Dive Brief:

• Arizona Public Service (APS) on Wednesday announced it would aim to deliver 100% carbon-free energy by 2050, with a near-term target of 45% renewables by 2030. The utility also plans to end all coal-fired generation by 2031, seven years ahead of its previous projections.
• The move is a marked turnaround from 2018, when APS spent millions to defeat Proposition 127, a ballot initiative that would have required 50% renewables by 2030. The utility's energy mix today is 50% carbon-free.
• Clean energy advocates hailed APS' announcement, but also said the utility still has room to grow on clean energy issues and implementation. The Arizona utility joins six other major electric providers in the nation that have voluntarily committed to 100% clean energy.​

Dive Insight:

The announcement by Arizona's largest electric utility is a significant step, clean energy advocates say, but many also want to see more specifics on coal closures and their impact, and are hoping state regulators will develop rules to ensure APS meets its commitments.

Utility officials say the 30-year window to reach 100% carbon-free energy means APS can take a more measured approach, leveraging new technologies and economic development to keep rates low.

"This gives us a fairly good runway,"  APS Chairman and CEO Jeff Guldner told Utility Dive.

Clean energy advocates praised the decision, but remain cautious.

"There is still more to do and much more we would like to see from APS and Arizona’s other utilities, including support for continued and increased standards for renewable energy and energy efficiency, and a strong commitment to invest in communities affected by coal retirements,” Sandy Bahr, Sierra Club's Arizona chapter director, said in a statement.

APS' plan calls for a 2030 resource mix that is 65% carbon-free, rising to 100% by 2050. The utility's plan will mean eventually shuttering Units 4 and 5 of the coal-fired Four Corners plant, though no specific date has been set. APS also owns the the Cholla Power Plant, and previously announced it will end operations there by 2025.

Retiring both Four Corners units by 2023, and replacing them with solar-plus-storage projects, could save customers around $500 million, according to Sierra Club.

The utility said its plan calls for investments in renewable resources and developing technologies, continued reliance on the Palo Verde nuclear plant, and energy efficiency and other programs for customers

APS also said it will continue to rely on gas-fired generation in the near-term, and did not rule out the use of carbon capture beyond 2050 that could keep gas plants operating. Though in its announcement, the utility said it expects "technological advances to eliminate the need to supplement renewable energy with even low-emitting carbon resources like natural gas."

Guldner said the 2050 timeline sends a signal to vendors and partners to say, "you've got to help us solve this problem."

"We don't have the technological answers today, on how to get to zero carbon in 2050," Guldner said. "I still think technology could advance ... we will need some dispatchable resources in the future and one of them could be carbon capture on natural gas [generation]." 

Guldner says APS currently burns gas for about 26% of the generation it owns, and more comes in the form of purchased power agreements. Coal generation is about 22% of the utility's portfolio.

Some details on how to begin replacing the power will come in the utility's next Integrated Resource Plan, which it will file with Arizona regulators by April 1. 

"We do expect additional renewables, and have a procurement out for wind and solar," Guldner said. "But the challenge here is that we have a baseload coal plant pretty much running full-out in the summer."

Growing focus on communities left behind by coal closures

The eventual closure of Four Corners is a concern, even among parties who want to see it shut down as soon as possible.

"We see this as a step in the right direction for Arizona," said Nicole Horseherder, executive director for To' Nizhoni Ani, an environmental group focused on Arizona's Black Mesa region. She added in a statement that APS "must make a clear commitment to support communities dependent on jobs from fossil fuel generation."

While environmental advocates cheer coal plant closures, their loss can have devastating impacts on communities where jobs are tied to the plants and mining of fuel. 

Tri-State Generation & Transmission this month announced a plan to shutter its coal generation and mining operations in New Mexico and Colorado by 2030, and at the same time committed millions to community revitalization. On the other hand, Horseherder said the "abrupt closure" of Arizona's Navajo Generating Station "has left tribal governments scrambling for resources and services."

Majority owner Salt River Project announced in November 2019 that the Navajo Generating Station had ended all operations.

"APS must make a clear commitment to support communities dependent on jobs from fossil fuel generation," Horseherder said. "A long-term plan and support for these communities’ economic future is essential."

Guldner said the utility has begun looking at how to help communities that lose jobs associated with coal plants and coal mines, but it is too soon to have plans in place. 

The Four Corners plant "is a major economic driver on Navajo Nation," Guldner said. Some employees can be relocated, and some will retire before the plants shut down. Ideally, manufacturing jobs could be brought in to provide new employment.

"Because the plant has such an important presence, the real thing we have to do in the next 10 years is look for economic opportunities that can replace the high wage jobs," Guldner said. "What I like about the timing, is it gives us some runway to engage with the [Navajo] nation, and the state and at the federal level, to see what we can do to try and drive some economic development."

In an email, Sierra Club's Bahr said APS "has a responsibility to the communities that will be impacted by coal plant closures by setting clear retirement dates, providing funding for just and equitable transitions, and, ideally, exploring how renewable energy can provide economic support."

Bahr also said state regulators should require greater renewables, energy efficiency, and carbon-free power from all utilities. She said the state currently has an "outdated" renewable energy standard set in 2006 that requires 15% renewable energy by 2025. However, the Arizona Corporation Commission is considering upping that standard, with Commissioner Sandra Kennedy floating goals of 50% renewable by 2028 and 100% clean energy by 2045.

"Coal is declining far faster than APS appears to think," Bahr said.

Guldner said APS is focused on the "clean" aspect of the plan, rather than trying to go 100% renewables. The Palo Verde plant is the nations largest carbon-free and clean energy resource, he said. 

As for the clean energy transition's impact on rates, Guldner said the utility is trying to maintain flexibility in its goals.

 "If we can continue to see robust growth in the Arizona and Phoenix economies, if we can take advantage of growth coming into state, that helps to spread the cost of new resources along a larger customer base," Guldner said.