Arizona Public Service on Feb. 21 said it would add 850 MW of energy storage and 100 MW of solar power by 2025, calling the move “a major down payment on Arizona’s continued progress toward an energy future that is clean, reliable and affordable.”
The plan puts APS in the lead for the single, largest energy storage build-out announced by a utility to date in the United States. In June, California’s Pacific Gas and Electric sought regulatory approval for 567 MW (2,270 MWh) of energy storage projects.
The announcement also sets a benchmark for APS in another way. “It is a real signal we got from the market,” APS spokeswoman Jenn Rowell said. “These technologies are going to be a viable solution going forward for peaking capacity historically filled by natural gas.”
There are two phases for APS’ plans to add energy storage. The first phase calls for 450 MW (1,500 MWh) of storage that would come online by 2021. The second phase would have 400 MW of storage come online by 2025. The durations of the second phase facilities have not yet been determined.
The first phase call for 200 MW (600 MWh) of batteries to be installed at eight existing APS solar power plants that were built under the utility’s AZ Sun program.
Invenergy won the solicitation to build 141 MW (423 MWh) of storage at six of the solar sites. Another 59 MW (177 MWh) of storage facilities will be added to the other two solar plants, but the solicitation to choose the contractor has not yet been issued. It could be issued as soon as this summer.
APS has also contracted for the output of 150 MW (300 MWh) of energy storage from standalone batteries that were awarded via an April 2018 solicitation. AES is building a 100 MW (400 MWh) energy storage project in Sun City, and Invenergy will build and own a 50 MW (200 MWh) storage plant in El Mirage. APS also plans to build a 100 MW solar facility that would be paired with a 100 MW (300 MWh) battery system. APS will own that facility, which is expected online in 2021.
For the second phase of its energy storage build-out, APS would build and own 400 MW of storage facilities. The timing of the solicitation to choose the contractor has not yet been finalized. And the durations of those storage projects will be determined as the projects take shape.
In general, APS is looking to storage to extend its solar power generation into its peak load hours, which run from 3:00 pm to 9:00 pm, and to offset the surplus of solar power that the utility produces during the winter.
APS also expects the economics of solar power and energy storage to improve as prices for the technologies continue to drop. The utility was surprised by the prices it received in the April 2018 solicitation, which had called for 800 MW of peaking capacity.
The solicitation sparked criticism from renewable advocates who claimed that it would encourage gas-fired generation despite a 2018 state ban against new gas-fired plants.
That moratorium has been extended, but, like the previous moratorium, does not apply to purchases from gas-fired plants.
In the end, APS said the proposals it received for solar-plus-storage projects and for standalone storage projects beat out bids for new gas-fired peakers.
APS did, however, sign a seven-year power purchase contract with Calpine, which bid the output from an existing 463 MW combined-cycle gas plant. APS will only buy power from the plant during the summer. That Calpine plant benefited in the competition because it was able to bid into the solicitation more competitively than a new build plant.
APS said the length of the power purchase agreement was shorter than it would have signed in the past. The shorter length allows the utility to leave its options open and potentially benefit from further declines in the cost of solar and storage technologies.
The amount of energy storage that APS has committed to buy and build is almost double the total that was in the utility’s 2017 integrated resource plan, Rowell said. APS is now drafting its second integrated resource plan. The results of the April solicitation will likely inform that plan, Rowell said.
Salt River Project also pursuing storage
Arizona public power utility Salt River Project is also pursuing energy storage opportunities.
SRP and NextEra Energy Resources in 2018 announced the opening of Pinal Central Solar Energy Center, a universal-scale, integrated solar plant equipped with a battery system.
Also last year, SRP announced contract execution and the start of construction with the AES Corporation for SRP’s first standalone battery-based energy storage project.