Dive Brief:

• Arizona consumers could save billions of dollars if all of the state's coal-fired power plants were retired and replaced with clean energy resources, according to new research conducted by Strategen for Sierra Club.
• The report analyzes 11 coal burning units at six plants that supply the state's consumers, and concludes replacing them all with solar plus storage by 2023 would save ratepayers $3.5 billion, though estimates exceed $10 billion when including societal benefits of reducing greenhouse gas emissions.
• Arizona utilities are already planning to eliminate coal use, though a full phaseout could take decades. All units evaluated in Sierra Club's report are slated for retirement after 2035, with the analysis assuming an earlier retirement of 2023. 

Dive Insight:

Coal may be on its way out, but environmental advocates want to see Arizona utilities speed that process. Utilities in the state say they are making progress, but must move deliberately to ensure a reliable and economic transition.

Sierra Club's report claims solar resources are "cheaper than coal power from all 11 coal units owned by Arizona utilities."

Replacing coal-fired generation with solar+storage would save consumers $3.5 billion, according to the analysis. Purchases in forward energy markets, based on the prices consistent with the Palo Verde Index, would create $2.8 billion in savings, while wind resources would generate $263 million in savings.

"While there is a clear intention to move away from coal-burning generation, the pace is not fast enough to fully capture the economic benefits of this transition, and Arizona ratepayers might end up paying more than they should to keep expensive coal units operating for several more decades," the report concludes.

The report "proves what so many of us already know," Sierra Club Grand Canyon (Arizona) Chapter Director Sandy Bahr said in a statement. "It's time for state leaders to seriously commit to a timely transition away from fossil fuels towards renewable energy."

The state's utilities are working toward that goal, but say they must ensure reliability and affordability. Both Arizona Public Service (APS) and Tucson Electric Power (TEP) told Utility Dive they were still analyzing the report's findings.

APS noted its plan to stop burning coal at its remaining Cholla units by spring 2025 and an overall commitment to exit coal by 2038, which includes the Four Corners plant in New Mexico. A spokesman pointed to the utility's preliminary IRP, which it has filed with the Arizona Corporation Commission.

"In assessing the exit strategy, APS continues to pursue solutions that strike a balance between providing customers reliable, reasonably priced power and managing coal generation’s costs of environmental regulations and production," the utility told regulators.

APS officials say they expect to file their full IRP by April 1.

The Four Corners plant has a must-buy coal supply agreement with the Navajo Transitional Energy Company through 2031. But the Sierra Club analysis concluded "despite the contract, retiring the coal plant and replacing the power with solar and battery storage is still less expensive than the continued operation" of the plant.

TEP says it plans to retire 638 MW of coal resources, representing a 41% percent reduction in capacity, by 2023.

Long-term resource planning "is a complex process often understated in third-party analysis," TEP spokesman Joseph Barrios said in an email.

"For example, you need to consider load and production curves over time to achieve a meaningful comparison," Barrios said. "A resource planning model that assumes the closure of coal plants also should forecast how the absence of those resources will affect market energy prices, particularly during peak hours when the cost of power is highest."