TEP Plans More Renewables, New Technologies to Meet Future Energy Needs

Tucson Electric Power (TEP) will satisfy customers' future energy needs by investing in efficient, innovative technologies, expanding renewable energy and exploring new ways to reduce reliance on coal-fired generating resources.

TEP's long-term strategy to build a more responsive, sustainable resource portfolio is described in its 2017 Integrated Resource Plan (IRP) filed this week with the Arizona Corporation Commission (ACC). The plan describes TEP's current resource portfolio, projects future energy needs, and outlines strategies the company will use to meet customers' energy requirements over the next 15 years.

"We're evolving from a traditional utility to a more technology- and consumer-focused provider of energy products and services while maintaining reliability, convenience and affordability for our customers," said David G. Hutchens, TEP's President and Chief Executive Officer.

"Our plan recognizes the continued financial and operational benefits of owning Units 1 and 2 at the Springerville Generating Station, Arizona's most efficient, cost-effective coal-fired power plant," Hutchens said. "However, renewable energy, energy efficiency and cost-effective natural gas technologies will play an increasingly prominent role in our future resource plans."

TEP will continue to diversify its generation portfolio by expanding solar and wind generation with a goal of delivering at least 30 percent of its power from renewable resources by 2030 - twice the level required by 2025 under Arizona's Renewable Energy Standard.

The company anticipates adding about 800 megawatts (MW) of new renewable energy capacity by 2030. TEP recently signed an agreement with NextEra Energy Resources LLC to buy power from a new 100 MW wind facility. The company also is evaluating proposals for a new 100 MW solar facility that would be built and owned by a project partner.

An increasingly flexible, sustainable generation portfolio will create operational challenges that require new ways of managing the intermittency and variability of renewable resources. TEP will continue to rely on energy efficiency measures and invest in new cleaner burning, natural gas resources. The company also is considering investing in flexible, fast-responding natural gas reciprocating internal combustion engine (RICE) technologies that provide an affordable way to manage power fluctuations associated with intermittent renewable resources.

TEP also expects to make 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, and the company could gradually add up to 100 MW of storage capacity. TEP recently completed three energy storage projects with a combined capacity of 22 MW that are designed to provide grid-balancing support.

TEP's 2017 IRP outlines the company's plans to retire and replace some of its coal-fired generating resources. TEP will lose 170 MW of coal-fired capacity when Unit 2 at the San Juan Generating Station in New Mexico is shut down at the end of this year. The company plans to stop using the plant entirely when the current coal supply agreement ends in June 2022, shedding another 170 MW of coal-fired capacity.

TEP also is preparing for the retirement of the coal-fired Navajo Generating Station, which participants have agreed to run through December 2019 if a land lease extension can be reached. TEP owns 7.5 percent, or 168 MW, in that plant and has joined other owners in working with the Navajo Nation to develop a transition plan for the facility.

Tucson Electric Power | www.tep.com