Dive Brief:

• The biannual Integrated Resource Plan from Arizona Public Service (APS), the state’s dominant utility, projects three key areas of change over the next fifteen years: (1) Renewables will double, with a tripling of rooftop solar and energy efficiency; (2) natural gas will replace coal as the primary base load resource; and (3) investments will make the APS grid smarter and more robust to accommodate the emergence of new technologies. The result will be 14% less carbon dioxide and 24% less water used per megawatt-hour.
• The 2029 APS service territory peak demand is forecast to grow by 6,613 megawatts. To meet that, APS plans to increase natural gas generation by 4,205 megawatts by 2029, taking it to 28.5% of the utility’s mix, ahead of coal’s 24.5% and nuclear’s 18.1%. Renewable energy nameplate capacity will increase by 818 megawatts, including 722 megawatts of distributed generation. The capacity factor for renewables is projected at 52% (425 megawatts) and for distributed generation at 36% (261 megawatts). Energy efficiency measures will cut 1,447 megawatts and demand response will account for 275 megawatts.  
• The increase in renewables, efficiency, and demand response will allow APS to meet Arizona’s Renewable Energy Standard and Energy Efficiency Standard. Grid investments and increased natural gas will provide the fast ramp flexibility APS expects to need to integrate variable renewables, efficiency, and demand response.

Dive Insight:

APS will spend $13.6 billion on new generation, $496 million on its transmission system, and $300 on modernizing its grid. The IRP foresees more natural gas and a smarter, more interactive grid because “power generation is becoming more complex and, in the case of renewable energy, unpredictable and variable based on the weather.”

Like utilities across the county, APS is finding the value propositions in new natural gas and smart grid investments too good to pass up. While wind and solar continue to grow exponentially across the U.S. and around the world, total renewables in the portfolio of the biggest utility in the sunniest U.S. state are only projected to grow over the next fifteen years from 2014’s 3,182 gigawatt-hours to 6,944 gigawatt-hours in 2029.

The IRP details challenges created by solar that necessitate the extensive investment in flexible resources and a modernized grid. Another section explains the “cost-shift” central to APS’s proposal last year to change in Arizona’s net metering program. Look for a noisy response from Arizona solar advocates.