Dive Brief:

• The Arizona Corporation Commission (ACC) on Tuesday approved a proposal from Tucson Electric Power to increase investments in renewable energy and deploy two 10 MW (5 MWh) energy storage pilot projects, the Arizona Daily Star reports. However, the ACC also separated out two proposals for utility-owned solar installations for further review.
• The ACC approved a $56.6 million budget for the TEP renewables program, which would raise the typical residential customer surcharge for the program from $3.22 to $4.02 per month. $9.4 million will be allocated for large-scale, utility-owned renewables.
• Regulators did not approve a request to expand TEP's utility-owned rooftop solar and community solar programs. TEP says it will pursue approval as a part of its general rate case, but the commission staff has already recommended against expanding the rooftop program over concerns about its cost-effectiveness. 

Dive Insight:

TEP CEO David Hutchens told Utility Dive in February that the utility requested an expansion of its rooftop solar program due to high customer demand. "It's already super-subscribed," he said.

TEP’s rooftop solar offering was launched in 2015. The program gives 600 customers in strategically selected areas the opportunity to host solar systems averaging 6 kW on their roofs. In return for a $250 application fee and allowing the utility to use their rooftops, customers receive a fixed electricity bill for 25 years.

The rooftop and community solar programs the utility sought to expand are the first steps toward a "full suite" of distributed energy resources that could be offered by the utility, Hutchens said at the time, which would eventually include battery storage and other technologies.

That vision makes many third party energy providers nervous. Although Hutchens said the utility would be glad to partner with names like Tesla and SolarCity to offer DERs, independent providers expressed concern the utility could use its market power and existing customer relationships to force them out of the market.

That discussion will now be extended to the utility's general rate case, which begins hearings in August. Although the ACC staff have recommended against expanding the rooftop solar program over cost concerns, a TEP spokesperson said the company will keep pushing for approval. That rate case includes proposals to reduce net metering credits and increase charges for solar customers as well.

While regulators hit the brakes on the solar programs, TEP got the green light for investments in utility-scale renewable energy and two energy storage pilots.

The utility originally asked for approval for one 10 MW (5 MWh) storage facility, but after issuing a request for proposals last June, it found it could deploy two projects of that size under the same budget.

One project, a lithium nickel-manganese-cobalt battery, is scheduled to be in operation late this year. The other, a lithium titanate oxide facility, is slated for the first quarter of 2017 and will accompany a 2 MW solar array. 

The batteries will be used to maintain voltage frequency and electric reliability, according to the utility.

With approval of its renewable energy plans, the company expects to add 800 MW of additional utility-owned renewables by the end of 2030, boosting its portfolio to about 1,200 MW. The company is planning to meet a target of 30% renewable energy for retail customers by 2030, according to its latest integrated resource plan.