APS issues RFP for 400-600 MW in Arizona, files IRP on future plans

Arizona Public Service (APS) on March 11 issued an “all-source” request for proposals (RFP), seeking 400-600 MW of capacity to help the utility meet customers’ peak energy needs.

Proposals must be able to begin delivery to APS no later than June 1, 2020, and no earlier than Jan. 1, 2020.

A webinar for anyone interested in bidding in the RFP is scheduled for March 23, with confidentiality agreements due May 18, according to the RFP. Responses to the RFP are due June 9, the utility said.

The RFP is open to all technologies, including thermal generation, renewable resources, energy storage and non-supply-side options such as energy efficiency and demand response proposals.

For supply-side technologies, any facility must be a minimum of 25 MW in size on a single site. For non-supply-side options, the minimum requirement is 25 MW in size for an aggregated program.

Any proposed facility must connect directly to the APS system, or in an alternative, a bidder must demonstrate that it has secured firm transmission for delivery to the APS system, according to the RFP.

The entire RFP process will be monitored and reviewed by an independent third-party monitor approved by the Arizona Corporation Commission (ACC), APS said.

APS, a subsidiary of Pinnacle West Capital Corp. (NYSE:PNW), based in Phoenix, also mentioned the RFP in its integrated resource plan (IRP) filed with the ACC March 1.

The IRP includes a discussion of generation changes such as repowering the natural gas-fired Ocotillo power plant in Tempe, Ariz., with new combustion turbines, examining new technologies such as battery and other storage options and the utility’s plan to join the western energy imbalance market (EIM) administered by the California ISO (Cal-ISO).

On the latter subject, APS said it intends to join the EIM in October, giving it access to a large and diverse pool of resources that can quickly respond to the variability of renewable resources and their effects on customer demand profiles. Besides pooling the resources from other EIM participants, the EIM includes five-minute and 15-minute transaction capabilities to further optimize resource decisions, which will benefit APS customers, the utility said.

Savings to APS customers from the benefits of participating in the EIM are expected to be about $7m annually, APS said.

The use of small reciprocating engines that can ramp up and down quickly in response to price signals or renewable resource variability, along with storage technologies such as batteries, flywheels and compressed air energy storage are some of the options being examined by APS.

“Battery storage may become an important part of APS’s future resource picture,” because of its ability to consume energy and supply it when needed to address system flexibility needs, although it is “still not economically viable or sufficiently mature for wide-scale deployment,” APS said.

APS in 2014 year said it plans to modernize and upgrade the Ocotillo plant by retiring two of the 110-MW steam units and adding five 102-MW combustion turbines while maintaining two existing 55-MW combustion turbines, boosting the capacity of the facility from 330 MW to 620 MW. The project is scheduled to be completed in 2019, APS said in the IRP.

Having the fast-starting, fast-ramping combustion turbines at the Ocotillo facility, along with the use of combined-cycle units to be added during the 2017-2032 planning period, “is important for a balanced natural gas fleet,” the utility said.

Because Arizona ranked second in the nation in total solar installations in the fall of 2015, the net demand for power in the middle of the day during non-summer periods is on the decline, APS said. Incorporating more flexible resources into its portfolio “will not only help counter-balance the variability and unique needs of a more renewable-driven mix, it will allow customers to benefit from the changing wholesale market prices produced in mid-day hours when solar production is at its highest,” according to the IRP.

APS said it faces “key decisions ahead” regarding the Cholla and Navajo coal-fired power plants, and that the use of those facilities will be evaluated based on how it can reliably and affordably meet customers’ energy needs.

APS expects to be able to meet the emission requirements of the U.S. Environmental Protection Agency’s Clean Power Plan if the plan is upheld after legal challenges, it told the ACC, adding that the expectation is based on the assumption that Arizona regulators will choose a rate-based compliance plan.

APS continues to monitor the legal challenges to the rule, following the Supreme Court issuing a stay of the rule while the legal challenges are pending, it said.