Planning for Arizona’s Energy Future

Brad Albert, General Manager of Renewable ResourcesArizona Public Service Co.

National Conference of State Legislators (NCSL), Energy Task ForceDecember 8, 2010

Regulatory Drivers in Arizona• Renewable Energy Standard (“RES”) Total Energy

Requirement

• 3% of retail sales in 2011

• Increasing to 5% of retail sales by 2015

• Incrementally increasing to 15% by 2025

• RES Distributed Energy Requirement

• Minimum 20% of the RES total energy requirement in 2010 increasing to 30% in 2012

• ½ from residential customers, ½ from non-residential customers

• APS commitment to exceed RES requirements

• 3.4 Million MWHs by 2015 (about 11% of retail sales)

Existing Conventional Generation

3

Renewable Energy Resources

APS Resource Portfolio

Renewable Energy Type

MW

Wind 289

Solar 385

Biogas/Biomass 24

Geothermal 10

Total 708

Conventional Owned Fuel Type

MW

Nuclear 1,146

Coal 1,753

Gas – Combined Cycle 1,871

Gas – Simple Cycle 1,022

Gas – Steam 430

Oil – Simple Cycle 66

Total-Owned 6,288

Purchases/Exchanges 2,300

Nuclear28%

Coal39%

Natural Gas26%

Renewables3%

Energy Efficiency

4%

2011

Nuclear19%

Coal27%

Natural Gas21%

Renewable17%

EnergyEfficiency*

16%

2025

Energy Sources 2011 vs. 2025

Renewable Energy Options• Wind

• Very strong resource in neighboring states (NM, CA)

• Limited access to transmission

• Some commercially viable areas in Arizona

• Solar

• Some of the best solar conditions in the world

• Ability to implement projects relatively close to load center

• Geothermal

• Strong potential in neighboring states (CA, NV, NM)

• Limited potential in Arizona

• Biomass

• Arid conditions in Arizona provides limited potential for in-state development

APS’s Utility-Scale Solar Initiatives• Concentrated Solar Power (Thermal)

• Power generation using conventional steam generation technology

• Solar energy provides the heat source• Greatest efficiency created when using water for cooling

• Thermal energy storage can be incorporated

• Generally 100MW or greater

• Most common type is parabolic trough technology

• Sunlight is focused on long, rectangular, highly reflective U-shaped mirrors arranged in parallel rows

• Single-axis tracking system that focuses solar energy onto a central receiver tube located along the focal line of the mirrors heating fluid

• Solar Photovoltaic (PV)

• Direct conversion of sunlight to electricity

• Modular components, easy to scale size to meet resource need

• Average residential roof-top system approximately 7kw• Utility scale systems are from 5MW to 250MW in size

• Fixed, single or dual axis tracking

Solar Thermal-Solana • 280 MW Concentrated Solar Plant with 6 hours of thermal

energy storage

• Awarded Conditional commitment for DOE loan guarantee in July 2010

• Location: 10 miles west of Gila Bend, AZ

• Total Generation: 280 MW

~about 900,000 MWHs energy

production per year

• Size: 3 square miles

• Jobs: Creates 80 permanent jobs

• Commercial operation

expected in 2013

~44MW

Difference

APS Load: PV vs. CSP with Storage

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

0

20

40

60

80

100

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140

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180

200

Lo

ad

MW

(7/6

/20

15

)

Pro

du

cti

on

MW

(10

0M

W C

ap

ac

ity)

PV CSP w/6 Hr Storage Load Profile

Hours

PV

CSP

Load

Utility Scale Solar PV

• Seven (7) Projects currently under development 105 MW

• Third Party Owned with Power Purchase Agreements (PPA)

• Prescott, 10 MW

• Ajo, 4.5 MW

• Bagdad, 15 MW

• Buckeye, 6 MW

• Utility Owned – AZ Sun Initiative

• Luke Air Force Base, 15 MW

• Gila Bend, 18 MW

• Hyder, 17 MW

• Chino Valley, 20 MW

Luke Air Force Base

• 15 MW Solar Photovoltaic Power Plant

• Equal to 3,750 Arizona homes or 50% of Luke AFB’s energy needs

• Construction scheduled to start January 2011, Commercial Operation date Summer 2011

• Will be the largest solar installation on U.S. Government property

• Located on 100 acres of underutilized land on the base

• Single-axis tracking system of 52,000 SunPower solar panels

Utility Scale Solar Plants: PV vs. CSP• Solar Photovoltaic (PV)

• Minimal water usage

• Developable at smaller scale or larger scale

• Smaller required land area to be economical, allows for more siting options

• Susceptible to significant and rapid fluctuations in power output with onset of clouds

• Less than full output at time of peak load

• Can be interconnected at many different levels of the transmission/distributionsystem

• Concentrated Solar Power (Thermal)

• Must be developed at large scale to be economical

• Greater land area, increased complexities in land acquisition, permitting, and ability to interconnect into existing transmission affordably

• Relatively large “step” additions to the renewable portfolio

• Transmission interconnection can be more complex

• Thermal technology reduces power output fluctuations due to cloud coverage

• Easier to incorporate thermal energy storage directly into design

• Two Options: Wet-cooled or Dry-cooled

• Significant reduction in efficiency and cost increase for dry cooling

Critical Role of Legislature

• Stability of State and Federal Policy

• Long term predictability

• Present landscape of utility industry

• Stable Environment that is supportive of these types of Long Term infrastructure investments

• Supportive Cost Recovery from regulatory body

• State and Local Support

• State RPS (Renewable Portfolio Standard)

• Tax Policies

• Permitting Process

Thank You.hank You

Brad Albert, General Manager of Renewable Resources