyandwasorderedinDecisionNo.74785tofiletheresultsofthestudywithin30daysofcompletion.CurrentlybeingledbyTEP,theultimategoalistoevaluatetheimpactsfromreducedavailabilityofcoalgenerationwithinthescopeandtimelineoftheWestConnectRegionalStudyPlan.
TEPparticipatedwithArizonaElectricPowerCooperative(AEPCO),ArizonaPublicServiceCompany(APS),SRPandtheWesternAreaPowerAdministration(WAPA),indevelopingarealisticArizonaUtilityCleanPowerPlan(CPP)CompliantscenariothatwassubmittedtoWestConnect.TheWestConnectPMCadoptedthatscenarioasa“WestConnect”Utilityscenariothatiscurrentlyintheprocessofevaluation,alongwithotherhigherrenewablepenetration/coalretirementscenarios,toidentifytransmissionsystem“opportunities”.
TheWestConnectcasesandstudyworkwillbeusedtoassesstheimpactoftheCPPonthereliabilityoftheArizonatransmissionsystemasorderedbytheACCinthe9thBTA.TheobjectiveofcoordinatingwiththeWestConnectbiennialregionalplanningprocesswastogainaccesstothemostcurrentandaccuratedatasetsforthesystemssurroundingArizona.
EvolvingResourceMixChallengesTheArizonatransmissionsystemwasdesignedtoaccommodatethelargecoalgenerationfleetthatisgeographicallydistantfromtheloadcenters.Theintegrationofrenewableenergyprojectsandthesimultaneousreductionofcoalresourcesislikelytohaveanimpactontheoperationofthetransmissiongrid.
35Source:Recommendation1.CreateaReliabilityAssessmentCommittee(RAC)oftheJPTRTFProposal–RevisedOctober5,2016.36TheIPRincludetheBajaMexicoandwesternCanadianregions.
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Thelossofsysteminertiaanddynamicreactivecapability,aswellaschangesinpowerflows,posesignificantrisksandupdatesshouldcontinuetobefiledintheBTAprocess.
TEPgaveapresentationattheRETI2WesternOutreachWorkshopinLasVegasonSeptember1,2016.Themainpurposewas,“…tobetterunderstandthetransmissionimplicationsofaccessingrenewableenergyfromelsewhereintheWest,aswellasidentifyingpotentialmarketsforCalifornia'sownexcessrenewableenergyproductionthatmayhelpmeetCalifornia’s2030RPSandGHGgoalsmostefficiently”.KeyconcernsexpressedbyTEPwere:
AnIntegratedRegionalResourcePlanthatdefinesthenecessaryenergyresourcesandtransmissionassetswithacoordinatedstrategytodeploythemdoesnotyetexist
SuchanIntegratedRegionalResourcePlanisnecessarytoconductcomprehensiveregionallycoordinatedreliabilitystudies.
Shorttimelineforexpectedrateofrenewableresourcedeploymentandcoalplantretirements
KeyIssues: CoalPlantRetirements/ReplacementResourcesareuncertain ChangingCaliforniaImports/ExportsdrivenbyNuclearandGasOTCRetirements,IncreasingRenewablePenetrationandWindResourcesfromNewMexico&Wyoming
Lossof“inertia”associatedwithcoalplantshutdown,resultinginpossiblestabilityand/orfrequencyresponseimpact
ChangeingenerationpatternandresourcemixwillimpactPathRatings Newrequirementsthatinclude,butarenotlimitedto,ramping,frequencyresponse,voltageregulationanddynamicreactivecapabilitywillhavetobedeterminedthroughseparatestudiesamongtheregions.
ThereforeTEPisinterestedinobtainingfrequencyresponseandstabilityinformationbasedonsystemanalysesthattakerapidlychangingoperatingconditionsresultingfromhighrenewableresourcepenetration,coal‐andgas‐firedgenerationretirementsandmateriallyrevisedresourcemixintoconsideration.Suchanalysisisintendedtobeusedtoidentifyadditionalalternativemarketmechanismsbasedondemonstrationofactualanticipatedphysicaltransmissionsystembenefits.TheseeffortswillrequirefurthercontinuedcoordinationandcooperationamongtheArizonautilitiesandstakeholders,SWAT,WestConnect,theotherWPRandIPR,andWECC.TheADSwillbeamongthemostcriticalassetstoallowcredibleanalysestobecompletedtoinformresourceandtransmissionplanningdecisions.
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OtherRegionalTransmissionProjectsOtherlargeprojectsproposedforinterconnectionineasternandsoutheasternArizonamayinfluenceTEP’slong‐termresourceplanningdecisions.
NogalesDCIntertieTheNogalesInterconnectionProjectisaproposeddirectcurrentinterconnection,commonlyknownasaDCtie,whichwillallowforanasynchronousinterconnectionbetweentheelectricgridsinsouthernArizonaandthenorthwestregionofMexico.Theprojectwillsupportthereliabilityoftheelectricsystem,includingprovidingbidirectionalpowerflowandvoltagesupport,aswellasemergencyassistance,asneeded,fortheelectricsystembothnorthandsouthoftheborder.
Map12‐NogalesDCIntertieStudyAreaandRoute
Thefirstphasewouldconsistofanew150MWDCtielocatedonpropertycurrentlyownedbyTEP;anew3‐mile138kilovolt(kV)transmissionlinethatwouldoriginateatUNSE'sValenciaSubstationinNogales,ArizonaandextendtothewestandsouthtothenewGatewaySubstation;andanewapproximately2‐mile230kVtransmissionlinethatwouldextendsouthfromtheGatewaySubstationtotheU.S.‐MexicoborderwhereitwouldinterconnectwithatransmissionlinetobeconstructedinMexico.ThesecondphasewouldexpandtheDCTiecapacityto300MW.Thetimingofthesecondphaseisnotyetcertain.
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Picture1–SharylandHVDContheTexas‐MexicoBorder
SunZiaSouthwestTransmissionProjectSunZiaisadouble‐circuit500kVlinethatwilloriginateincentralNewMexicoataproposedsubstationnearAncho,NewMexicoandterminateattheproposedPinalCentralsubstationnearCasaGrande,Arizona.ItisbeingplannedtoprovideNewMexicoandArizonaadditionalaccesstorenewableenergyresources.SunZiacouldincreaseimportcapacityfromNewMexicobyasmuchas3,000MW.
TheSunZiaSouthwestTransmissionProjectisplannedtobeapproximately515milesoftwosingle‐circuit500kVtransmissionlinesandassociatedsubstationsthatinterconnectSunZiawithnumerous345kVlinesinbothstates.SunZiawillconnectanddeliverelectricitygeneratedinArizonaandNewMexicotopopulationcentersintheDesertSouthwest.
TheelectricitydistributedbySunZiashouldhelpmeettheSouthwestRegionandCalifornia’sdemandforrenewableenergy.
OnJanuary23,2015,theBLMissuedaRecordofDecision(ROD)thatapprovedSunZia’sapplicationforaright‐of‐wayacrossfederallyownedproperty.TheRODconcludedthesixandhalfyearefforttocomplywithNEPA.
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Map13‐SunziaProposedProjectRoute
TheSouthlineTransmissionProjectTheSouthlineTransmissionProjectisaproposedtransmissionlinedesignedtocollectandtransmitelectricityacrosssouthernNewMexicoandsouthernArizona,bringingpotentialelectricsystembenefitstotheDesertSouthwest.Theprojectisbeingdesignedtominimizelandandresourceimpactsbydevelopingaroutealongexistinglinearfeaturesandbyupgradingexistingtransmissionlineswherefeasible.Theprojectwillprovideupto1,000megawattsoftransmissioncapacityinbothdirections,andwillinterconnectwithupto14existingsubstationlocations.Theprojectconsistsoftwosections:
TheNewBuildSectionwouldinvolvetheconstructionofapproximately240milesofnew345kVdouble‐circuitelectrictransmissionlinesinNewMexicoandArizona.TheNewBuildisdefinedbyendpointsoftheexistingAftonSubstation,southofLasCruces,NewMexico,andtheexistingApacheSubstation,southofWilcox,Arizona.
TheUpgradeSectionwouldconsistofdouble‐circuit230‐kVlinesconnectingtheApacheSubstationtotheexistingSaguaroSubstationnorthwestofTucson,Arizona.TheUpgradeSectionwouldrebuildapproximately120milesofexistingsingle‐circuit115‐kVtransmissionlines,currentlyownedbyWAPA,providingupto1,000MWoftransmissioncapacitybetweenthesesubstations.Anewlinesegmentapproximately2milesinlengthwillberequiredtointerconnectwiththeexistingTEPVailSubstation,locatedjustnorthoftheexistingWesternline.TheupgradesectionwillalsointerconnectatTEP’sTortolitaandDeMossPetriesubstations.
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Map14‐SouthlineProposedProjectRoute
WesternSpiritCleanLineTheWesternSpiritCleanLinewillcollectrenewablepowerfromeast‐centralNewMexicoanddeliverapproximately1,000MWofpowertomarketsinthewesternUnitedStatesthathaveastrongdemandforrenewableenergy.Theenergywillbetransportedviaanapproximately140‐miletransmissionlinetotheexistingelectricgridinnorthwesternNewMexicowhereitinterconnectswiththeTEPtransmissionsystematSanJuan.
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Figure36‐WesternSpiritCleanLineProject
EnergyImbalanceMarketsEnergyimbalanceonanelectricalgridoccurswhenthereisadifferencebetweenreal‐timedemand,orloadconsumption,andgenerationthatisprescheduled.Priortotheemergenceofrenewableenergytechnologyonthegrid,balancingoccurredtocorrectoperatinglimitswithin30minutes.Flowsareoftenmanagedmanuallybysystemoperatorsandtypicallybilaterallybetweenpowersuppliers.Theintermittentcharacteristicsofwindandsolarresourceshaveraisedconcernsabouthowsystemoperatorswillmaintainbalancebetweenelectricgenerationanddemandinsmallerthanthirtyminuteincrements.EIMscreateamuchshorterwindowmarketopportunityforbalancingloadsandresources.AnEIMcanaggregatethevariabilityofresourcesacrossmuchlargerfootprintsthancurrentbalancingauthoritiesandacrossbalancingauthorityareas.Thesubhourlyclearing,insomecasesdownto5minutespotentiallyprovideseconomicadvantagetoparticipantsinthemarket.EIMsproposetomoderate,automateandeffectivelyexpandsystem‐widedispatchwhichcanhelpwiththevariabilityandintermittencyofrenewableresources.EIMsboasttocreatesignificantreliabilityandrenewableintegrationbenefitsbysharingresourcereservesacrossmuchlargerfootprints.
CAISO–EnergyImbalanceMarketEIMOnNovember1,2014,theCAISOwelcomedPacifiCorpintothewesternEIM.Nevada‐basedNVEnergybeganactiveparticipationintheEIMonDecember1,2015.RecentlyArizonabasedArizonaPublicServiceandWashingtonbasedPugetSoundEnergyenteredintothereal‐timemarketonOctober1,2016.ThisvoluntarymarketserviceisavailabletoothergridsintheWest.SeveralWesternutilitieshavecommittedtojointheEIM.PortlandGeneralElectrichasfiledtheirintenttojoininOctoberof2017.IdahoPowerhasannouncedtheirintenttojointhewesternEIMinAprilof2018.InDecemberof2016,SeattleCityLightsignedanagreementtojointhemarketinAprilof2019.AndMexicogridoperatorCENACEhasformallyagreedtoexploreparticipationofitsBajaCaliforniaNortegridinthemarket.
The project will begin near Corona, New Mexico and will terminate northwest of Albuquerque at the Public Utility of New Mexico's (PNM) Rio
Puerco substation. Clean Line and RETA have worked with a wide range of interested parties to select a route, including federal, state and
county agencies, environmental NGOs, and Native American tribes. Clean Line will meet with each landowner affected by the Western Spirit
Clean Line and will take landowner feedback into consideration when determining structure placements and possible route adjustments.
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ParticipantsintheEIMexpecttorealizeatleastthreebenefits:
Produceeconomicsavingstocustomersthroughlowerproductioncosts ImprovevisibilityandsituationalawarenessforsystemoperationsintheWesternInterconnection Improveintegrationofrenewableresources
TEPcontractedwiththeenergyconsultingfirmE3toperformastudytoevaluatetheeconomicbenefitsofTEPparticipatingintheenergyimbalancemarket.E3evaluatedtheEIMbenefitstoTEPbasedonasetofstudyscenariosdefinedthroughdiscussionswithTEPtoreflectTEPsysteminformation,includingloads,resources,andpotentialtransmissionconstraintsforaccesstomarketsforreal‐timetransactions.TheprojectanalysisbeganinFebruary2016andwascompletedinDecember,2016.
Resultsofthestudyplaceapproximatelytwo‐thirdsofanyestimatedsavingoccurring7%ofthetimefromextremereal‐timepricing.WiththesizeofTEP’sgenerationfleetcombinedwith40%ofTEP’sgenerationlimitedfromEIMparticipationduetosystemrestrictions,TEPestimatesanannualbenefitofapproximately$2.5million.Itisexpectedthatthisbenefitwilldiminishovertime.
TEPhasstartedtheprocessofdeterminingtherelevantcostsassociatedwithjoiningtheCAISOEIMmarketaswellasevaluatingwhatotherwesternEIMmarketoptionsmaybeavailable,ifany.Itisestimatedthatthecostanalysiswillbecompletedsometimeduringthesummerof2017.
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Map15‐CAISOEIMMap
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RegionalTransmissionOrganizations(RTOs)Agroupconsistingofinvestorownedutilities,cooperativepowerprovidersandpublicpowerentitieswasformedtoconsiderandanalyzepotentialalternativestojoiningtheCAISOEIM.Thegroup,knownastheSouthwestRegionalEIMAlternativesWorkingGroup(“WorkingGroup”)wasformedinordertoevaluatethepotentialregionalsynergiesandopportunitiesofjoiningorformingaregionalmarket.BasedontherecentexpansionoftheCAISOEIM,bothintermsofparticipantsandmarketopportunities,theWorkingGrouprecognizedtheneedtoevaluatethemeritsoftheCAISOEIMandalternativemarketstructures.Theworkinggroupalsorecognizedtheneedtoevaluatetheimplicationsforexistingbi‐lateralmarketsandpotentialimpactstoregionalgridoperationsintheSouthwest
Map16‐WestConnectSubregionalPlanningGroups
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TheWorkingGroupincludesAEPCO/ACESEnergyManagement;ElPasoElectricCompany(EPE);PublicServiceCompanyofNewMexico(PNM);SRP;Tri‐StateGenerationandTransmissionAssociation(“Tri‐State”);TEP;UNSE;andWAPA.TheobjectivesoftheWorkingGroupareasfollows:
Determineeconomicbenefitsofpotentialalternativesandweighopportunitiesformarketparticipation,
DetermineiftheCAISOEIMandregulatedmarketsintheMidwestandMountainwestoffercertaineconomicbenefitsrelatedtomoreefficientutilizationofgeneratingassetsandtransmissioninfrastructure,
Evaluateoperationalbenefitsespeciallyastheyrelatetorenewableresourceintegrationandsystemregulation,
EstablishifEIM/RegulatedMarketsandcertainalternativesmayofferreliabilitybenefitsrelatedtothegridoperations,and
Considergovernancestructureandimplicationsforresourcecontrol.
TheWorkingGroupevaluatedthecostsandbenefitsofvariousregionalmarketoptionsincluding1)establishingaregionalmarketbyjoininganexistingmarket,2)establishingitsownregionalmarketor3)ahybridofthetwooptions(i.e.usingresourcesofanexistingmarketoperatortoestablishandoperateanascentsouthwestmarket).TheWorkingGroupdiscussedvariousoptionswiththeCAISO,theSouthwestPowerPool,andtheMountainWestTransmissionGroup.Atthispointthereisrecognizablevaluetoestablishingaregionalmarketaswellaspotentialbenefits.However,thecostofjoiningorestablishingaregionalmarkethaveyettobedeterminedandfullyevaluated.TEPwillcontinuetoengagewithmarketoperatorstodeterminethebestpathforwardforitscustomers.
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CHAPTER 9
TEP EXISTING RESOURCES
TEP’sExistingResourcePortfolioThissectionprovidesanoverviewofTEP’sexistingthermalgeneration,renewablegeneration,andtransmissionresources.Forthethermalgenerationresourcesitprovidesdetailsoneachstation’sownershipstructure,fuelsupply,environmentalcontrols,historicalemissions,andabrieffutureoutlook.Fortherenewablegenerationresources,itprovidescapacityandtechnologyinformationaswellascertaindetailsontheconstructionofthefacilities.Informationonconnectionstothebulkelectricsystemisprovidedinthetransmissionsection.Inaddition,thischapterhighlightsitscurrentuseofthewholesalepowermarketforfirmcapacityresources.
TEP’sexistingthermalresourcecapacityis2,649MW.Inaddition,theCompanyalsoreliesonthewholesalemarketforfirmcapacityPPAstomeetitssummerpeakobligations.Table18belowprovidesasummaryofTEP’sexistingthermalresources.
Table18‐TEPExistingThermalResources
Generating Station Unit Fuel Type
Net Nominal Capability
MW
Commercial Operation
Year
Operating Agent
TEP’s Share %
TEP Planning Capacity
Springerville 1 Coal 387 1985 TEP 100 387
Springerville 2 Coal 390 1990 TEP 100 406
San Juan 1 Coal 340 1976 PNM 50 170
San Juan 2 Coal 340 1973 PNM 50 170
Navajo 1 Coal 750 1974 SRP 7.5 56
Navajo 2 Coal 750 1975 SRP 7.5 56
Navajo 3 Coal 750 1976 SRP 7.5 56
Four Corners 4 Coal 785 1969 APS 7 55
Four Corners 5 Coal 785 1970 APS 7 55
Sundt Steam 1‐4 Gas 422 1958‐1967 TEP 100 422
Luna Energy Facility 1‐2 Gas 555 2006 PNM 33.3 184
Gila River 3 Gas 550 2003 TEP 75 413
Combustion Turbines Gas/Oil 219 1972‐2001 TEP 100 219
Total Planning Capacity 2,649
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Map17‐TEPSystemMap
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CoalResources
Map18‐MapofCoalGenerationandPrimaryFuelSources
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SpringervilleGeneratingStation
SpringervilleGeneratingStation(“Springerville”)isafourunit,base‐loadcoal‐firedsteamelectricgeneratingstationlocated15milesnortheastofSpringerville,Arizona.TEPoperatesallfourunits.Units1and2areownedbyTEP.Tri‐StateGenerationandTransmissionownsUnit3,andSaltRiverProjectownsUnit4.
OwnershipStructure:
Units Capacity (MW)
In‐Service Date
Planned Retirement
Unit 1 387 1985 Not Planned
Unit 2 406 1990 Not Planned
Unit 3 415 2006 Not Planned
Unit 4 417 2009 Not Planned
ParticipationAgreement:ExpiresJanuary1,2078
CoalSupply:AgreementsignedJune17,2003withPeabodyEnergysourcedfromElSegundo/LeeRanch,expiresDecember31,2020.
PollutionControls:
Unit SO2 NOx PM Hg
1 SDA LNB SOFA FF ACI, CaBR2
2 SDA LNB SOFA FF ACI, CaBR2
3 SDA SCR FF ACI, CaBR2
4 SDA SCR FF ACI CaBR2
SDA – Spray Dry Absorber FF – Fabric Filter (Bag house) LNB SOFA – Low NOx burners – Separated overfired air SCR – Selective catalytic reduction
CaBR2 – Calcium bromide (added to coal)
ACI – Activated carbon injection
Outlook:Units1and2willbesubjectto“ReasonableProgress”provisionsoftheRegionalHazerule,whichcouldmandateemissionreductionsinthe2025to2027timeframe.Givencurrentcontrolsandrecentreductionsatotherregionalplants,TEPdoesnotbelieveadditionalcontrolsarelikely.
TEP793 MW
SRP417 MW
Tri‐State415 MW
‐
5,000
10,000
15,000
20,000
25,000
2000 2003 2006 2009 2012 2015
SO2 and NOx, tons
Historical Emissions, TEP Share
SO2 NOx
SpringervilleGeneratingStation
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SanJuanGeneratingStation
SanJuanGeneratingStation(“SanJuan”)isafourunit,coal‐firedbase‐loadsteamelectricgeneratingstationlocated17mileswestofFarmington,NewMexico.PublicServiceCompanyofNewMexico(PNM)istheoperatingagentforallfourunits.Units1and2areownedbyTEPandPNM.Units2and3willberetiredattheendof2017.RemainingownerswillincludeTEP,PNM,theCityofFarmingtonNewMexico,theCountyofLosAlamos,NewMexicoandtheUtahAssociatedMunicipalPowerSystem(UAMPS)
OwnershipStructure(after2017):
Units Capacity (MW)
Entered Service
Planned Retirement
Unit 1 340 1976 2022 (1)
Unit 2 340 1973 December
2017
Unit 3 496 1979 December
2017
Unit 4 507 1982 Not planned
(1) TEP does not plan to extend its participation
agreement for San Juan 1 beyond June 2022.
ParticipationAgreement:ExpiresJune30,2022
CoalSupply:AgreementwithWestmorelandCoalCompanysourcedfromSanJuanMineiseffectivefromJanuary2016throughJune2022.
PollutionControls:Unit SO2 NOx PM Hg
1 FGD SNCR FF ACI
2 FGD LNB SOFA FF ACI
3 FGD LNB SOFA FF ACI
4 FGD SNCR FF ACI
FGD – Flue Gas Desulphurization‐wet FF – Fabric Filter (Bag house) LNB SOFA – Low NOx burners – Separated overfired air SNCR – Selective non‐catalytic reduction ACI – Activated carbon injection
Outlook:TEPintendstoenditsparticipationinSanJuanattheendofJune2022,coincidingwiththeexpirationoftheplantparticipationagreement.
PNM496 MW
TEP170 MW
COF108 MW
Los Alamos36 MW
UAMPS37 MW
‐
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2000 2003 2006 2009 2012 2015
SO2 and NOx, Tons
Historical Emissions, TEP Share
SO2 NOx
SanJuanGeneratingStation
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NavajoGeneratingStation
NavajoGeneratingStation(“Navajo”)isathreeunit,coal‐firedbase‐loadsteamelectricgeneratingstationlocatedfivemileseastofPage,ArizonaSaltRiverProjectistheoperatingagentforallthreeunits.PlantparticipantsincludeTEP,SRP,USBureauofReclamation,LosAngelesDepartmentofWaterandPower,ArizonaPublicService,andNVEnergy.
OwnershipStructure:
Units Capacity (MW)
In‐Service Date
Planned Retirement
Unit 1 750 1974 2019
Unit 2 750 1975 2019
Unit 3 750 1976 2019
ParticipationAgreement:Extendstotheexpirationdateoftheplant’sleasewiththeNavajoNation,whichisDecember20,2019.InFebruary2017,TEPjoinedotherNavajoownersinvotingintocontinueoperationsattheplantthroughDecember2019ifaleaseextensionagreementcanbereachedwiththeNavajoNation.
CoalSupply:AgreementwithPeabodyEnergysourcedfromKayentaMineexpiresDecember2019.
PollutionControls:Unit SO2 NOx PM Hg
1 FGD LNB SOFA ESP ACI, CaBR2
2 FGD LNB SOFA ESP ACI, CaBR2
3 FGD LNB SOFA ESP ACI, CaBR2
FGD – Flue Gas Desulphurization‐wet
ESP – Electrostatic Precipitator
LNB SOFA – Low NOx burners – Separated overfired air
ACI – Activated carbon injection
CaBR2 – Calcium bromide (added to coal)
Outlook:FinalRegionalHazerequirementsforNavajocallfortheretirementofoneunitattheendof2019,andtheadditionofSelectiveCatalyticReductionontheremainingunitsbytheendof2030.
Aleaseextensionwouldcontinuepowerproduction,maintainplantemploymentandpreserverevenuesfortheNavajoNationandHopiTribe,providingcontinuedsupportfortheareaeconomythrough2019.Withouttheleaseextension,theownerswouldbeforcedtoceasepowerproductionin2017toallowfordecommissioningworktobecompletedbeforethecurrentleaseexpires.TEPhasexpresseditswillingnesstoworkwiththeNavajoNationinsearchoflong‐termsolutionsforNavajothatbalancestheneedsoftheplant’smanystakeholdersandservesthebestinterestsofTEP’scustomers.
SRP965 MW
APS315 MW
USBR547 MW
NV Energy255 MW
TEP168 MW
‐
1,000
2,000
3,000
SO2 and NOx, tons
Historical Emissions, TEP Share
SO2 NOx
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FourCornersPowerPlant
FourCornersPowerPlant(“FourCorners”)isatwounit,coal‐firedbaseloadsteamelectricgeneratingstationlocated18mileswestofFarmington,NewMexico.APSistheoperatingagentforbothunits4and5.PlantparticipantsincludeTEP,APS,SRPandPNM.
OwnershipStructure:
Units(1) Capacity (MW)
In‐Service Date
Planned Retirement
Unit 4 770 1969 2031
Unit 5 770 1970 2031
(1)APSshutdownunits1‐3inDecember2013tocomplywithRegionalHazeBARTrequirements.
ParticipationAgreement:Co‐tenancyagreementexpiresJuly2041.
CoalSupply:AgreementwithNavajoTransitionalEnergyCompanysourcedfromtheNavajoMineexpiresJuly2031.
PollutionControls:Unit SO2 NOx PM Hg
4 FGD SCR (1) FF WFGD, FF, CaBR2
5 FGD SCR (1) FF WFGD, FF, CaBR2
(1) Required by end of July 2018 to comply with Regional Haze
BART requirements
FGD – Flue gas desulfurization‐wet FF – Fabric Filter (Bag house) SCR – Selective catalytic reduction
CaBR2 – Calcium bromide (added to coal)
Outlook:TEPanticipatesthattheplantwillcloseafterexpirationofcurrentcoalsupplycontractin2031.TEPwillcontinuetoevaluatethelong‐termviabilityofitscoaloperationsatFourCornersinsubsequentIRPplanningcycles.
APS1,080 MW
PNM200 MW
SRP150 MW
TEP110 MW
‐
500
1,000
1,500
2,000
2,500
2000 2003 2006 2009 2012 2015
SO2 and NOx, Tons
Historical Emissions, TEP Share
SO2 NOx
FourCornersPowerPlant
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H.WilsonSundtGeneratingStation
SundtGeneratingStation(“Sundt”)isafourunit,peakandintermediate‐load,steamelectricgeneratingstationlocatedinTucson,Arizona.Units1,2,and3aregasoroilburninggeneratingunitsandUnit4firesnaturalgasandlandfillgas.
Ownership:SundtGeneratingStationis100%ownedandoperatedbyTEP.
Units Capacity (MW)
Entered Service
Planned Retirement
Unit 1 81 1958 2020
Unit 2 81 1960 2022
Unit 3 104 1962 2030
Unit 4 156 1967 Not Planned
FuelSupply:TheprimaryfuelatSundtGeneratingStationisnaturalgas.ThestationissuppliedbygaspurchasedonthespotmarketandthroughgashedgingagreementsthatareconsistentwithTEP’shedgingpolicy.NaturalgasisdeliveredthroughtheKinderMorgannaturalgaspipelinewhichislocatedadjacenttotheSundtproperty.
PollutionControls:Unit SO2 NOx PM Hg
1 NA LNB NA NA
2 NA LNB NA NA
3 NA LNB NA NA
4 NA LNB SOFA NA NA
LNB SOFA – Low NOx burners – Separated overfire air
NA – Not Applicable
Outlook:In2015,thedepletionoftheCompany’sexistingcoalinventoryattheSundtGenerationStationandlownaturalgaspricessupportedthepermanenttransitionofSundtUnit4fromcoaltonaturalgastwoandonehalfyearsaheadoftheDecember2017deadlineinitsagreementwiththeEPA.ThistransitiontonaturalgashasreducedTEP’snear‐termfuelsupplycostsforcustomersandmarkstheendofSundt’s27yearsofoperationsoncoal.
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LunaEnergyFacility
LunaEnergyFacility(“Luna”)isa555MWnaturalgas‐firedpowerplantconsistingofasingle2on1combinedcyclepowerblock.ThepowerblockutilizestwoGE7FAgasturbines,twoheatrecoverysteamgenerators(HRSGs),andaGED11steamturbine.ThefacilityislocatedthreemilesnorthofthetownofDeming,NewMexico.
Ownership:Lunaownershipsharesaredividedbyone‐thirdPNM,one‐thirdTEPandone‐thirdSamchullyCo.Ltd.PNMistheplantoperator.
Units Entered Service
Planned Retirement
Power Block 1 2006 Not Planned
FuelSupply:EachLunaparticipantmanagesitsowngassupply.TEPpurchasesnaturalgasonthespotmarketandthroughhedgingcontractsthatareconsistentwiththeUNSEnergyHedgingpolicy.
PollutionControls:LunaEnergyFacilityisanaturalgas‐firedcombinedcyclecombustionturbinewithdryLNBandSCRforNOxcontrol.Asagreenfieldsite,aPreventionofSignificantDeterioration(PSD)permitwasobtainedpriortoconstruction.APSDpermitrequiresthatBestAvailableControlTechnology(BACT)beappliedforcontrolofSO2andNOx,andthefacilitymustcomplywiththeAcidRainprogramlimitsforSO2andNOx.
Unit SO2 NOx PM Hg
1 NA SCR NA NA
2 NA SCR NA NA SCR – Selective Catalytic Reduction NA – Not Applicable
Outlook:Luna’sfastrampingcapabilitiesprovideTEPwithlow‐cost,intermediateloadresourcetosupporttheintegrationofrenewables.
TEP184 MW
PNM184 MW
Samchully184 MW
LunaEnergyFacility
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GilaRiverGeneratingStation
GilaRiverGeneratingStation(“GilaRiver”)isa2200MWfourblock,2on1naturalgas‐firedcombinedcycleelectricgeneratingstationlocatedthreemilesnorthofthetownofGilaBend,inMaricopaCounty,Arizona.
Ownership:Units1and2areownedbyBealBank,Unit3isowned75%byTEPand25%byUNSE.Unit4waspurchasedin2016bySaltRiverProject.Underthatagreement,SaltRiverProjectwilltakeownershipoftheunitin2017.
Units Capacity (MW)
Entered Service
Planned Retirement
Power Block 1 550 2006 Not Planned
Power Block 2 550 2006 Not Planned
Power Block 3 550 2006 Not Planned
Power Block 4 550 2006 Not Planned
FuelSupply:EachGilaRiverparticipantmanagesitsowngassupply.TEPandUNSEpurchasesnaturalgasonthespotmarketandthroughhedgingcontractsthatareconsistentwiththeUNSEnergyHedgingpolicy.
PollutionControls:Block SO2 NOx PM Hg
1 NA SCR NA NA
2 NA SCR NA NA
3 NA SCR NA NA
4 NA SCR NA NA
SCR – Selective Catalytic Reduction
NA – Not Applicable
Outlook:LownaturalgaspricesmakeGilaRiverBlock3oneoflowestcostgenerationassetsforbothTEPandUNSE.GilaRiver’sfastrampingcapabilities,alongwithitsreal‐timeintegrationintoTEP’sbalancingauthority,providebothTEPandUNSElectricwithanidealresourcetosupporttheintegrationoffuturerenewables.
Beal Bank1,100 MW
TEP412 MW
UNSE138 MW
SRP550 MW
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CombustionTurbines
TheCompanyhas219MWofgasoroilfiredcombustionturbinesforpeakingcapacity.Thiscapacityiscomprisedof6unitsatthreelocations,50MWsplitbetweentwounitsatSundt,94MWsplitbetweenfourunitsatNorthLoop,andone75MWunitatDeMossPetrie.AlllocationsareinoraroundTucsonandarealloperatedfromtheSundtStation.
Ownership:Thecombustionturbinesare100%ownedbyTEP.
Units Capacity (MW)
Entered Service
Planned Retirement
Sundt CT Unit 1 25 1972 2027
Sundt CT Unit 2 25 1973 2027
DeMoss Petrie Unit 1
75 2001
Not Planned
North Loop Unit 1 25 1972 2027
North Loop Unit 2 25 1972 2027
North Loop Unit 3 23 1972 2027
North Loop Unit 4 21
2001 Not
Planned
FuelSupply:TheCompanypurchasesnaturalgasforitscombustionturbinesonthespotmarket.NatualgasfortheunitsatNorthLoopandDeMossPetrieisdeliveredthroughSouthwestGas.NaturalgasforthetwoSundtturbinesisdeliveredfromTEP’sSundtconnectiontotheKinderMorganpipeline.
NorthLoopGeneratingStation
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FuturePlantoMovetoCyclingOperationsTEPiswellonitswaytoachievinga30%renewabletargetby2030.InChapter3ofthisdocument,wediscussthechallengescharacteristicofhighsolarPVpenetration,asitpertainstothesummerpeakdemand.Chapter3dealsprimarilywiththetopicofresourceadequacy;thetaskofsecuringoracquiringresourcestomeetthesummerpeakdemand.Thischapteralsopresentsadiscussionofoperationsandintrahourdispatch.AsTEPmovesforwardtoachievingitsrenewabletarget,theissueofcoalgenerationminimumsandpotentialthermalunitcyclingarises,especiallyonclear‐sky,wintermonths.
Chart38–TypicalWinterLoadandDispatchOperations
Chart38aboveillustratesatypicalwinterday,withadualpeakandaprogressing‘duckcurve’withadeeperbellythroughtheyears.Thetopmostshape(dotted)representsatypical24‐hourwinterretaildemandprojectedfor2030.ThethickblacklinerepresentsretaildemandthatisadjustedforsolarPV(utility‐scaleandDG).Weimmediatelyobservethatthebellyofthe‘Net(with2017solar)’curveisintersectingwiththeaggregatecoalunitminimumgeneration(for2017).ThisisnotyetaproblemasTEPmakessystemsalesthatkeeptotalloadabovethisminimum.
InthisIRP,however,TEPassumesthatitdivestsitselfoftheNavajoandSanJuancoalplants,withSpringervilleandFourCornersremaining.Theminimumcoalgenerationfor2023dropstoapproximately400MWandremainsatthatleveluntil2031.TEPwillcontinuetopushagainstitsgeneratorminimumswithadditionalsolargenerationby2030.TEPisbeginningtoexploresolutionsatitspowerplantsformodificationstogeneratingunitsthatwillallowforlowerminimumsand/orpotentialcyclingcapabilities.Ifaplantiscapableofcyclingduringtheday,largermeasuressuchasseasonalshut‐downsmaybeavoided.
0
200
400
600
800
1000
1200
1400
1600
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
MW
Typical Peak Day (Hours)
Net (with 2030 solar) Retail (2030) Net (with 2017 solar)
Net (with 2020 solar) Net (with 2025 solar)
2023 Coal Minimum Generation
2017 Coal Minimum Generation
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ExistingRenewableResourcesOverthelastseveralyears,TEPhasconstructedorenteredintopurchasedPPAsforsolarandwindresourcestoproviderenewableenergyforitsserviceterritory.ThisispartofTEP’scommitmenttomeetingtheArizonaRESrequirementofserving15%ofitsretailloadwithrenewableenergyby2025.Table19belowlistsTEP’sexistingsolarandwindrenewableresources.
Table19–TEP’sExistingSolarandWindRenewableResources
Project Name Owned or PPA Location Operator Completion/Estimated Date Capacity MWdc
Fixed Photovoltaic
Springerville Owned Springerville, AZ TEP Dec‐2010 6.41
Solon UASTP II Owned Tucson, AZ TEP Jan‐2012 5
Gato Montes PPA Tucson, AZ Astrosol Jun‐2012 6
Solon Prairie Fire Owned Tucson, AZ TEP Oct‐2012 5
TEP Roof tops Owned Tucson, AZ TEP Dec‐2012 0.55
Ft Huachuca I Owned Sierra Vista, AZ TEP Dec‐2014 17.2
Ft Huachuca II Owned Sierra Vista, AZ TEP Jan‐2017 5
Single‐Axis Tracking Photovoltaic
Solon UASTP I Owned Tucson, AZ TEP Dec‐2010 1.6
E.ON UASTP Owned Tucson, AZ TEP Dec‐2010 6.6
FRV Picture Rocks PPA Tucson, AZ Macquire Oct‐2012 25
NRG Solar Avra Valley PPA Tucson, AZ First Solar Oct‐2012 34.41
E.ON Valencia PPA Tucson, AZ Areva Jul‐2013 13.2
Avalon Solar I PPA Sahuarita, AZ Avalon Dec‐2014 35
Red Horse Solar PPA Willcox, AZ Torch Sep‐2015 51.25
Avalon Solar II PPA Sahuarita, AZ Avalon Feb‐2016 21.53
Cogenera PPA Tucson, AZ SunPower Dec‐2015 1.38
Concentrated Photovoltaic
Amonix UASTP II PPA Tucson, AZ Amonix Apr‐2011 2
White Mountain Owned Springerville, AZ TEP Dec‐2014 10
Concentrated Solar Power
Areva Solar Owned Tucson, AZ TEP Dec‐2014 5
Wind
Macho Springs PPA Deming, NM Element Power Nov‐2011 50.4
Red Horse Wind PPA Willcox, AZ Torch Sep‐2015 30
Notes: PPA – Purchased Power Agreement ‐ Energy is purchased from a third party provider
Fixed PV – Fixed Photovoltaic – Stationary Solar Panel Technology
SAT PV – Single Axis Tracking Photovoltaic
CPV – Concentrated Photovoltaic
Not listed is the Sundt’s Landfill Gas project. Its capacity is estimates at 4 MW, representative of capacity
that would have been utilized by Sundt Unit 4 if burning conventional natural gas
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Existing Fixed Axis Solar PV Projects
SpringervilleSolarTEPcurrentlyhas6.4MWdcofsolarattheSpringervillesite.ThesolarprojectisafixedPVfacilitylocatedonthepropertyoftheSpringervilleGeneratingStation,12milesnorthofSpringerville,Arizona.TEPexpandedits4.6MWsolarfacilityinSpringervilleattheendof2010byaddinganadditional1.8MWsolarfieldadjacenttothecurrentsite.Thecombinedsystemsgenerateenoughelectricitytopowerabout1,350homes.
Picture2‐SpringervilleSolar
Thesystemproducesthemostpowercapacityduringthecoolermonthsoftheyearwhenthesunisnearlatitudeangle.ThesystemoperatesasanunmannedsiteandismonitoredcontinuouslyviaanInternetbasedcommunicationschannel.TheSpringervillelocationhasroomforexpansion.Technologiesofvarioustypesforanyfutureexpansionarebeingconsidered,includingFixedTiltPVandSATPV.TEPwillcontinuetoevaluatethesetechnologiesandtheirrelativeperformanceovertimetoaidinfuturedesignconsiderations.
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Solon/TEPUASTPIISOLONIIisa5MWdcfixedPVsystemdesignedandbuiltbySOLONCorporation,andinstalledatUniversityofArizonaScienceandTechnologyPark(UASTP).Thefixedtiltarraysitson34acresandispoweredbytwenty‐onethousandhighefficiencymodules.
Picture3‐SolonIISolar
GatoMontesGatoMontesisa6MWdcPVsystemdesignedandbuiltbyAstroenergy,andinstalledattheUASTP.DukeEnergynowownstheGatoMontessite.ThesolarPVthinfilm,amorphoussilicontechnologyusedinthisprojectisafirstintheDukeEnergyRenewablesFleet.Thistechnologymakesthesolarmodulesextremelythincomparedtootherpolycrystallinemodules.ItbeganoperationinDecember2012andconsistofover48,000panelswhichproducesenoughenergytopowerover1,200homes.DukeEnergysellsitsoutputtoTEPthrougha20‐yearPPA.
Picture4‐GatoMontesSolar
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SolonPrairieFirePrairieFireisa5MWdcsolarfacilitylocatedinPimaCountyoffValenciaRoadeastofKolbRoadinTucson.ThePVtechnologyusedisacrystallinefixedsystemmodule.Theplantconsistsof17,604panels.PrairieFirebeganprovidingpowertoTEPcustomersinlateDecember2012.TEPownsandoperatesthissystem,andwillcontinuetomanageoperations,monitoringandmaintenance.
Picture5‐SolonPrairieFireSolar
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Ft.Huachuca–PhaseIFortHuachucaPhaseIisownedbyTEP.PhaseIisa17.2MWdcfixedPVsysteminstalledattheFt.HuachucaArmybaseinSierraVista,Arizona.Thefixedtiltarrayissitedon300acresandispoweredby57,600highefficiencymodulesmanufacturedbyBYDCompanyLimited.ThisprojectbeganprovidingpowerinDecemberof2014andisthelargestsinglesiteownedbyTEP.
Picture6‐Ft.HuachucaPhaseI
Ft.HuachucaPhase‐IIPhaseIIisa5MWdcfixedPVsystempoweredby46,480FristSolar107.5Wattmodules.PhaseIIwascommissionedinJanuaryof2017bringingFortHuachuca’stotalsolarplantcapacityto22.6MWdc.
Picture7‐Ft.HuachucaPhaseII
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Existing Single Axis Tracking Projects
CogeneraCogeneraisa1.38MWdcSATsystemthatusestheCogeneraproprietaryDenseCellInterconnecttechnologyof72cellsolarmodules,whichcandeliver15%morepowerthanconventionalsolarmodulescoveringthesamearea.TheCogeneraisinstalledattheUASTPandisownedbyWashingtonGasandElectric.
Picture8‐CogeneraDCITechnology
SolonUASTPIBringingsolarpowertoTucsonresidents,SOLONCorporationdesignedandinstalledthisturnkey,1.6MWsingle‐axistrackingsystemin2010forTEP'sBrightTucsonCommunitySolarProgramattheUASTP.
Picture9‐SolonUATSPISolar
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E.ONUASTPThis6.6MWsingle‐axistrackingplantislocatedintheSolarZoneattheUASTP.TheprojectrepresentsE.ON’sfirstsolarprojectintheU.S.Theprojectconsistsofover23,000crystallinePVmodulesinstalledonasingle‐axistracker,situatedon37‐acres.TEPpurchasespowergeneratedattheplantthrougha20‐yearPPA.
Picture10‐EONUATSPSolar
PictureRocksThis25MWdcsingle‐axistrackingsystemislocatedona305‐acresiteownedbyTucsonWaterjustwestofTucson.Theprojectdeploysover89,000poly‐crystallinemoduleswhicharemountedonhorizontal‐axistrackersthatrotatewiththesun’spositioninordertooptimizeelectricityproduction.
Picture11‐PictureRocksSolar
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E.ONValenciaThe13.2MWdcEONValenciaprojectislocatednearValenciaroadandtheI‐10freewayinTucson,Arizona.E.ONownsthisSATsystemthatutilizesmorethan47,500poly‐crystallinemodules.E.ONsellsitsoutputtoTEPthrougha20‐yearPPA.
Picture12‐EONValenciaSolar
AvalonSolarIandIIAvalonSolarIandAvalonSolarIIareadjacentlylocatedneartheAsarcoLLCMissionMine12milessouthofTucson,ArizonaandbotharesingleaxistrackingPVsystem.AvalonIisa35MWplantandAvalonIIisa21.5MWplant.Theplantsusesimilarsingle‐axis‐trackingtechnologywithAvalonIdeployingover116,000polycrystallinesolarmodulesandAvalonIIover71,000.Combined,theplantsproducejustundera100GWhofenergyorenoughenergytopower12,000homes.BothplantsweredevelopedbyIdahobasedClenera,LLCandconstructedbySwinertonRenewableEnergy.
Picture13‐AvalonSolarI
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AvalonSolarIwascommissionedinDecemberof2014andwassoldtoCoronalEnergy.AvalonSolarIIwascommissionedinMarchof2016,andCleneraretainedownership.TEPwillbuypowerfromtheseprojectundera20‐yearPPA.
Picture14‐AvalonSolarII
RedHorseSolarIIAtthisuniquerenewableenergyprojectinWilcox,Arizona,a51.3MWPVsolararrayiscomplementedbya30MWwindfarm.Solarandwindcomponentsarefairlyclosetogether,withthewindturbinesonamountainridgenexttothesolarfield(formoreinformationonthewindfarmpleaseseetheWindAssetssectionbelow).RedHorseIIdeploysover170,000polycrystallinesolarmodulesmountedonasingle‐axis‐trackertomaximizeproduction.TheprojectwasdevelopedbyDEShawandTEPpurchaseselectricitygeneratedfromtheprojectthroughaPPA.
Picture15‐RedHorseII
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NRGSolarThe34.4MWdcNRGSolarprojectisaSATPVsystemlocatedon320acresontheLupariFarminAvraValley,Arizonaabout20milesnorthwestofTucson.Thefacilitywillproduceclean,renewableelectricitythatwillbesoldtoTEPundera20‐yearPPA.Atfullcapacity,theAvraValleySolarProjectwillgenerateenoughpowertosupplyapproximately7,300homes.
Picture16‐NRGSolar
RedHorseIISolar
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Existing Concentrating PV Projects
AmonixUASTPIIAmonixUASTPIIisa2MWdcCPVsystemdesignedandbuiltbyAmonix,Inc.,andinstalledattheUASTP.Theprojectconsistsof12acreslinedwith34dual‐axistrackersthatreachupto50feetoffthegroundonpedestalsthattrackthesunhorizontallyandvertically.AmonixwillsellitsoutputtoTEPthrougha20‐yearPPA.
Picture17‐AmonixConcentratingPVSystem
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WhiteMountainWhiteMountainSolar,alsolocatedattheSpringervillesite,isacombinationofSingleAxisTrackingCPVandfixedtiltPV.The10MWplantconsistsoftwotypesoftechnology.Aninnovative7.3MWlow‐concentratedPVsingle‐axistrackingsystemusesmultiplemirrorstoreflectandconcentratesunlightontoarowofPVcells.ProducedbySunPower,thisisthethirdarrayofitskindinuseintheUnitedStates.Thesecondsystemincludes2.83MWsofSunPower’sT5rooftoppanelsmountedonaspecializedrackandangledtomaximizeproduction.
Picture18‐SunPowerT5Technology
Picture19‐SunPowerC7Technology
Existing Concentrating Solar Power Projects
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ArevaSolarArevaSolarisTEP’sfirstuseofsolarthermaltechnologytoaugmentexistingsteamgenerationattheSundtGeneratingStation.NamedtheSundtSolarBoostProject,theprojectisa5MWequivalentrenewableresource.IntegratedwiththeexistingSundtUnit4,theArevaadditionisexpectedtoboostpeakcapacityoftheunitby5MW.
Areva'sCompactLinearFresnelReflectortechnologyusesmirrorstoconcentratesunlighttodirectlycreatesteampower.Ratherthanusingtrough‐ordish‐shapedmirrorscommontootherconcentratingsolarsystems,Areva'stechnologyusesasystemofnearlyflatmirrors,arrangedinlouverlikearraysandmotorizedtotrackthesun,toheatupwaterpassingoverheadthroughalinearabsorber.TheArevasystemalsoisdesignedtoheatwaterdirectly,comparedwithothersystemsthatgeneratesteamindirectlywithheat‐transferfluidssuchasoilormoltensalt.
Picture20‐ArevaSolar–SundtGeneratingStation
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Existing Wind Resources
MachoSpringsMachoSpringsWindFarm,locatedinLunaCounty,NewMexicocommencedoperationinNovember2011.Thewindfarmislocatedapproximately20milesnortheastofDeming,NM,andisownedbyCapitalPower.The50MWwindfarm,consistingof28VestasV100‐1.8MWwindturbines,willgenerateenoughcleanenergytoprovideelectricityformorethan20,000homes.Theprojectissituatedonapproximately1,900acresofprivatelyownedland.Eachofthe28turbinesisinstalledonan80‐meter(264feet)tower,andhasarotordiameterof100‐meters(328feet).TheenergyoutputfromtheprojectiscontractedtoTEPthroughalongtermPPA.Theproject’soutputisdeliveredviaElPasoElectric’sexistingtransmissionlinethatrunsthroughtheprojectarea.
Picture21–MachoSpringsWindFarminNewMexico(50MWProject)
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RedHorse2WindProjectTheRedHorseWindprojectisa30‐megawattwindfarmincludingfifteen2MWwindturbinessitedon220acres.Eachturbinestandsmorethan450feethighandisownedbyRedHorse2LLCwhichwasformedbyTorchRenewablesEnergy.Theproject,locatedatAllenFlat,about20mileswestofWilcox,Arizona,achievedcommercialoperationinAugustof2015.TEPbuyspowerfromthisprojectundera20‐yearPPA.
Picture22‐RedHorse2WindProject
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Existing Biomass Projects
SundtBiogasTEPusesmethanegasfromtheLosRealesLandfillinTucsonandpipesit3.5milestoTEP'sSundtGeneratingStationtoco‐firewithpipelinenaturalgasintheUnit4boiler.Methanegasisabyproductofdecayinlandfills,andithasaGlobalWarmingPotentialthatis22timesmorethancarbondioxide.
Picture23–LosRealesLandfill
TheLosRealesLandfillcoversapproximately370acresinTucson,ArizonaandisownedandoperatedbythecityofTucson'sDepartmentofEnvironmentalService.
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TEP’sEnergyStorageProjectsTheprimaryadvantageofanEnergyStorageSystem,inthecontextofalargeutility,isofteninitsabilitytoveryrapidlychangepoweroutputlevels,muchfasterthantheproportionalgovernorresponserateofanyconventionalthermalgenerationsystem.ThisnaturallyleadstotheusagecasesofanESSbeingcenteredonshorttermbalancing‐typeactivities.AnadditionalstrengthisthatoperatingcostsofanESSaregenerallyfixedandindependentofusage.Incontrast,gasturbinesystemshavealimitednumberofstartandstopcyclesandthereforehaveanappreciablecosttoactivate,andtheyarenotnecessarilyonlinewhenneeded.
Inthespringof2015,TEPissuedarequestforproposalsfordesignandconstructionofautility‐scaleenergystoragesystem.TEPsoughtaprojectpartnertobuildandowna10MWstoragefacilityundera10‐yearagreement.TEPwaslookingforacost‐effective,provenenergystoragesystemthatwouldhelpintegraterenewableenergyintoitselectricgrid.
Figure37–LithiumIonBatteryStoragePlant
Theaggressivenatureofthebiddingcompaniesfarexceededexpectations.InitssolicitationTEPreceivedatotalof21bids;20bidsforbatterytechnologyandonebidforflywheeltechnology.Withinthebatterycategory,thereweresevendifferentbatterytypesproposed.Ultimately,TEPwasabletoselecttwowinningbids.Oneincludinga10MW,LithiumNickel‐Manganese‐Cobaltbattery;andaseparateoneincludinga10MW,LithiumTitanatebatterytogetherwitha2MWsolarfacility.Withtheseprojects,TEPwillbeabletoassesstheoperationalimpactsoftwoofthepredominantLithiumtechnologiesavailabletoday.Bothsystemswerecommissionedduringtheearlymonthsof2017.
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DistributedGenerationResourcesDistributedGenerationresourcesaresmall‐scalerenewableresourcessitedoncustomerpremises.TheRenewableEnergyStandardrequiresthataportionofrenewableenergyrequirementsbeobtainedfromresidentialandcommercialDGsystems.TherequiredDGpercentageintheArizonaRESis30%ofthetotalrenewableenergyrequirement.
Bytheendof2016,TEPhadapproximately190MWofrooftopsolarPV.DGisexpectedtosupplyatleast342GWhofenergyin2017.OnlyaverysmallportionofthisgenerationisattributabletotheTEP‐ownedrooftopsolarprogramthatwasinitiatedin2015.
Map19–TEP’sDistributedSolarResourcesSites
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DavisMonthanAirForceBaseDistributedGenerationProjectTheFebruary2014completionofa16MWsolaradditionatDavisMonthanAirForceBase(DM)hasexpandedthetotalsolarresourcesforthebaseto21MWsmakingDMthesiteoftheDepartmentofDefense’slargestsolarfacility.The2014additioniscomprisedofover57,000fixedtiltpanelson170acres.OwnedbySunEdison,itiscontractedtosupplytheAirForcebasewithpoweroverthenext25yearsforanexpectedtaxpayersavingsof$500,000peryear.
Picture24–DavisMonthanAirForceBaseDistributedGenerationProject
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Transmission
OverviewTransmissionresourcesareakeyelementinTEP’sresourceportfolio.AdequatetransmissioncapacitymustexisttomeetTEP’sexistingandfutureloadobligations.TEP’sresourceplanningandtransmissionplanninggroupscoordinatetheirplanningeffortstoensureconsistencyindevelopmentofitslong‐termplanningstrategy.Onastatewidebasis,TEPparticipatesintheACC’sBTAwhichproducesawrittendecisionbytheACCregardingtheadequacyoftheexistingandplannedtransmissionfacilitiesinArizonatomeetthepresentandfutureenergyneedsofArizonainareliablemanner.
TEP’sExistingTransmissionResourcesTEP’sexistingtransmissionsystemwasconstructedoverseveraldecadestosupportthedeliveryofthebaseloadcoalgenerationresourcesinnorthernArizonaandNewMexico.Today,TEPownsapproximately473milesof46kVlines,405milesof138kVlines,andisownerandpartownerof1,110milesof345kVlinesand655milesof500kVlines.AsshowninMap20theTucsonserviceterritoryareaisinterconnectedtotheWesternInterconnectionBulkElectricSystem(BES)via345kVinterconnectionsattheSouthLoopandVailsubstations,anda500kVinterconnectionattheTortolitasubstation.ThesethreesubstationsinterconnectanddeliverenergyfromtheEHVtransmissionnetworktothelocalTEP138kVsystem.
Map20‐TEP’sExistingTransmissionResources(includesrightsonothersystems)
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PinalCentraltoTortolita500kVTransmissionUpgrade
InNovember2015,TEPenergizeditsnewest500kVtransmissionexpansionprojectthatinterconnectsatthe500kVPinalCentralSwitchyard.ThePinalCentraltoTortolita500kVlineaddsasecondextrahighvoltage(EHV)transmissionconnectionbetweenTucsonandthePaloVerdewholesalepowermarket.ThislinetiesinattheexistingSaltRiverProjectSoutheastValleytransmissionprojectthatextendsfromPaloVerdetoPinalCentralintoTortolita.ThisnewtransmissioninterconnectionimprovesTEP’saccesstoawiderangeofrenewableandwholesalemarketresourceslocatedinthePaloVerdeareawhileimprovingTEP’ssystemreliability.
Map21‐PinalCentral‐Tortolita500kVProject
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PinalWesttoSouthUpgradeProjectThePinalWesttoSouth345kVlineisundergoingequipmentreplacementthatwillincreasethethermalratingoftheline.ThisisexpectedtoincreasetheTotalTransferCapabilityoftheline,whichwillallowTEPtoschedulemorepowertotheTEPloadpocketfromremoteresources.
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CHAPTER 10
FUTURE RESOURCE REQUIREMENTS
FutureEnergyEfficiencyAssumptionsTEP'sEEprogramswillcontinuetocomplywiththeArizonaEEStandardthattargetsacumulativeenergysavingsof22%by2020.ForthisIRP,EEismodeledasaresourceandisdispatchedtomeetloadbasedontheEEshapedescribedinChapter5.Theenergysavingsreflectedinourreferencecaseforecastthrough2020,representanestimateoftheenergysavingsneededtomeetthestandard,excludingsavingsassociatedwithprogramcredits37.From2021throughtheendoftheplanningperiod,theestimatedannualsavingsarebasedonanassessmentof“achievablepotential”inenergysavingsfromEEprogramsconductedbyEPRI38.This“achievablepotential”represents“anestimateofsavingsattainablethroughactionsthatencourageadoptionofenergyefficienttechnologies,takingintoconsiderationtechnical,economic,andmarketconstraints39.”Marketconstraintsincludebothmarketacceptancefactorssuchastransactional,informational,behavioral,andfinancialbarriers,aswellasprogramimplementationfactorswhichaccountforrecentutilityexperiencewithEEprograms40.
TEPwillpursuearangeofcost‐effectiveandindustry‐provenprogramstomeetfutureEEtargets.TEP’sproposedEEportfolio,inadditiontomaintainingcompliancewiththeArizonaEEStandard,isalsoexpectedtobecompliantreadyundertheprovisionsoftheCPP.GiventheuncertaintyaroundthestatusoftheCPP,TEPnotesthatEEisaneffectivecompliancetoolundervirtuallyanypolicyaimedatreducingcarbonemissions.Underamass‐basedapproach,EEaidsincompliancebydisplacingactualfossilgenerationandtheassociatedemissions.Underarate‐basedapproach,similartotheCPP,EEmeasuresthatundergoappropriate,Evaluation,MeasurementandVerification(EMV),canbeusedtoreducetheemissionrateofaffectedfossil‐firedgenerators.By2032,thisoffsettofutureretailloadgrowthisexpectedtoreduceTEP’sannualenergyrequirementsbyapproximately1,894GWhandreduceTEP’ssystempeakdemandby318MW.
37ArizonaAdministrativeCode,R14‐2‐2404C.‐G.38U.S.EnergyEfficiencyPotentialThrough2035,ElectricPowerResearchInstitute,datedApril2014.http://www.epri.com/abstracts/Pages/ProductAbstract.aspx?ProductId=00000000000102547739Ibid,p.v40Ibidp.2‐20
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FutureRenewableEnergyAssumptionsIntheCompany’smostrecentgeneralratecaseproceeding,TEPcommittedtodiversifyingitsgenerationresourceportfoliowithagoalofserving30%ofitsretailloadwithcost‐effectiverenewableresources.Thestate’srenewablerequirementremainsat15%by2025,andtheCompanyexpectstoachieve15%bytheendof2020.Asoftheendof2016,theCompanyhasnearly400MWofcombinedutilityscalerenewablegenerationcapacityonitssystem,andsuppliedapproximately10%ofitsretailsaleswithrenewableresources.TheCompanyanticipatesaddingapproximately800MWofrenewableenergycapacityby2030,basedoncurrenttechnologyandcostprojections,inordertoachieveits’desired30%renewabletarget.
TEPrecentlysigneda100MWwindPPAwithNextEraEnergyResources,scheduledforcompletionbyearly2019.TEPisalsoevaluatingresponsesfroma100MWsolarRFP,alsoscheduledforcompletioninearly2019.Immediatelybeyondthesesignificantadditions,TEPexpectstofocusontheintroductionoflargescalestoragefacilitiesandfastresponsethermalgenerationtofacilitatetheadditionofthenexttrancheoflargescalerenewablesystems.
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TEP’s2017ReferenceCasePlan–PortfolioEnergyMix
Coal Generation,
69%Natural Gas, 11%
Market Purchases, 9%
Utility Scale Renewable Resources, 7%
Distributed Generation (DG), 4%
2017 Portfolio Energy Mix
Coal Generation,
50%Natural Gas, 28%
Market Purchases, 3%
Utility Scale Renewable Resources, 14%
Distributed Generation (DG), 5%
2023 Portfolio Energy Mix
Coal Generation,
38%
Natural Gas, 26%Market Purchases, 5%
Utility Scale Renewable Resources, 26%
Distributed Generation (DG), 5%
2032 Portfolio Energy Mix
The portfolio energy charts shown above represents the energy resource mix to serve TEP’s retail customers. Wholesale
market sales are excluded from these results. By 2030, TEP’s retail customers will be served from 30% renewables. This is
based on a combination of utility‐scale and distributed generation resources.
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TechnologyConsiderationsInordertoachievetheCompany’sstatedgoals,theCompanycontinuestoevaluateonanon‐goingbasis,themostcost‐effectiverenewableenergyoptionscurrentlyavailable.Thisevaluationincludesthemostcurrentmarketcostsofrenewabletechnologysuchaswindandsolar,systemintegrationavailabilityandassociatedtechnologiestofacilitategreaterrenewablepenetration,aswellasexistingandplannedtransmissionavailabilityforregionslocatedoutsidetheCompany’sserviceterritory.Asexpectedwiththecurrenttechnologycostdeclines,currenttaxincentivepolicies,andsolarinsolationvaluesinsouthernArizona,utility‐scalePVsolaristheleastcostresourceonanenergy‐onlybasis,followedcloselybyhigher‐capacitywindresourceslocatedincentraleasternportionsofArizonaandwesternregionofNewMexico.
AlthoughtheCompanyexpectstohaveahigherpercentageofsolarresourceswithinitsserviceterritory,primarilyduetofavorableproductioncurves,lowcosts,andlackofavailabletransmissiontoimportotherresources,thiswillultimatelyresultinoperationalchallengesasdiscussedaboveinChapter3,includingtheCompany’sabilitytomanageitsown“duckcurve”.Theseintegrationissues,includingtheadditionwindresources,willrequirenewtechnologiestomanagethevariabilityoftheseresources.TheCompanyseesthischallengeasanopportunitytobothexploreandutilizenewer,fast‐actingstoragetechnologiestomitigatesystemvariabilityduetotheintermittentnatureoftheseresources.
DiversityofResourcesAstheCompanyhaspreviouslydiscussed,thepotentialimpactongridoperationsduetoincreasedrenewablepenetrationisexpectedtodramaticallyaltertheCompany’straditionalresourceportfolio,requiringgreaterflexibilityandnewerfast‐actinggenerationresources.Inordertominimizetheimpactofvariablegenerationresourcesandtheirimpactonoperations,theCompanymustmaintainamixofvariablerenewablegenerationresources.ThesetechnologieswillfocusonthosetechnologiesreadilyavailabletotheCompanywiththecapabilitytobedeliveredtotheconsumer.
ThismixoftechnologieswillprimarilybelargescalewindresourcesineasternArizonaandwesternNewMexicothatareabletoutilizeexistingtransmissionfacilitiesandcapacity,includingexpectedavailablecapacityfromplannedplantretirements,andmultiplesolarresources.ThesolarresourceswillbeamixoffixedPVandtrackingPV,inthescaleof25‐100MW,whichcanbemoreeasilyinterconnectedwiththeCompany’ssub‐transmissionanddistributionsystems.TheCompanyhaschosennottopursuePVorsolartechnologiesthathaveahighconsumptionofwater,suchasconcentratingsolarthermal.
UtilityScaleProjectOwnershipTEPhashadalong‐standingpolicyofutilityinvestmentinlargescalesolarresources.Thispolicyisbasedontheconceptoftheutilityowningandoperatingutilityscalesolarresourcesinordertoprovideabalanceofcontractedversusownedfacilities,aswellasprovidegreateroperationalflexibilitybyhavingtheabilitytoregulateandcurtailoperationsasnecessary.Historically,theCompanyhasstrivedforapproximately25%owned(solar)facilitiesand75%contractedthroughPPA’s.TheCompanybelievesthisisanappropriatebalancetomaintainsomesystemoperationalcontrolwhileprovidingtheindustryanopportunitytosupportsolardevelopmentinsouthernArizona.
WhiletheCompanyfirmlybelievesitshouldmaintainapercentageofrenewableownership,italsorecognizesthechallengesassociatedwithitsrenewableenergydevelopmenttargets.Aspreviouslynoted,significantintegrationofsolarresourcesintotheCompany’sgenerationportfoliowillcreateaconsiderablymorepronounced“TEPduckcurve”.DuetothesignificantlylowerPPApricesassociatedwithsolarandwind,theconceptofcurtailableresourceswhileensuringthethirdpartyownerremainseconomicallyunharmedisin
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manycasesoneoftheleast‐costoptionsformitigatingtheimpactsofexcessivegenerationduringperiodsofhighpenetration.
FutureGridBalancingResourcesAsdescribedinChapter3,itiscriticalforTEPtomaintainadequateresourcesthatcanbalanceloadandgeneration,especiallyasincreaseduseofrenewableenergyleadstogreaterintermittencyofgenerationandgreaterrampingrequirementsofnon‐renewableenergyresources.ThissectionoftheIRPdescribestheadditionofnewgrid‐balancingandload‐levelingresourcesassumedintheReferenceCasePlan.
EnergyStorageInadditiontothe20MWofbatteryESSinstalledin2017,theReferenceCasePlanassumestheimplementationofthreebatteryESSs:oneeachintheyears2019,2021,and2031.Thesystemsin2019and2021wouldeachbe50MWwithastoragecapacityof50MWh.Thesystemin2031wouldbe100MWx100MWh.
Theprimarypurposeofthe2019and2021systemsistofacilitatetheintegrationofmorerenewableenergyintoTEP’sresourcemix.Specifically,thesystemswouldprovideancillarypowerservicessuchasfrequencyresponseandregulationandvoltagesupport,whicharemorechallengingfortraditionalpowersourcestomaintainunderthedemandsofasystemwithhighlevelsofrenewableenergypenetration.Thesystemin2019wouldcorrespondwiththelargestadditionofrenewableenergycapacitytoTEP’ssystemovertheplanningperiod(180MW).Thesystemin2021wouldfurthersupportrenewableenergyintegration(e.g.,asmoreDGcomesonline)whileprovidingmoretimetogainexperiencewithbatteryESSsandforsuchsystemstofurtherdeclineincost.Finally,theseESSswouldprovideenergycapacityvalue.IntheReferenceCasePlan,itisassumedthathalfoftheircapacity(50MW)wouldbeavailableifnecessaryunderpeakdemand.
By2031,substantiallymorerenewableenergyisexpectedtobeonline.Thus,theReferenceCasePlanassumesanotherESS(100MWx100MWh)tobeimplementedbythen.Again,theprimarypurposewouldbetoprovidegrid‐balancingandload‐levelingresources.Itisassumedtheseresourceswouldbeprovidedthroughoutmostoftheyear(e.g.,whenrampingrequirementsarehighinthenon‐summermonths),butthatthissystemwouldprovideprimarilyenergycapacityservicesinthesummer(100MW).
AlthoughtheCompanyhashadconsiderablediscussionregardingthelocationoftheinitialstoragefacilities,andtheappropriatevoltagelevelatwhichtoobtainthemaximumsystembenefits,itwasultimatelydeterminedthattheywouldinterconnectatthedistributionsystemlevel.Therewereadvantagestositingthestoragefacilitiesinsidecompanyownedsubstations,aswellastheR&DadvantagesofsitingoneprojectattheUniversityofArizonaScienceandTechPark.Additionally,beingthefirstoftheirtechnologywithinoursystem,jurisdictionalsitingandpermittingpolicieshadtobedeterminedthroughclosecollaborationwiththeCityofTucsonandPimaCounty.
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Inthefuture,thesitingoflargerscalestoragefacilitieswilldependonanumberofcircumstances,including:
Primarypurposeoffacility(distributionortransmissionlevelvoltagesupport,frequencyresponse,generationsmoothingandramping,etc.)
Secondaryandtertiaryancillaryservicesavailablefromfacilityrelativetoitslocation Engineeringstudies Sizeoffacility Interconnectionfeasibility Companyorthird‐partyownedfacility
Althoughanumberofinstabilityissueshavebeenidentifiedasaresultoffuturewindandsolarpenetrationonthegrid,actualtransmissionanddistributionsystemoperationswilldeterminetheactuallocationandtimingofanyplannedstorageadditionstothesystem.
TheCompanyiscloselyfollowingthetechnologyadvancesinlargescaleenergystorage,specificallyasitrelatestothedevelopmentoflarge‐scale(>10MW),longduration(>4hrs.),energystorage.TheCompany’sfirstutilityscalestoragefacilitieshavebeenlithium‐ionbasedchemistry,andthischemistryismakingsignificantadvancestowardslonger‐term,highercapacityenergystorage.Additionally,theCompanyistrackingadvancementsthathavebeenmadeinflow‐basedenergysystems,particularlyVanadium,Iron,Zinc,andRedoxFlowtechnologies.Also,TEPiscloselymonitoringtheprogressofpumpedhydrostorageprojectsintheWest.Althoughthesetechnologiesarestillonthehighendofthecostcurve,theirpotentialtoprovidelongterm,highcapacityenergystoragewithlonglifecyclesholdssignificantpromisefortheutilityindustry.
FastResponseThermalGenerationAsrenewablepenetrationincreases,fastrespondingresourceswillbeneededtosmoothouttheoft‐occurringvariabilityofsolarandwindgenerators.Additionally,acertainlevelofthermalresourceswithmechanicalinertiawillhavetobemaintainedinordertohelpbalancetheelectricsystem.RICEsarefasttorespondtorenewablevariabilitybutcanalsoprovide100%ELCCduringpeakperiods.Theunitsareonlydegradedbyrun‐timehoursandcanwithstandmultiplestart‐upswithinaday.Theunitsarealsocapableofrunningat30%oftheirdesignedcapacity.A10MWunitcanidledownto3MWsandspinorstandreadytoreacttodisturbancesorrenewablegenerationreductions.
Initsfleetofgeneratingresources,TEPhastargetedtwoaginggas‐steamgeneratingunitsforretirementatSundtGeneratingStation.Units1and2areeach81MWunitsthatareincreasinglyrequiringmoreO&Mandcapitalexpenditures.These1960’svintageunitshavehighheatratesandareoftenonlyrunforsummerreliabilitycontingencymitigation.SundtUnits1&2arenotwellsuitedtorespondorparticipateinmitigatingrenewablegeneratorintermittency.TEPperformedaninternalstudytodeterminetheeconomicandoperationalbenefitsofreplacingtheseunits.TherecommendationmadeisthatSundtUnits1and2shouldberetiredin2020and2022respectivelyandreplacedinthoseyearswith100MWsofRICE.
ThestudyshowedthatRICEbetteredeachSundtunitbyaLCOEdifferenceofapproximately$26/MWh.ThecapitalexpendedonRICEovercametheSundtunitsbecauseRICEismoreefficientanditperformsathighercapacityfactors.Asmentionedabove,cyclingRICEhasnoimpactonO&Mandthe3to5minutestarttimesarenotequaledbyanyexistinggeneratorintheTEPfleet.TheRICEunitswillequallyprovidesummerpeakingcapabilitybutmoreimportantly,thesefast,responsiveandefficientunitsareabetterfitwithrenewableenergy.Reliabilityisincreasedaswellbecausetheprobabilityofoutagesisspreadacrossmultipleunits.
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DemandResponseTEPcurrentlyimplementsavoluntaryDLCprogramforlargercommercialandindustrialcustomersinTEP’sserviceterritory.Duringpeakhours(lateafternoonandevening)ofthesummermonths,commercialandindustrialloadrepresentsatotalofapproximately22%ofsystemdemand.Controlsforchillers,rooftopACunits,lighting,fans,andotherendusesaremodifiedtoallowforcurtailmentofload,thusreducingpowerdemandfromcustomersatspecifiedtimes.Participatingcustomersvoluntarilyreducetheirelectricityconsumptionduringtimesofpeakelectricitydemandorhighwholesaleelectricityprices(whenalertedbyTEP).Customersarecompensatedwithincentivesfortheirparticipationatnegotiatedlevelsthatwillvarydependingonmultiplefactorsincludingthesizeofthefacility,amountofkWunderloadcontrol,andthefrequencywithwhichtheresourcecanbeutilized.
TheprogramhashadslowergrowththanoriginallyexpectedduetothesmallindustrialbasedcustomerloadinTucson.TEPusesathird‐partyvendortoadministertheDLCprogramandistargetingenrollmentofenoughcustomersby2020toreach42MWofsummerpeakdemandreduction,availableforupto80hoursperyear,withatypicalloadcontroleventlasting3‐4hours.Forplanningpurposes,TEPassumesapproximately4%annualgrowthinDRcapacityafter2020resultingin67MWavailablein2032with2%annualincreaseinfeesneededtoachievethatlevelofgrowth.ThesegrowthassumptionswouldlikelyrequireexpandingDLCbeyondtheCommercialandIndustrialsectors.
ComparingthecostofTEP’scurrentDLCprogramtoshort‐termcapacitymarketprices,TEPdoesnotanticipatethatDRwillbeaneconomicallyfeasibleoptionforshort‐termcapacitypriorto2022,andbeyondthattime,TEPdoesnotprojectasignificantneedforshort‐termcapacity.Therefore,TEPintendstoshifttowarddesigningDLCprogramsthatarecapableofcost‐effectivelyaddressingperiodsofsignificantramping,anticipatedwithhighpenetrationofrenewableresources.
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FutureTransmissionTransmissionresourcesareakeyelementinTEP’sresourceportfolio.AdequatetransmissioncapacitymustexisttomeetTEP’sexistingandfutureloadobligations.TEP’sresourceplanningandtransmissionplanninggroupscoordinatetheirplanningeffortstoensureconsistencyindevelopmentofitslong‐termplanningstrategy.Onastatewidebasis,TEPparticipatesintheACC’sBTAtodevelopatransmissionplanthatensuresthatArizona’stransmissionorganizationsarecoordinatedintheireffortstomaintainsystemadequacyandreliability.
Ten‐YearTransmissionPlanOnanannualbasis,TEPdevelopsandsubmitstotheCommissionatenyeartransmissionplanforitsEHVandlocaltransmissionnetworks.ThisplanreflectsplannedandconceptualprojectsontheEHVtransmissionnetworkusedtobringpowerfromremoteresourcesintotheTucsonloadpocketandthelocal138kVlocalnetworkusedtodeliverpowertothelocaldistributionsubstations.TEP’sEHVand138kVtransmissionsystemisplannedtomeetperformancerequirementsoftheNERCTransmissionSystemPlanningPerformanceRequirements(TPL‐001‐4)standardandtheWECCTransmissionSystemPlanningPerformance(TPL‐001‐WECC‐CRT‐3.1)criteria.Thisplanincludesneworreconductoredtransmissionprojects,transformercapacityupgrades,andreactivepowercompensationfacilityadditionsat115kVorabove.ThisplanensuresthatTEPhassufficientloadservingcapabilityandTotalTransferCapabilitytoprovideservicetoitscustomersundernormalconditionsandfollowingoutagesasspecifiedintheNERCstandardsandWECCcriteria.
TEP’s2016tenyeartransmissionplanincludedthefollowing:
1plannedEHVtransmissionlineproject 7conceptualEHVtransmissionlineprojects 0EHVplannedorconceptualEHVreactivecompensationprojects 13planned138kVtransmissionlineprojects 5conceptual138kVtransmissionlineprojects 4planned138kVreactivecompensationprojects 0conceptual138kVreactivecompensationprojects
TransmissionSubstationReconfigurationProjectsToimprovesystemreliabilityandmaintainabilityofthetransmissionsystemandmeetnewrequirementsoftheNERCPlanningStandards,TEPisconvertingfoursubstationsfromaringbustoabreaker‐and‐a‐halfconfiguration.TheGreenlee(PhilYoung)andSouthLoop345kVsubstationconversionswilltakeplacein2018.TheIrvingtonandDeMossPetrie138kVconversionswilltakeplacein2020and2021,respectively.
ConceptualFutureLocalArea345kVEHVTransmissionProjectsTheIrvington‐Vail,Irvington‐SouthLoop345kVprojectsaretwoconceptualprojectsthatwereanalyzedaspossiblelongtermtransmissionscenariostoimprovelocalareatransmissioncapacity.ThesearetwophaseprojectsthatarepartofalargerEHVreach‐instrategytoservethegrowingloadinTucsonwithoutrequiringEHVlinesacrossthecentralmetroarea.Inaddition,theseprojectsarecoordinatedwiththepotentialbuildoutoflocalgenerationresourcesatSundtGeneratingStation.InPhase1,anew26mile345kVlinewouldbeconstructedbetweentheIrvingtonandSouthLoopSubstations.Phase2ofthisprojectwouldcompleteanew10mile345kVlineinterconnectingtheIrvingtonandVailSubstations.Phase1wouldbeexpectedtoprecedePhase2byseveralyears.NewPhase1facilitieswouldincludea345kVterminationatVailanda345/138kVsubstationatIrvington.
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Map22–LocalAreaConceptual345kVEHVProjects
TransmissionResourcesNeededforNewGeneratingResourcesAdditionaltransmissionresourceswillbeneededforspecificgenerationinterconnections.Forpurposesofthisresourceplan,theresourceplanninggroupdevelopedasetoftransmissioncostassumptionsbasedonthelistofpotentialgenerationresources.Thesegenerationresourceoptionsincludetheadditionalcostsassociatedwithanytransmissionimprovementsthatwouldberequiredtoconnecttheresourcestothetransmissionsystem.
Forexample,someofthelargerbaseloadresourceoptionsareexpectedtobeconstructedfarfromtheTEPserviceterritoryandwouldrequiresignificanttransmissioninfrastructureimprovementswiththeconstructionofthegenerationfacility.SmallergenerationfacilitiessuchasgasturbineswouldlikelybeconstructedwithintheTucsonmetroareaandwouldrequireamuchsmallerinterconnectioninvestment.Finally,inadditiontoconstructioncapital,theresourceplanalsoincludesthecostsoftheon‐goingO&Mthatisrequiredtomaintainthesetransmissionfacilities.
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CHAPTER 11
ALTERNATIVE FUTURE SCENARIOS AND FORECAST SENSITIVITIES
Modelingtheperformanceofaresourceportfolioinvolvesmakingassumptionsaboutfutureconditionssuchaseconomicgrowth,fuelandwholesalepowermarkets,regulatoryconditions(e.g.emissionprices),andthepaceoftechnologicaldevelopment.TEPseekstoidentifyareferencecaseportfoliothatprovidessolidperformanceundertheassumptionsselectedwhilemaintainingoptionalitytomakecourseadjustmentsinresponsetoactualemergingconditions.Duetotheinherentuncertaintyaboutthesefutureassumptions,itisnecessarytotesttheperformanceofeachresourceportfolioagainstarangeoffutureconditionstobetterassesswhetheraportfolioisrobustundervaryingconditions.Becausecertainmarketconditionsdonotmoveindependentlyofeachother,alternativefuturescenariosmustbeidentifiedthatcapturearangeoffutureconditions,yetrepresentplausibleoutcomesintermsoftherelativemovementofdifferentmarketforces.
PACEAlternativeFutureScenariosTEPhiredPACEtodevelopabasecasesetofassumptionsandtwoalternativefuturescenariosformodelingtheperformanceofeachresourceportfolio.Thesethreefuturestatesoftheworldarecharacterizedbydiscretescenarioswithvaryingeconomicdriversthatrepresentthreeseparateforecastsofforwardmarketconditions(SeeAppendixA).
Thesescenariosaredefinedas:
1. BaseCaseScenario2. HighTechnologyScenario3. HighEconomyScenario
TheBaseCaseScenariofeaturesexistingregulations,graduallyrisingmid‐termgasprices(inrealterms),continuingtechnologicalgrowth,lowloadgrowthandgenerallymoderatemarketoutcomes.Powermarketparticipantsareabletoadaptandadjustinatimelymannertochangingmarketforces.
TheHighTechnologyScenarioischaracterizedbysignificantadvancesinenergystoragetechnology,renewableenergydeployment,emissionsreductionandCO2removaltechnology,highefficiencynaturalgas‐firedgeneration,andalsonaturalgasextractionproductivityimprovements.Theseconditionstendtosubduefuelprices,powerpricesandcapitalcosts,andputpressureoncoalplanteconomics,resultinginadditionalretirements.However,therearealsosignificantdevelopmentsintechnologiesthatimproveEE,whichhelpstomitigateloadgrowththatmightotherwisebeexpectedina“hightechnology”scenariowithrobusteconomicgrowth.
TheHighEconomyScenarioischaracterizedbyarobustandgrowingU.S.economythatkeepsupwardpressureonallofthemajormarketoutcomecategories,includingloadgrowth,fuelcosts,powerprices,andcapitalcosts.Thisgrowthisintheabsenceofamajortechnologicalbreakthrough.Existinggenerationresourcesareneededtomaintainthiseconomicexpansion,limitingthenumberofretirementswhileacceleratingthenumberofcapacityadditions.Whilethisscenariosharesmanyoftheattributesoftheprevious“HighTechnology”scenario,thepaceoftechnologicalinnovationisnotasdynamicandthereforebeneficialtokeepingpricesandcostsincheck.
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UndertheHighTechnologyandHighEconomyScenarios,keymarketindicessuchasfuelprices,emissionprices,andretirementsmoveinoppositedirectionsrelativetothebasecase,therebyprovidingtherangeofoutcomesdesiredforportfoliomodeling.
Thetablebelowrepresentstrendsforeachvariableinthe“BaseCaseScenario”andthedirectionalshiftintrendrelativetothebasecaseoutlookin“L”,“H”,and“M”underthe“HighEconomyScenario”andthe“HighTechnologyScenario”.The“L”symbolrepresentsadeclineorareductionintrendcomparedtothebasecaseprojection,whereasthe“H”symbolrepresentsanincreaseorariserelativetothebasecaseprojectionforthecorrespondingperiod.Finally,the“M”symbolrepresentsidenticalmovementtothebasecaseoraconvergencetothebasecaseforthespecificperiodiftheprevioustrendhascausedthevariabletogoaboveorbelowthebasecase.
Table20–SummaryofPACE’sKeyPlanningDriversScenarios
Key Planning Base Case Scenario High Economy Scenario High Technology Scenario
Drivers Base Case Natural Gas Pricing High Natural Gas Pricing Low Natural Gas Pricing
Planning Horizon Short‐Term
Mid‐Term
Long‐ Term
Short‐Term
Mid‐Term
Long‐Term
Short‐Term
Mid‐Term
Long‐Term
Natural Gas Prices B Upward Trend
Level Trend
B H M B L L
Coal Prices B Upward Trend
Upward Trend
B H H B L L
Load Growth B Level Trend
Upward Trend
B H M B L** L**
CO2 Compliance Prices B Upward Trend
Upward Trend
B H H B L L
Wholesale Power Prices B Upward Trend
Level Trend
B H H B L L
Capital Costs B Upward Trend*
Upward Trend*
B H H B L L
Coal Plant Retirements B Upward Trend
Upward Trend
B L M B H M
Resource Additions B Upward Trend
Upward Trend
B H M B H M
Notes:
All scenarios are similar to the Base Case (B) in the short‐term, then move low (L), high (H), or moderate (M) relative to the base case.
Planning Horizon: Short‐Term = 2016‐2018, Mid‐Term = 2019‐2025, Long‐Term = 2026‐2040
*Certain renewable technologies are on a downward capital cost trend as the technologies continue to mature
**Slightly lower
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NaturalGasPricesChart39showstheHenryHubnaturalgaspriceassumptionsforthethreePACEscenarios.
Chart39‐PermianBasinNaturalGasPriceSensitivities
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CoalPricesTEPcurrentlyhasownershipsharesinfourcoal‐firedpowerplantsinArizonaandNewMexico,mostofwhichareunderlong‐termcontractsforcoalsupply.
SanJuan:Theplantisamine‐mouthfacilitythatreceivescoalfromtheSanJuanmine.Ithasrecentlysignedashort‐termcontractthroughJuly2022.
Springerville:TheplanthasaccesstolocalcoalfromtheElSegundomineinNewMexicoviaraildeliveries.SpringervillecanburnbothWesternsubbituminouscoalaswellascoalsourcedfromPowderRiverBasin.
Navajo:TheplantreceivescoalfromtheKayentamine,located80milessouthoftheplant,viaadedicatedrailline.TEPisunderalong‐termcoalsupplyagreementthrough2030.
FourCorners:TheFourCornersPowerplantissourcedfromtheNavajoCoalmine,whichismine‐mouthfacility,operatedbytheNavajoTransitionalEnergyCompany.TheFourCorners’coalsupplyagreementrunsthroughJune2031.TEP’sassumptionsforcoalpricesarebasedoncontractindicesandescalatorsthataredrivenbythePACEcoalmarketoutlooktoestablishcoalpriceprojectionsfortheTEPfleet.Chart40reflectstheTEPweightedaveragecoalpricingforthethreescenarios.
Chart40–TEPCoalPriceAssumptions
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CapitalCostsThecapitalcostfornewresourcesarebasedontheLazard’sLevelizedCostofEnergyAnalysisv.10.0,whichpresentscostsin2016dollars.FuturenominalcostsincludeaninflationadjustmentaswellasinnovationadjustmentdevelopedbyPACEtoreflectthatthatinstalledcostsofcertaintechnologiesareexpectedtodecreaseasthetechnologyitselfmaturesinadditiontoimprovementsinmanufacturinganddeliveryprocessesandsupplychainefficiencies.Chart41belowpresentsthecapitalcostassumptionsforthetechnologiesrepresentingthemajorityoffutureresourceadditionsforeachofthethreescenarios.
Chart41–CapitalCostAssumptions,SolarTechnology
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Chart42–CapitalCostAssumptions,Wind
Chart43–CapitalCostAssumptions,NaturalGasTechnology
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PaloVerde(7x24)MarketPricesChart44showsthePaloVerdemarketpriceassumptionsforthethreePACEscenarios.
Chart44‐PaloVerde(7x24)MarketPriceSensitivities
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LoadGrowthScenariosDuetotheneedforcomparabilitybetweenalternativeportfolios,thebasecaseloadassumptionwillbeusedforallalternativeportfolios.VaryingassumptionsonloadgrowthisanalyzedagainsttheReferenceCasePlanportfolioonly.The2017ReferenceCasePlanprojectsTEPpeakdemandgrowingapproximately0.7%peryearbetween2020and2030.Thischangeingrowthishighlyinfluencedbytheassumptionofasignificantminingexpansionoccurringby2022.Otherthanthisexpansion,TEPdoesn’tforecastanysignificantincreaseinloadfromTEP’slargeindustrialandminingcustomers.The2017ReferenceCasePlanalsoshowsasteadydeclineinfirmwholesaleobligationsascurrentcontractsexpire.Fortheloadgrowthscenarios,thesebasecaseconditionswillbemodifiedtocreateaHighLoadandLowLoadscenarios.Theloadgrowthscenariosaredescribedbelow.ResultsofthisscenarioanalysisalongwithchangesthatwouldberequiredintheReferenceCasePlanaresummarizedinChapter12.
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HighLoadScenarioForpurposesoftestingtheReferenceCaseportfolioagainstascenariosinwhichenergyuseanddemandaregreaterthaninthebasecase,TEPassumedacontinuationoffirmwholesalecontractsatlevelsconsistentthoseinthenearterm.Underbasecaseload,existingfirmwholesaleobligationsaremodeledaccordingtotheircontracttermsandaredroppeduponthecurrentcontractexpiration.Itislikelythatcertaincontractswillbeextendedornewlong‐termwholesalecontractswillbeenteredinto.Table21representsthefirmwholesaleobligationsundertheHighLoadScenario.
Table21–HighLoadFirmWholesaleObligations,SystemPeakDemand(MW)
Demand MW 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Base Case Firm Wholesale Demand 223 158 158 154 154 154 129 129 44 44 44 44 44 44 44 44
Reserve Margin, % 21% 15% 15% 15% 15% 15% 15% 15% 19% 20% 20% 21% 18% 18% 17% 17%
High Load Case
Firm Wholesale Demand 223 158 158 154 154 154 160 160 160 160 160 160 160 160 160 160
Reserve Margin, % 21% 15% 15% 15% 15% 15% 15% 15% 16% 16% 17% 15% 16% 16% 15% 15%
LowLoadScenarioForpurposesoftestingtheReferenceCaseportfolioagainstascenarioinwhichenergyuseanddemandarelowerthaninthebasecase,TEPassumesnosignificantnewlargecustomerorminingexpansionsoccurwithintheplanninghorizon.Underthisassumption,thereisan80MWreductioninpeakloadbeginningin2022.
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Fuel, Market and Demand Risk Analysis
TEPdevelopedexplicitmarketriskanalyticsforeachportfoliothroughtheuseofcomputersimulationanalysisusingAuroraXMP41.Specificallyastochasticbaseddispatchsimulationwasusedtodevelopaviewonfuturetrendsrelatedtofuelprices42,wholesalemarketprices,andretaildemand.Theresultsofthismodelingwasemployedtoquantifytheriskofuncertaintyandevaluatethecostperformanceofeachportfolio.Thistypeofanalysisensuresthattheselectedportfolionotonlyhasthelowestexpectedcost,butisalsorobustenoughtoperformwellagainstawiderangeofpossibleloadandmarketconditions.
AspartoftheCompany’s2017resourceplan,TEPconductedriskanalysisaroundthefollowingkeyvariables:
NaturalGasPrices
WholesaleMarketPrices
RetailLoadandDemand
DeliveredCoalPrices
41AURORAxmpisastochasticbaseddispatchsimulationmodelusedforresourceplanningproductioncostmodeling.AdditionalinformationaboutAURORAxmpcanbefoundathttp://epis.com/42Bothnaturalgasandcoal.
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PermianNaturalGasPricesAspartof2017IRPanalysis,TEPranonehundredrisksimulationstoquantifytheriskofuncertaintyrelatedtoPermiannaturalgasprices.Chart43belowdetailsPACEGlobalBaseCase(CleanPowerPlan)Scenarioandthenaturalgaspricesimulationsagainstwhichtheportfolioswereevaluated.
Chart45‐PermianBasinNaturalGasPriceIterations($/mmBtu)
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PermianNaturalGasPriceDistributionsChart46showstheexpectedpricedistributionsfornaturalgassourcedfromthePermianBasin.ThesedistributionsarebasedonthestochasticdatasimulationsshowninChart45shownabove.
Chart46‐PermianBasinNaturalGasPriceDistributions($/mmBtu)
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PaloVerde(7x24)WholesalePowerPricesAspartofthe2017IRPanalysis,TEPranonehundredrisksimulationstoquantifytheriskofuncertaintyrelatedtowholesalepowerprices.Chart47belowdetailsPACEGlobalBaseCase(CleanPowerPlan)Scenarioandthewholesalepowerpricesimulationsagainstwhichtheportfoliowereevaluated.
Chart47–PaloVerdeWholesalePowerPriceIterations($/MWh)
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PaloVerde(7x24)MarketPriceDistributionsChart48showstheexpectedpricedistributionsforwholesalepowersourcedfromthePaloVerdemarket.ThesedistributionsarebasedonthestochasticdatasimulationsshowninChart47shownabove.
Chart48‐PaloVerde(7x24)MarketPriceDistributions
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LoadVariabilityandRiskAsoutlinedintheprevioussections,loadisalsovariedwithineachofthe100simulationsinaccordancewiththemovementofnaturalgasandwholesalepowerprices.Inthisway,awidevarietyofpossibleloadgrowthscenariosarealsoconsideredinthesimulationanalysisandarethereforeinherentintheresultingriskprofiles.
Chart49‐TEPPeakRetailDemand(MW)
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CHAPTER 12
REFERENCE CASE PLAN
TEP’s2017IRPReferenceCasePlancontinuestheCompany’slong‐termstrategyofresourcediversificationbytakingadvantageofnear‐termopportunitiestoreduceitshighercostcoalcapacity,expandingthedeploymentofrenewableenergyresourceswithatargetofserving30%ofitsretailloadusingrenewableenergyby2030,continuingdevelopmentandimplementationofcost‐effectiveEEmeasures,andaddinghigh‐efficiencynaturalgasresources.
ResourceDiversificationInSeptember2016,TEPacquiredtheremaining50.5%shareofSpringervilleUnit1,bringingitstotalcapacityatSpringervilleto793MWwithfullownershipandoperationalcontrolofUnits1and2.Aspartofthe2017IRPReferenceCasePlan,TEPplanstomakethefollowingcoalcapacityreductionsoverthenextfiveyears.By2018TEPwillreduceitscoalcapacityattheSanJuanGenerationStationfrom340MWto170MWwiththeretirementofSanJuanUnit2.TEPwillfurtherreduceitsoverallcoalcapacityby169MWassumingtheNavajoGeneratingStationceasesoperationattheendof201943.Finally,TEPwillexitSanJuanentirelywhenthecurrentcoalsupplyagreementendsinJuly2022.
The2017ReferenceCasePlanincludestwolargerenewableenergyprojectscomingonlinein2019.Theseprojects,consistingof100MWofwindand80MWACofsolarPV,arecurrentlyinprocurementasPPAs.Furtherrenewableenergyisassumedtobeaddedtothesystembetween2023and2030,consistingofadiversifiedmixofsolarPV(fixedaxisandSAT)andwind.Tosupportthesysteminlightofthishighpenetrationofintermittentrenewableenergy,andtoprovidereplacementcapacityfortheretirementofolder,lessefficientnaturalgassteamunitsatSundt(Units1and2),itisassumedthatTEPinstallsapproximately192MWofnaturalgasfiredRICEsbetween2020and2022.Additionalrenewableenergysupportandotherancillaryservicesaretobeprovidedwithanumberenergystorageprojectsassumedtocomeonlinebetween2019and2021.Thesesystemsareassumedtobe50MWprojectswithastoragedischargecapacityof50MWh.
43 The2019retirementdateisdependentuponreceivinganextensionoftheleaseagreementtoallowforplantdecommissioningpriortoexpirationofthelease.Withoutanextensionofthecurrentlease,plantclosurewouldneedtotakeplaceasearlyasthisyeartoallowfordecommissioningbytheendof2019.
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LoadsandResourceAssessment
Chart50–TEP’s2017LoadsandResourceAssessment
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RICE96 MW2020
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AdditionofResourcestoMeetSystemRequirementsInconsideringfutureresources,theresourceplanningteamevaluatesamixofloadservingandgridbalancingtechnologies.Thismixoftechnologiesincludesbothcommerciallyavailableresourcesanddevelopingtechnologiesthatarelikelytobecometechnicallyviableinthenearfuture.TheIRPprocesstakesahigh‐levelapproachandfocusesonevaluatingresourcetechnologiesrelevanttotheneedsofthesystem,ratherthanfocusingonspecificprojects.Candidateresourceadditionsdesignedtomeetplanningreserverequirementsareidentifiedformodelingandthroughaniterativeprocess,aspecificconfigurationintermsoftechnology,timingandcapacityisarrivedatbasedoncostfactors(capitalexpenseandNetPresentValue[NPV]),reliabilityneeds,andenvironmentalperformance.Thisapproachallowstheresourceplanningteamtodevelopawide‐rangeofscenariosandcontingenciesthatresultinaresourceacquisitionstrategythatcontemplatesfutureuncertainties.
AdditionofLoadServingResourcesToreplacethenear‐termcoalcapacityreductions(508MWbetween2017and2022),TEPplanstoaddapproximately400MWofNGCCcapacityin2022.NGCCisahigh‐efficiencyintermediatetobaseloadresource,andgiventhecurrentoutlookonnaturalgasprices,representsthelowestLCOEamongfully‐dispatchableload‐servingresources.NGCCunitsarealsocapableofload‐followingand,intheproperconfiguration,canprovidefastrampingresponse.
AdditionofGridBalancingandLoadLevelingResourcesAnadditional150MWofRICEcapacityisassumedtocommenceoperationin2031astherenewableenergycapacityincreases,andasoldercombustionturbineandnaturalgassteamunitsareretired,inadditiontotheretirementofFourCorners.Thehighefficiencyoftheseunitscombinedwiththeirmodulararrangementandfaststartandfastrampcapabilitiesmakethemahighly–flexible,costeffectivealternativeforaddressingrenewableintermittencyaswellaspeakcapacity.Inadditiontothe120MWofbatteryESSinstalledby2021,the2017IRPReferenceCasePlanassumestheadditionofenergystoragein2031.Thissystemwouldbe100MWx100MWhandcouldprovideacombinationofancillary,peakcapacityandload‐levelingservices.
ReferenceCasePlanSummaryandTimelineChart51andChart52showtheReferenceCasePlanresourcecapacityadditionsandretirementsbyyear,respectively.Chart51givesanindicationofthesourceofreplacementandmake‐uppowerduetounitretirementsandincreasingload.Figure38detailsthesignificantresourceplanningdecisionsassumedforthe2017IRPReferenceCasePlan.
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Chart51‐ReferenceCasePlan‐NewResourceCapacity
Chart52‐ReferenceCasePlan‐ResourceRetirements
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Figure38–2017IRPReferenceCasePlanResourceTimeline
Formodelingpurposes,the2017IRPReferenceCasePlandoesnotincludeanysignificantnewtransmissionupgradesoverthe15‐yeartimeframe.TheTEPTen‐YearTransmissionPlanonlyincludesone“Planned”project,whichisarelativelysmallprojectanticipatedforconstructionin201844.Several“conceptual”projectswereidentifiedintheplan,however,thetimingoftheseprojectsisexpectedtobedeterminedthroughfuturetransmissionplanningactivities.TEPwillupdatetheseconceptualprojectdescriptionsinfutureIRPfilingsastheyareclarified.
44Hassayampa–PinalWest–projectisa500kVlineloop‐inof3spansorlesstoconnectanexistinglinetotheJojobaSwitchyard‐
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ReferenceCasePlanAttributesTheprimaryobjectiveoftheReferenceCasePlanistoprovideaportfolioofresourcesthatreliablymeetsourcustomers’energyneedsatanaffordablerate,whileidentifyingandaddressingpotentialriskstocostandreliability.TEP’s2017ReferenceCasePlanachievesbothoftheseobjectives.Chart53andChart54,belowshowthegrowingdiversityinenergyandpeakcapacity,respectively,overtheplanningperiod.
Chart53‐ReferenceCasePlan,AnnualEnergybyResource
Chart54‐ReferenceCasePlan,TotalCoincidentPeakCapacity
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ExistingRenewableIntegrationRequirementsTEP’sReferenceCasePlantargetsserving30%ofitsretailloadusingrenewableresourcesby2030.Theserenewableresourceadditionsresultinasignificantamountofnewintermittentcapacity,whichrequiresacorrespondingincreaseinGridBalancingservicestoprovide“back‐up”capacitywhenthoserenewableresourcesareunavailable.Asameasureoftheabilitytomaintainreliability,Chart57Chart55,belowshowsTEP’sexisting10‐minuterampingcapacityincomparisontotheCompany’sprojectedreserveandrampingrequirements.Chart56detailsTEP’scurrent10‐minuterampingcapacitybyresource.
Chart55–TEP’sExisting10‐MinuteRampingCapacityversusProjectedRequirements
Chart56‐TEP’sExisting10‐MinuteRampingCapacitybyResource
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ReferenceCasePlanRenewableIntegrationRequirementsAsshownonChart57andChart58,TEP’sReferenceCasePlanportfolioadditionsofnewreciprocatingenginesandbatterystorageinthe2020timeframewillenabletheCompanytomeetitsneartermandlongerterm10‐minuterampingrequirementstoreliabilityintegratethetargetof30%renewableresourcesby2030.
Chart57–TEP’sReferenceCasePlan10‐MinuteRampingCapacityversusProjectedRequirements
Chart58–TEP’sReferenceCasePlan10‐MinuteRampingCapacitybyResource
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CleanPowerPlanComplianceAsdiscussedinChapter3,TEPassumesthatArizonawouldadoptasubcategorizedratebasedapproachforCPPcompliance,whileNewMexicoandtheNavajoNationwouldadoptamass‐basedapproach.Inaddition,duetotheeconomicadvantagesinherentintrading,TEPassumesthatallthreejurisdictionswouldenteranationaltradingpool.Chart59showsTEP’scompliancepositioninArizonaundertheReferenceCasePlan.TEP’ssignificantinvestmentinrenewableenergyresourcesandcontinuedEEdeploymentresultinasurplusofERC’sthatwouldbeavailableforsaleorcouldbebankedforfuturecomplianceperiods.
Chart59‐TEPReferenceCasePlanCPPCompliance,Arizona
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Chart60showsTEP’scompliancepositioninNewMexicoandtheNavajoNation,combined.Thesignificantretirementofaffectedcoal‐firedunitsinthesejurisdictionsresultsinasurplusofemissionallowancesduringeachcomplianceperiod.
Chart60‐TEPReferenceCasePlanCPPCompliance,NewMexicoandNavajoNation
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ReferenceCasePlanRiskDashboardWhiletherearemanyriskfactorsdirectlyorindirectlyassociatedwitheachresourceportfolio,theyallstemfromthefactthatoperatingunderafullyintegratedelectricutilitymodelrequiresverylargecapitalinvestmentsthatgenerallyneedtobepaidforovermanyyears.OurgoalistodevelopaReferenceCasePlanthatprovidesoptionalitytomakeadjustmentsshouldtherebeamajorchangeinfuturemarketandregulatoryoutcomes.Still,riskcannotbeeliminate;therefore,keyriskfactorsneedtobeidentifiedandmeasured.
TEPdevelopedaRiskDashboardbelowasameanstobringattentiontotheprimaryriskfactorseffectingfutureresourcedecisions.
CO2Emissions–WhiletheReferenceCasePlanisevaluatedforcomliancewiththeCPPasdiscussedabove,theultimateoutcomeoftheCPPlitigationisuncertain,andthecurrentIRPplanninghorizonextendsbeyondtheCPPimplementationperiod.TEPbelievesthatCO2emissionreductionswilleventuallyberequired,thoughthetimingandmagnitudeofthosereductionsremainsuncertain.TEPbelievesthattheReferenceCasePlanCO2emissionreductions(inexcessof30%by2032)representsabalancedpositionintheeventofafutureCO2emissioncompliancerequirement.
WaterConsumption–Wateravailabilityforpowergenerationisanongoingconcern,especiallyintheDesertSouthwest.Lowsurfacewaterlevelsduetodroughtandchangingweatherpatterssuggestthatalong‐termgoaltoreducesurfacewaterconsumptionisappropriate.Consumptionofgroundwaterismuchmoresite‐specific.TEPbelievesthatthe100%reductioninsurfacewaterconsumptionandnearly30%reductioninwaterconsumptionoverallby2032realizedundertheReferenceCasePlanisasignificantoutcomeintermsofmanagingfuturewatersupplyrisk.
NaturalGasUsage–Overthepastfivedecades,TEP’sresourcemixhasbeendominatedbycoal‐firedgeneration.Whilemakingastrategicefforttodiversifyitsresourceportfolio,whichincludesreplacingcoal‐firedgenerationwithnaturalgasandrenewableresources,theCompanyismindfulofnotgoing“toofar”,thuscreatinganoverrelianceonnaturalgas.TEPbelievestheReferenceCasePlanresourcemixappropriatelymanagestheriskofoverrelianceononeresourcetype.
CapitalExpenditures–Along‐termresouceplanshouldprovidetheoptionalitytomakecoursecorrectionstoaddressuncertainties(marketperformance,technolgydevelopment,regulatorychanges,etc.)andwellasunforeseencircumstances.Thatoptionalitycanbelostduetolarge,near‐termcapitalinvestments.The2017ReferenceCasePlanportfoliostagesmajorcapitalinvestmentsfarilyevenlyoverthe15‐yearplanningperiod.
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Chart61–ReferenceCasePlanRiskDashboard
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Load Growth Scenario Analysis
HighLoadScenarioThehighloadgrowthscenarioassumesacontinuationoffirmwholesalecontractsatlevelsconsistentwiththoseinthenearterm.UndertheReferenceCaseload,firmwholesaleobligationsremainsteadythrough2022atjustover150MW,thenbegintodecreaseascurrentcontractsexpire.Thehighloadscenariomaintainsfirmwholesaleobligationsat160MWfrom2023throughtheendoftheplanningperiod,whichresultsinanincreaseinpeakdemandrangingfrom31to116MWcomparedtotheReferenceCasePlan.
TheReferenceCasePlanhasexcessreservebeginningin2025duetothesignificantincreaseinrenewableenergyaswellastherampingresourcesneededwiththathighlevelofrenewablepenetration.Therefore,thecapacityofadditionalresourcesneededunderthehighloadscenariodonotneedtomatchthe116MWincreaseobservedbetweentheReferenceCaseandthehighloadscenarioinordertomaintainanadequatereservemargin.Between36MWand72MWofadditionalcapacitywasdeterminedtobesufficient.ThehighloadscenarioutilizesRICEresourcestofillthisadditionalcapacityneed.Adjustmentstothe2017ReferenceCasePlantomeetthehighloadscenarioarepresentedonFigure39.
Figure39‐HighLoadScenarioAdjustmentstothe2017ReferenceCasePlan
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LowLoadScenarioThelowloadgrowthscenarioassumesthatthereisnonewminingexpansionswithintheplanningperiod,whichresultsinadecreaseinpeakdemand,andload,ofapproximately80MWcomparedwiththeReferenceCasePlan,beginningin2022,andextendingthroughtheendoftheplanningperiod.ThetimingofthisdecreasecoincideswithRICEandNGCCresourceadditionsintheReferenceCasePlan.Therefore,decreasingtheamountofadditionalcapacityisalogicalapproachforadjustingtothisdecreaseinload.Giventhenatureofminingload(approximately85%loadfactor),andthefactthattheRICEsareintendedtosupportincreasesinrenewableenergyresources,thelowloadscenarioreducestheamountofadditionalNGCCcapacityneededin2022.Adjustmentstothe2017ReferenceCasePlantomeetthelowloadscenarioarepresentedonFigure40.
Figure40‐LowLoadScenarioAdjustmentstothe2017ReferenceCasePlan
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CHAPTER 13
ALTERNATIVE PORTFOLIOS
ThefollowingsectionspresentadescriptionandtheresultsofalternativeportfoliosanalyzedaspartofthisIRP.Thelistofportfoliosanalyzedispresentedbelow.
EnergyStorageCasePlan SmallNuclearReactorsCasePlan(combinedwithFullCoalRetirement) ExpandedEnergyEfficiencyCasePlan HighSolarCasePlan(substitutedfortheExpandedRenewablesCasePlan)
ThislistofalternativeportfoliosvariesslightlyfromthelistpresentedintheMarch2016PreliminaryIntegratedResourcePlan.HighloadandlowloadgrowthscenarioswereanalyzedinthecontextoftheReferenceCasePlaninChapter12,whereadjustmentsweremadetotheportfoliotoaccountforthosedifferingloadassumptions.TheFullCoalRetirementCasePlanwascombinedwiththeSmallNuclearReactorCaseplanbasedontheviewthatcoalandnuclearresourcesprovidethesameservice(fullydispatchableloadservingresources),andasameansofmaintainingsomeresourcediversityintheabsenceofcoal‐firedgeneration.AMarket‐BasedReferenceCasePlanwasnotanalyzedbecauseundertheReferenceCasePlan,TEPhascapacityinexcessofthe15%reservemargininallyearsbeyondthefiveyearswheremarketpurchasescanbeincludedintheportfolio.TheExpandedRenewablesCasePlanwassubstitutedwithaHighSolarCasePlanastheReferenceCasePlanportfolioalreadyhadhighrenewableenergyassumptions.TheHighSolarCasePlanallowsforanalyzingtheeffectsoflowerdiversityintherenewableenergymix.
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OverviewoftheEnergyStoragePortfolioIntheExpandedEnergyStoragePortfolio,the100MWx100MWhESSimplementedin2031intheReferenceCasePlanisreplacedwithapairof“bulkenergy”storagesystemsimplementedin2022and2025.Eachbulksystemisassumedtobe100MWx400MWh.UnliketheESSsincludedintheReferenceCasePlan,whichareintendedtoprovideancillaryservices,thebulkESSsareintendedtoprovidebothancillaryandenergyservices,suchascapacity,levelizationofthermal‐basedelectricitygeneration,andfollowingofload.
Bulkstoragesystemscanalsoreduceoperatingcostsbystoringenergywhenitisrelativelyinexpensivetogenerateandreleasingitwhenitwouldotherwisebemostexpensivetogenerate,andsucharbitrageopportunitiesareexpectedtobecomemorecommonintheSouthwestastheincreaseduseofrenewableenergycreatesgreaterintra‐daywholesaleelectricitypricevariations.
ThefirstbulkESSinthisportfolioisassumedtobeoperatingby2022.ThiscoincideswiththeexpectedtimingofgreaterarbitrageopportunitiesandthefullretirementoftheSanJuanGeneratingStation,whichwouldhavetheeffectofreducingemissionsassociatedwithrechargingtheESS.ThisESSwouldalsoobviatetheneedforthefiveRICEsassumedtocomeonlinein2022intheReferenceCasePlan,whicharethereforeremovedfromtheEnergyStoragePortfolio.
ThesecondbulkESSisassumedtobeoperatingby2025,whichcoincideswiththehighestyearofassumedrenewableenergyexpansionafter2019.ImplementingthissecondESSin2025,asopposedtoimplementingbothin2022,alsoprovidesmoretimeforESSstoimproveintermsofperformanceandcosts.Infact,analysesbyLazardandDNVGLsuggestthatby2025thecostoflithium‐ionbulkESSswillbeapproximatelythesameaspumpedhydroenergystorage,whichmayalsobeanenergystorageoptionaroundthattime.Finally,a2025implementationdatewouldallowthreecombustionturbinesatNorthLoopandtwoatSundttoretirethreeyearsearlierthanplannedintheReferenceCasePlan.
BothbulkESSsinthisportfolioaremodeledaslithium‐ionbatterytechnology,partlybecauseoftheirrapidlydecliningcostsandpartlybecauseofthegreaterflexibilitytheyprovideovermoretraditionalformsofenergystorageintermsofmodularity,scaling,siting,andmultipleuses–e.g.energyservices,ancillaryservices,andtransmissionanddistributioncostdeferral.However,theresultsoftheanalysiswouldlikelyholdforotherformsofenergystoragesuchaspumpedhydro.ExpandedEnergyStoragePortfolioadjustmentstotheReferenceCasePlanarepresentedonFigure41.
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Figure41‐ExpandedEnergyStorageAdjustmentstotheReferenceCasePlan
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OverviewoftheSMR‐FullCoalRetirementPortfolioInDecisionNo.75068,asaresultofthe2014IRP,theACCrequestedthatload‐servingentitiesstudyascenariothatincludestheadditionofSMRs.AsorderedbytheACCinthe2012IRP,TEPgeneratedascenariocalled“FullCoalRetirementCase”.Thiscasewasstudiedinthe2014IRPinanticipationofpotentialalternativeoutcomesresultingfromEPARegionalHazemandates.TheCleanPowerPlanfurtherinstigatedareviewofexpandedcoalretirements.
AsTEPwasanalyzinganddesigningeachofthesescenarios,itwasevidentthatanyscenarioinvolvingSMRwouldassumeareplacementofbase‐loadgeneration.Thefullcoalrequirementwouldneedbase‐loadtypereplacement;itonlymadesensetomergethesetwoscenarios.
SmallNuclearReactors–FullCoalRetirementCaseSmallNuclearReactorsareatechnologythatcanbeutilizedtolowerCO2emissions,aswellasotherpollutants,whileprovidingreliable,sustainedandefficientpoweroutput.Inthiscase,TEPstudiedtheimpactofSMRsasaresourcetosupplantretiringbaseloadcoalassets.ThiscasewasdesignedtofullymeettheEEstandardsaswellasexceedtherenewablestandardwiththeTEP30%targetasdescribedthroughoutthisdocument.TheassumptionsintheReferenceCasePlanremain,exceptforthechangesillustratedinFigure42below.InadditiontothecoalunitclosurespresentedintheReferenceCasePlan,thefollowingclosureswerealsoassumed:SpringervilleUnit1in2025,andFourCornersUnits4&5in2028.Replacementcapacityisalsoshowninthefigurebelow‐‐anadditional200MWofRICEand105MWofNGCCisneededin2026.Thestorageprojectassumedfor2031intheReferenceCasePlan,wasadvancedto2028inthisscenario.Theleadtimeforanuclearprojectisover10years,thisscenarioassumesacommissiondatefor500MWsofSMRin2029.
Figure42–SMR&CoalRetirementCaseResourceTimelineforExistingResources
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OverviewofExpandedEnergyEfficiencyForpurposesofthisportfolio,itisassumedthatTEPrealizesadditionalEEinthetimeperiodfrom2021throughthe2032.ThehigherlevelsofEEassumedunderthisportfolioarebasedonthe“highachievablepotential”estimatedbyEPRI45.Incomparisonwiththe“achievablepotential”assumedintheReferenceCasePlan,inwhichmarketconstraintsincludebothmarketacceptancefactorsaswellasprogramimplementationfactors,the“highachievablepotential”excludesprogramimplementationfactors.
HigherlevelsofenergysavingswillnecessitategreaterinvestmentinDSMprogramactivities.However,itisdifficulttoestimatetheamountofadditionalDSMinvestmentneededtoattainaparticularenergysavingsgoal.Therefore,forthisportfolio,TEPestimatednoannualincrementalDSMprogramcostescalation.Inotherwords,the1st‐year$/MWhcostisthesameintheExpandedEnergyEfficiencyCaseasitisintheReferenceCasePlan.ThislikelyunderestimatesthatcostofachievingthesavingsassumedintheExpandedEnergyEfficiencyCase.
Underthisportfolio,thetotalenergysavingsrealizedbytheCompanyin2032is2,140GWh,comparedwith1,894GWhinthereferencecase(seeChart62).TotalDSMprograminvestmentfortheperiodfrom2021through2032undertheExpandedEnergyEfficiencyportfoliowas$584Mcomparedwith$365Minthereferencecase.Combiningsystemfuelsavingswithadditionalprogramexpenses,theExpandedEnergyEfficiencyportfoliowas$35MnetpresentvaluemoreexpensivethantheReferenceCasePlanovertheplanningperiod.However,forprogramsinthelatterpartoftheplanningperiod,energysavingsextendingbeyondtheplanningperiodarenotcapturedinthenetpresentvaluecalculation.
Theadditionalenergysavingsinthisportfolioalsoprovidesaslightcapacitybenefit,astheaveragereservemarginform2025to2030is19.6%comparedwith18.4%inthereferencecase.However,forpurposesofthisportfolio,nodeferralsinadditionalcapacityorearlierretirementofexistingcapacityweredeemedappropriate.Muchoftheexcessreservemarginisassociatedwitharampupinrenewableenergystartingin2023,incombinationwithfirmresourcesneededtobalancetheintermittencyofthatrenewableenergy.
Chart62‐ProjectedEnergySavings(GWh)
45 U.S.EnergyEfficiencyPotentialThrough2035,ElectricPowerResearchInstitute,datedApril2014.http://www.epri.com/abstracts/Pages/ProductAbstract.aspx?ProductId=000000000001025477
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DuetotheuncertaintyinestimatingtheDSMprograminvestmentneededtoachievetheenergysavingsprojectedintheExpandedEnergyEfficiencyportfolio,itmaybeinformativetodividethefuelsavingsresultingfromtheexpandedenergysavings(basedonEPRI’s“highachievablepotential”)bythetotalincrementalenergysavings,withoutconsideringanyincrementalDSMprogramcosts.Thisprovidesa“target”investmentforadditionalDSMprogramsaspresentedinTable22below.
Table22‐TargetInvestmentforAdditionalEnergySavings
IncrementalNPVFuelSavings $30,950,000
IncrementalEnergySavings 1,286GWh
TargetInvestment(2017$) $24.07/MWh
Asstatedpreviously,TEPdoesnotanticipatethatDRwillbeaneconomicallyfeasibleoptionforshort‐termcapacitypriorto2022,andbeyondthattime,TEPdoesnotprojectasignificantneedforshort‐termcapacity.Therefore,TEPdidnotincorporateexpandedDRprogramsintothisportfolio.TEPintendstoshifttowarddesigningDLCprogramsthatarecapableofcost‐effectivelyaddressingperiodsofsignificantramping,anticipatedwithhighpenetrationofrenewableresources,andwillevaluatehigherlevelsofDRinfutureIRPplanningcycles.
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OverviewoftheExpandedRenewablePortfolioTheReferenceCasePlanimplementsadiversifiedrenewableportfoliothattargetsserving30%ofTEP’sretailloadby2030.TherenewableportfolioundertheReferenceCasePlaniscomprisedof60%solarresourcesand40%windresources.Incomparison,theExpandedRenewableplanexaminesthelong‐termcostimpactsofaheavysolarportfolio.EventhoughsolarprojectsareprojectedtobelessexpensiveandthesolaroutputhasagreatercoincidencewithTEP’ssystempeak(particularlysingleaxistracking),theheavysolarportfolioresultsinhigher10‐minuterampingrequirements.IncomparisonwiththeReferenceCasePlan,theExpandedRenewableportfoliorequiresadditional100MWoffaststartreciprocatingenginesin2026.TheExpandedRenewableportfoliowithahighconcentrationofsolarresourcesisshowninFigure43below.
Figure43–ExpandedRenewablePortfolio(HeavySolar)vs.ReferenceCasePlan
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Chart63showshowthe10‐minuterampingrequirementsundertheExpandedRenewableportfoliowithahighconcentrationofsolarresourcesincreasesbeyondthe10‐minuterampingrequirementsintheReferenceCasePlan.Chart64showsthe10‐minuterampingrequirementsfortheReferenceCasePlan.
Chart63–ExpandedRenewablePortfolio10‐MinuteRampingRequirements
Chart64–ReferenceCasePlan10‐MinuteRampingRequirements
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OverviewofMajorIRPAssumptionsbyPortfolioTable23belowsummariesthemajorassumptionsandenvironmentalupgradesthatareincludedineachcase.
Table23–MajorIRPAssumptionsbyCase
Major Assumptions Reference Expanded Storage
Expanded Renewables
Expanded Energy Efficiency
SMR ‐ Coal Retirement
Energy Efficiency
Fully compliant with the Arizona EE Standard (22% by 2020). From 2021 on, EE Programs
based on EPRI’s estimate of “Achievable”
Savings.
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Plan
Same as Reference Case
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Same as Reference Case Plan. From 2021 on, EE
Programs based on EPRI’s estimate of “High Achievable”
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Targets Serving 30% of Retail Load from both
Utility Scale Renewables and DG by 2030.
60% Solar & 40% Wind (utility scale)
Same as Reference Case
Plan
Targets 30% by 2030
Sourced from 90% Solar & 10% Wind
Same as Reference Case Plan
Same as Reference Case
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Storage Resources 220 MW 205 MWh
In‐Service by 2031
320 MW 905 MWh
In‐Service by 2025
Same as Reference Case
Plan
Same as Reference Case Plan
Same as Reference Case
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36% by 2022 56% by 2032
Same as Reference Case
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Same as Reference Case
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Same as Reference Case Plan
63% by 2026 100% by 2032
Production Changes 2017 versus 2032
Reference Case Plan Expanded Storage
Expanded Renewables
Expanded Energy Efficiency
SMR ‐ Coal Retirement
Water Consumption ‐17% ‐17% ‐17% ‐17% ‐33%
CO2 Emissions ‐21% ‐21% ‐24% ‐22% ‐75%
NOx Emissions ‐40% ‐40% ‐40% ‐40% ‐90%
SO2 Emissions ‐17% ‐17% ‐17% ‐17% ‐100%
Natural Gas Consumption
+91% +91% +78% +84% +136%
CapEx (Nominal $millions)
Reference Case Expanded Storage
Expanded Renewables
Expanded Energy Efficiency
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CapEx 2017‐2024 $993 $1,164 $1,031 $993 $993
CapEx 2025‐2032 $480 $641 $851 $480 3,892
Total CapEx $1,473 $1,805 $1,882 $1,473 $4,885
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SummaryofNPVRevenueRequirementsbyScenarioChart65belowsummarizesthenetpresentvaluerevenuerequirements(NPVRR)foreachofthePACEGlobalscenariosmodeledinthe2017IRP.TheReferenceCasePlanresultsinthelowestcostportfolioundertheBaseCaseandtheHighEconomyscenarioswhereastheExpandedRenewableCaseisthelowestcostportfolioundertheHighTechnologyscenariobecausecapitalcostsforsolartechnologiesdeclineatafasterratethanthatofwind.
Chart65–NPVRevenueRequirementsbyScenario
$13,000,000
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High Economy Scenario Base Case High Technology Scenario
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SummaryofNPVRevenueRequirements–BaseCaseScenarioTable24belowsummariestheNPVRRforeachportfolioundertheBaseCasescenario.
Table24–NPVRevenueRequirements–BaseCaseScenario
Non Fuel Revenue Requirements, $000 Reference Expanded Storage
Expanded Renewable
High Energy Efficiency
SMR ‐ Coal Retirement
Existing T&D Resources $4,061,825 $4,061,825 $4,061,825 $4,061,825 $4,061,825
Existing Generation Resources $3,909,337 $3,905,335 $3,909,337 $3,909,337 $3,732,095
New Generation Resources $695,575 $593,721 $758,243 $695,575 $1,707,209
Storage Resources $140,203 $454,732 $140,203 $140,203 $149,131
New Renewable Resources $79,736 $79,736 $176,658 $79,736 $79,736
Total Non‐Fuel Revenue Requirements $8,886,676 $9,095,349 $9,046,266 $8,886,676 $9,729,996
Existing Transmission Expenses $237,009 $237,009 $237,009 $237,009 $237,009
Total Non‐Fuel Revenue Requirements $9,123,685 $9,332,358 $9,283,275 $9,123,685 $9,967,005
Fuel & Purchase Power, $000 Reference Expanded Storage
Expanded Renewable
High Energy Efficiency
SMR ‐ Coal Retirement
Total PPFAC Costs $4,133,336 $4,074,618 $3,955,869 $4,102,386 $4,170,264
Energy Efficiency and Renewables, $000 Reference Expanded Storage
Expanded Renewable
High Energy Efficiency
SMR ‐ Coal Retirement
Energy Efficiency $285,450 $285,450 $285,450 $351,404 $285,450
Demand Response $39,714 $39,560 $39,532 $39,665 $39,803
Total Energy Efficiency $325,164 $325,010 $324,982 $391,069 $325,253
Total Renewables $400,139 $400,139 $451,998 $400,139 $400,139
Total Energy Efficiency and Renewables $725,303 $725,149 $776,980 $791,208 $725,392
Total System Revenue Requirements $13,982,324 $14,132,125 $14,016,124 $14,017,279 $14,862,661
NPV Difference from Reference Case Plan $149,800 $33,799 $34,954 $880,336
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SummaryofNPVRevenueRequirements–HighEconomyScenarioTable25belowsummariestheNPVRRforeachportfolioundertheHighEconomyscenario.
Table25–NPVRevenueRequirements–HighEconomyScenario
Non Fuel Revenue Requirements, $000 Reference Expanded Storage
Expanded Renewable
High Energy Efficiency
SMR ‐ Coal Retirement
Existing T&D Resources $4,061,825 $4,061,825 $4,061,825 $4,061,825 $4,061,825
Existing Generation Resources $3,909,337 $3,905,335 $3,909,337 $3,909,337 $3,732,095
New Generation Resources $753,202 $648,331 $818,773 $753,202 $1,766,772
Storage Resources $144,302 $481,654 $144,302 $144,302 $151,944
New Renewable Resources $94,246 $94,246 $204,728 $94,246 $94,246
Total Non‐Fuel Revenue Requirements $8,962,912 $9,191,391 $9,138,965 $8,962,912 $9,806,882
Existing Transmission Expenses $237,009 $237,009 $237,009 $237,009 $237,009
Total Non‐Fuel Revenue Requirements $9,199,921 $9,428,400 $9,375,974 $9,199,921 $10,043,891
Fuel & Purchase Power, $000 Reference Expanded Storage
Expanded Renewable
High Energy Efficiency
SMR ‐ Coal Retirement
Total PPFAC Costs $4,677,093 $4,563,367 $4,457,733 $4,635,803 $4,840,984
Energy Efficiency and Renewables, $000 Reference Expanded Storage
Expanded Renewable
High Energy Efficiency
SMR ‐ Coal Retirement
Energy Efficiency $285,450 $285,450 $285,450 $351,404 $285,450
Demand Response $40,167 $39,969 $39,904 $40,100 $40,305
Total Energy Efficiency $325,617 $325,419 $325,354 $391,504 $325,755
Total Renewables $299,841 $299,841 $382,211 $299,841 $299,841
Total Energy Efficiency and Renewables $625,458 $625,260 $707,565 $691,345 $625,596
Total System Revenue Requirements $14,502,472 $14,617,027 $14,541,272 $14,527,069 $15,510,471
NPV Difference from Reference Case Plan $114,555 $38,800 $24,597 $1,007,999
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SummaryofNPVRevenueRequirements–HighTechnologyScenarioTable26belowsummariestheNPVRRforeachportfolioundertheHighTechnologyscenario.
Table26–NPVRevenueRequirements–HighTechnologyScenario
Non Fuel Revenue Requirements, $000 Reference Expanded Storage
Expanded Renewable
High Energy Efficiency
SMR ‐ Coal Retirement
Existing T&D Resources $4,061,825 $4,061,825 $4,061,825 $4,061,825 $4,061,825
Existing Generation Resources $3,909,337 $3,905,335 $3,909,337 $3,909,337 $3,732,095
New Generation Resources $622,882 $525,553 $681,195 $622,882 $1,620,599
Storage Resources $129,934 $380,104 $129,934 $129,934 $145,764
New Renewable Resources $62,402 $62,402 $104,930 $62,402 $62,402
Total Non‐Fuel Revenue Requirements $8,786,380 $8,935,219 $8,887,221 $8,786,380 $9,622,685
Existing Transmission Expenses $237,009 $237,009 $237,009 $237,009 $237,009
Total Non‐Fuel Revenue Requirements $9,023,389 $9,172,228 $9,124,230 $9,023,389 $9,859,694
Fuel & Purchase Power, $000 Reference Expanded Storage
Expanded Renewable
High Energy Efficiency
SMR ‐ Coal Retirement
Total PPFAC Costs $3,464,140 $3,453,215 $3,344,143 $3,449,172 $3,411,727
Energy Efficiency and Renewables, $000 Reference Expanded Storage
Expanded Renewable
High Energy Efficiency
SMR ‐ Coal Retirement
Energy Efficiency $285,450 $285,450 $285,450 $351,404 $285,450
Demand Response $39,282 $39,199 $39,186 $39,255 $39,314
Total Energy Efficiency $324,732 $324,649 $324,636 $390,659 $324,764
Total Renewables $525,799 $525,799 $538,852 $525,798 $525,799
Total Energy Efficiency and Renewables $850,531 $850,448 $863,488 $916,457 $850,563
Total System Revenue Requirements $13,338,060 $13,475,891 $13,331,861 $13,389,018 $14,121,984
NPV Difference from Reference Case Plan $137,831 ($6,199) $50,958 $783,924
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DistributionofNPVRevenueRequirementsbyPortfolioThedegreetowhicheachportfolioisabletoadequatelymeetfutureloadservingrequirementsatareasonablecostismeasuredbyexaminingthedistributionofitsNPVRRoutcomesforeachportfolioacrossmultiplestochasticiterations.Theperformanceofeachportfolioissummarizedinthefollowingcharts.Chart66showseachhistogramcomparingthefrequencyofoutcomesforeachofthecandidateportfolios.Allhistogramsarerepresentedonthesamescale.Portfoliosshowingalargenumberofoutcomes(higherbars)ontherightsideofthegraphrepresenthighcostoptionsrelativetotheothersresourceportfolios.Higherriskisreflectedbylowerbarsspreadovermoretranches.
Chart66–DistributionofNPVRRbyPortfolio
0
5
10
15
20
25
30
35
13,850,000
13,925,000
14,000,000
14,075,000
14,150,000
14,225,000
14,300,000
14,375,000
14,450,000
More
Frequency
NPV Revenue Requirements ($000)
Reference Case Portfolio
0
5
10
15
20
25
30
35 13,850,000
13,925,000
14,000,000
14,075,000
14,150,000
14,225,000
14,300,000
14,375,000
14,450,000
More
Frequency
NPV Revenue Requirements ($000)
Expanded Storage Portfolio
0
5
10
15
20
25
30
35
13,850,000
13,925,000
14,000,000
14,075,000
14,150,000
14,225,000
14,300,000
14,375,000
14,450,000
More
Frequency
NPV Revenue Requirements ($000)
Expanded Renewable Portfolio
0
5
10
15
20
25
30
35
13,850,000
13,925,000
14,000,000
14,075,000
14,150,000
14,225,000
14,300,000
14,375,000
14,450,000
More
Frequency
NPV Revenue Requirements ($000)
Expanded EE Portfolio
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DistributionofNPVRevenueRequirementsbyPortfolioChart67belowshowsthedistributionofNPVRRonthesamechart.
Chart67–AggregatedNPVRRbyPortfolio
0
5
10
15
20
25
30
35
13,850,000
13,875,000
13,900,000
13,925,000
13,950,000
13,975,000
14,000,000
14,025,000
14,050,000
14,075,000
14,100,000
14,125,000
14,150,000
14,175,000
14,200,000
14,225,000
14,250,000
14,275,000
14,300,000
14,325,000
14,350,000
14,375,000
14,400,000
14,425,000
14,450,000
14,475,000
14,500,000
More
Frequency
NPV Revenue Requirements ($000)
Reference Case PortfolioExpanded EE PortfolioExpanded Renewable PortfolioExpanded Storage Portfolio
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NPVRRMeanandWorstCaseRiskChart68summarizeseachportfoliowithrespecttoboththeexpectedaverageNPVRRandthe“worstcase”outcomeriskasrepresentedbythe95thpercentileofitsNPVRRoutcomes.Valuesloweronthegraphandfarthertotheleft,representlowerriskandlowercostportfolios.
Chart68–SummaryofNPVRRMeanandRisk
13,900,000
14,000,000
14,100,000
14,200,000
14,300,000
14,400,000
14,500,000
14,600,000
14,700,000
14,800,000
14,900,000
15,000,000
13,800,000 14,000,000 14,200,000 14,400,000 14,600,000 14,800,000 15,000,000 15,200,000
95th Percentile of NPVRR ($000)
Expected Nominal NPVRR ($000s)
ReferenceCase
ExpandedRenewables
Coal Retirement &SMR Portfolio
ExpandedStorage
ExpandedEE
2017IntegratedResourcePlan
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CHAPTER 14
FIVE‐YEAR ACTION PLAN
The2017ReferenceCasePlanwaschosenasthepreferredportfolioplanbasedoncurrentforecastsandassumptions.TEPhasdevelopedafiveyearactionplanbasedontheresourcedecisionsthatarecontemplatedinthisIRP.Underthisactionplan,additionaldetailedstudyworkwillbeconductedtovalidatealltechnicalandfinancialassumptionspriortoanyfinalimplementationdecisions.TEP’sactionplanincludesthefollowing:
TEPplanstocontinuewithitscommunity‐scalebuildoutofrenewableenergytoachieveadiverseportfoliothattargets30%ofretailloadfromrenewablegenerationby2030.Asaresult,overthenextfiveyears,TEPistargetingtheadditionof100MWofutility‐scalewindand100MWofutility‐scalesolarresources.
AspartofTEP’sportfoliodiversificationstrategy,theCompanyisreducingitscoalresourcecapacityby508MWoverthenextfiveyears,whichrepresents36%ofourcurrentcoalcapacity.TheseplannedcoalretirementswillenableTEPtotakeadvantageofnear‐termopportunitiestoreducecostsandrebalanceitsresourceportfoliooverthelonger‐term.Thisreductionincoalresourceswillresultinsignificantcostssaving46forTEPcustomersandwillresultinmeaningfulreductionsinairemissionsandwaterconsumption47.
Inordertoaccommodateincreasedrenewableenergyresources,andtoallowfortheretirementofoldergassteamunitsattheSundtGeneratingStation,TEPplanstomoveforwardwithageneratingresourcemodernizationplanatSundtoverthenextfewyears.Aspartofthiscurrentresourceplanningcycle,TEPconductedaFlexibleGenerationTechnologyAssessment48withBurns&McDonnellin2017.TheresultsofthisstudyindicatethatRICEtechnologyisthepreferredtechnologythatwillprovidecapacityandassistinmitigatingrenewableenergyintermittencyandvariability.TEPplanstomoveforwardwithissuingaRequestforProposalforthesefast‐respondingresourcesthatwillmeetthe2020and2022timeline.
TEPwillcontinuetoimplementcost‐effectiveEEprogramsbasedontheArizonaEEStandard.TEPwillcloselymonitoritsEEprogramimplementationsandadjustitsnear‐termcapacityplansaccordingly.TEPwillcontinuetomonitorcloselyandimplementDRprogramsthataremutuallybeneficialtotheCompanyanditscustomers.
TEPisoptimisticaboutthepotentialofenergystoragesystemsasatechnologyandasaneconomicallyviablesolutiontoprovidepeakcapacityandrenewableintermittencymitigation.TheReferenceCase
46Aspartofthe2014IRPanalysis,TEPavoidedapproximately$165inpollutioncontrolswithitscommitmenttoretireSanJuanUnit2attheendof2017.Inthe2017IRPanalysis,TEP’scustomerswillrealizeanadditionalnetpresentvaluesavingsofapproximately$179millionrelatedtotheretirementofTEP’sownershipinterestinNavajoattheendof2019andtheretirementofTEP’sownershipinterestinSanJuanUnit1attheendofJune2022.47TheretirementofbothNavajoandSanJuanUnits1and2resultsinreductionsinTEP’stotalsystememissionsof15.8%forcarbondioxide(CO2),29.8%fornitrousoxides(NOx),and9.8%forsulfurdioxide(SO2).Inaddition,theretirementoftheNavajoandSanJuanunitsshowwaterconsumptionisreducedbyapproximately2,599acrefeetperyear,anoverallsavingsof16.18%.48Seethe2017FlexibleGenerationTechnologyAssessmentinAppendixB.
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Planincludestheadditionofa50MWbatteryprojectfor2019andanother50MWsfor2021.TEPwillcontinuetomonitortheadvanceofESSandmayopttoissueaRFPinthenearfuture.
TEP’s2017ReferenceCasePlanrecommendstheadditionof413MWofnaturalgascombinedcyclecapacityin2022.Aspartofitsnear‐termportfoliostrategy,TEPwillcontinuetoutilizethewholesalemarketforthepurchaseofshort‐termmarketbasedcapacityproducts.Inaddition,TEPwillcontinuetomonitorthewholesalemarketforotherresourcealternativessuchlong‐termPPAsandnear‐termlowcostplantacquisitions.TEPwillalsomonitorandadjustitsnaturalgashedgingrequirementsasitreducesitsrelianceoncoalbasedgenerationinfavorofnaturalgasresources.Recommendationswillbemadeonpotentialfuelhedgingchangesiftheybecomenecessary.
TEPandotherArizonautilitiescontinuetoevaluatethepotentialbenefitsofin‐groundnaturalgasstorage.Localstoragewouldimprovetheabilityofnaturalgasgenerationunitstorespondtochangingloadsaswellastheintermittencycausedbyrenewableresource.DuetothedistanceofArizona’slargestloadpocketsofPhoenixandTucsonfromtheSanJuanandPermiannaturalgasproductionbasins,localnaturalgasstorage(ifavailableandconstructed)wouldbeabletomorequicklysupplynaturalgasduringshortfallsandstoreexcessnaturalgasduringperiodswhenthenaturalgasmainlinesexperiencedoperationallimitations.
Aswithanyplanninganalysis,the2017IRPrepresentsasnapshotintimebasedonknownandreasonableplanningassumptions.ItisimportanttonotethateventualclosureofSanJuanandNavajoGeneratingStationsisgivenahighprobabilitytooccur.Evenafterthe2017IRPfilingdate,TEPanticipatesthattheplantparticipantswillcontinuetoworkthroughthecomplexissuessurroundingplantoperatingagreements,fuelcontracts,landleases,economicanalysisandenvironmentalimpactreviewsbeforethefinalresourcedecisionsaremade.Giventheconfidentialnatureofthesedecisions,TEPplanstocommunicateanymajorchangeinitsanticipatedresourceplanwiththeACCaspartofitsongoingplanningactivities.TEPhopesthisdialogwillengagetheCommissiononimportantresourceplanningissueswhileprovidingTEPwithgreaterregulatorycertaintywithregardstofutureresourcedecisions.TEPrequeststhattheCommissionapproveits2017IntegratedResourcePlanasprovidedinA.A.C.R14‐2‐704.B.andtheassociatedactionsherein.
Figure44‐TEP’s2017IRPReferenceCasePlan–MilestoneTimeline
2017IntegratedResourcePlan
APPENDIX A
PACE GLOBAL FUTURE STATES OF THE WORLD
TucsonElectricPower
2017IntegratedResourcePlan
APPENDIX B
2017 FLEXIBLE GENERATION TECHNOLOGY ASSESSMENT
