Tucson Electric Power IRP includes more solar and analysis of DER, storage

The integrated resource plan (IRP) of Tucson Electric Power (TEP) lays out steps for the utility to diversify its resources with increased solar power, less coal-fired generation, more energy efficiency to meet Arizona’s policy goal, and an examination of the effect of distributed energy resources (DER), the utility said March 2.

The completion of a transmission project last fall has enhanced TEP’s access to the wholesale power market and renewable resources by adding a second extra high voltage transmission connection between Tucson and the Palo Verde market area, TEP said in the IRP.

The IRP describes how TEP plans to meet customers’ energy needs through 2030 while satisfying regulatory requirements, including Arizona’s energy efficiency standard, which directs utilities to achieve cumulative energy savings of 22% by 2020, the utility said in a statement.

With energy efficiency measures as a cost-effective resource option, TEP said that it will offer new programs such as discounts on energy-saving appliances, thermostats and heating, ventilation and air conditioning measures.

The IRP was filed with the Arizona Corporation Commission (ACC) March 1, a TEP spokesperson told TransmissionHub March 2.

On generation, TEP said it will lose 170 MW of coal-fired capacity when Unit 2 of the San Juan Generating Station in New Mexico is shut down at the end of 2017. The utility will continue to own a 170-MW share of San Juan Unit 1 but has an option to exit that in 2022.

TEP has stopped burning coal at its Sundt plant in Tucson, but reductions in coal-fired resources will not diminish the importance of the Springerville coal-fired plant in eastern Arizona, TEP said, noting that the facility anchors the ability to meet customers’ everyday energy needs.

The Springerville plant “is the lowest-cost, most efficiently run coal resource in our fleet and has always been part of our long-term resource planning,” David Hutchens, TEP’s president and CEO, said in the statement. “We are committed to a diversification strategy that benefits from capacity reductions at other TEP-owned coal-fired power plants.”

TEP said in its IRP that it previously acquired half of Unit 1 at the Springerville plant, and it is preparing for the potential acquisition of the other half of the unit as part of a resolution of legal disputes with other co-owners of that unit. TEP also said that it owns Unit 2 at that plant, “so this would anchor our long-term baseload resource in our newest and most efficient coal plants.”

Under a directive from the ACC, TEP and other utilities made preliminary IRP filings because of uncertainties raised by the U.S. Environmental Protection Agency’s Clean Power Plan (CPP), TEP said, adding that a final IRP will be filed in 2017. Noting that the U.S. Supreme Court issued a stay of the CPP due to a pending legal challenge, TEP said it will continue working toward its CPP goals as the status of the final rule is being addressed in court.

TEP said it and other stakeholders spent the last several months working with the Arizona Department of Environmental Quality to identify strategies that could be used to satisfy state CPP requirements.

“Our initial analysis suggests that TEP’s resource diversification strategy is consistent with the targets set forth in the final CPP,” Hutchens said in the statement.

That strategy includes investing in large solar arrays and other community-scale renewable resources, boosting TEP’s total renewable portfolio to about 1,500 MW by the end of 2030. TEP’s renewable portfolio is expected to exceed 370 MW by the end 2016, according to the IRP.

“While we remain open to the possibility of using additional natural gas power plants to meet base load requirements, we will also study fast-response generating resources like reciprocating natural gas engines, which can be used to stabilize intermittent renewable resources,” the utility said in the IRP.

TEP said it also is examining how energy storage and smart grid technologies can improve reliability, with construction expected to begin this year on two 10-MW storage projects that will be used to study how energy storage can help maintain the balance between supply and demand, as well as other energy management requirements.

The IRP also explores how DER efforts like rooftop solar panels have created new challenges and opportunities for utilities and their customers. TEP said it expects to use more sensing and measurement devices to respond to the increase of intermittent renewable resources on its distribution system, effectively enabling some portions of the local electric grid to function as stand-alone “microgrid” systems.

The utility noted that it energized the 500-kV Pinal Central to Tortolita transmission expansion in November 2015, which ties into existing transmission facilities that extend from Palo Verde to Pinal Central and into Tortolita, and will help TEP meet Tucson’s future energy needs.

“This new transmission interconnection will further improve TEP’s access to a wide range of renewable and wholesale market resources located in the Palo Verde area while improving TEP’s system reliability,” TEP said in the IRP.

TEP and its parent company, UNS Energy, are owned by Fortis Inc., which owns utilities in the United States and Canada and has proposed to purchase ITC Holdings (NYSE:ITC) for $11.3bn.