January 25, 2020
This week’s announcement by Arizona Public Service (APS) that it will fully decarbonize the electricity it sells to its customers is a major win for a clean energy future, both in Arizona and nationally. It is also part of a wave of announcements by states, cities, and utilities that plan to move to 100 percent zero-carbon electricity. APS is the seventh US utility to set a target to fully decarbonize its operations by 2050 or sooner, and in doing so it also joins 14 states, dozens of corporations, and more than 100 cities across the nation.
However, not all of these pledges are the same; there is a big difference between mandates that are part of state law and voluntary goals. This pledge by APS, like all of the plans by utilities, is by its nature voluntary. Likewise, out of the 14 states, only four (plus Puerto Rico and Washington, D.C.) have enshrined 100 percent clean energy targets in law. Most of the others reflect more aspiration than actual policy.
And it is notable that in the case of several utilities, such as Public Service Company of New Mexico and Avista, their 100 percent renewable energy pledges came after either existing or pending state law would set a requirement. In the case of Xcel, one of the states where it operates (Colorado) had an incoming governor who pledged to put the state on a path to fully decarbonize its electricity supply.
This decision by APS was likewise not in a vacuum. Though it was not compelled by either existing or pending state law, APS has publicly acknowledged that Proposition 127, which would have set a 60 percent by 2030 renewable energy mandate, played a role in its decision. The decarbonization announcement also follows a lengthy stakeholder process, where those involved in the Proposition 127 campaign were participants.
A Sunset for Coal in the Western United States?
As part of its plan to meet the announced targets, APS will close down its Four Corners coal-fired power plant in 2031, seven years earlier than planned, after closing its Cholla plant in 2025. This will make the utility coal-free.
This comes only two months after the massive Navajo Generating Station burned its last load of coal, and follows on announcements by other Western utilities Xcel, Tri-State, and PacifiCorp that they will accelerate the closure of their coal-fired power plants. The Los Angeles Department of Water and Power has also announced plans to replace its Intermountain Coal Plant in Utah with a hydrogen- and gas-burning power plant.
Taken together, these moves show the accelerating demise of coal in the West, and suggest that the region could be coal-free decades before anyone has expected.
As for gas, this announcement sends mixed signals. It indicates that APS will continue to utilize gas-fired power plants for the next three decades, but also gives an end date for dependence on gas—at least without carbon capture and storage (CSS).
Gas can also be seen as a driver for this plan. One of the main factors that is enabling this transition, for APS and other utilities across the United States, is sustained low natural gas prices that allow low-priced power from existing gas generators to replace coal generation in the near term.
Procuring Low-Cost Renewables Speeds Progress Toward Decarbonization
APS is not only showing leadership in the utility sector with its long-term 100 percent carbon-free commitment, but also through its approaches to procuring clean energy resources in the near term to support decarbonization and system reliability. The costs of solar, wind, and battery projects across the United States have declined far faster than expected, and project developers have reached a scale that increasingly allows for large-scale procurements.
However, it’s not just innovation in technology that has enabled headline-grabbing renewable deployment levels and low prices; a utility’s procurement process also plays an enabling role in allowing these resources to be solicited at least cost and effectively integrated into broader grid planning and operations processes.
APS, among other utilities, has evolved its procurement processes to foster creative bids and take advantage of the increasing competitiveness of clean energy. For example, a recent APS solicitation challenged developers to meet the utility’s specified need while allowing them to use excess energy produced outside of peak hours to capture additional revenue.
One of the most creative solutions was a project that paired solar with battery storage at a price that was competitive with traditional gas peaking capacity. This and other evolving planning and procurement strategies are allowing utilities like APS to harness the competitive potential of clean energy resources and facilitate near-term progress toward decarbonization goals.
Getting to 100 Percent
APS is not planning to decarbonize using solar and wind alone. Batteries will necessarily play a key role; a year ago APS announced plans to procure 850 megawatts of battery storage by 2025, some of which will be paired with solar projects and will help to utilize daytime solar generation for meeting power needs after sundown.
But there are also plans for emerging technologies, and APS has stated that some of the technologies needed to achieve this target are in early stages or have yet to be developed. The utility has also made it clear that this plan includes plans to keep running Palo Verde nuclear power plant, of which it is a partial owner, for the foreseeable future.
All of this underscores that APS will be moving to 100 percent clean energy on its own terms. This is a lesson for other utilities, as the pledge positions APS to have greater control over the details of the transition, and manage the technical changes to its system required to reach 100 percent clean energy at a self-directed pace.
The falling costs of renewables and the growing sophistication of clean energy procurement and integration approaches suggests that utilities like APS can cost-effectively make near-term progress toward a zero-carbon target. The utility is already 50 percent carbon-free, and under this plan will get to 65 percent carbon-free and 45 percent renewable over the course of the next 10 years.
Like other utilities, APS has stated that as it gets closer to a 100 percent carbon-free energy goal, new kinds of zero-carbon dispatchable resources will be needed, and in an interview with Greentech Media, CEO Jeff Guldner identified green hydrogen and natural gas with carbon capture and storage as potential technologies.
But despite lingering uncertainty about which technology in the future can take APS to 100 percent clean energy, APS has made it clear that the utility is not waiting around to make near-term progress toward 65 percent and beyond. Instead, APS is moving forward with a plan for decarbonization that leverages the currently-low and still-falling prices for clean energy projects that enable utilities to reduce carbon cost-effectively today. In doing so, the utility is charting a proactive path forward for itself and its customers, and setting an example for the broader West.