Renewable Resources. David Jacobs Manager, Resource Planning and Procurement

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1 Renewable Resources David Jacobs Manager, Resource Planning and Procurement October 22, 2009

2 Demand (MW) 4,000 Tucson Electric Power Capacity Requirements with 15% Energy Efficiency Target by 2020 and 15% Renewable Energy Target by ,500 3,000 2,500 2,000 Existing Peaking Resources Renewable Resources Fill-In Intermediate Deficiencies 1,500 Existing Intermediate Resources 1,000 Existing Coal Resources

3 IRP and Renewable Resources No longer Least Cost but Reasonable Cost plan Resource plan balances desire for clean, renewable energy with the need to deliver low cost and reliable power State and Federal Regulatory Considerations Customer Desires Customers Want Solar Local Project Emphasis Low Water Portfolio 3

4 MWh RES Requirements Annual Requirements Excluding Distributed Generation 700, , , , , , ,

5 Wind Power Mature technology Short development time Most low hanging fruit taken Southern AZ has marginal to poor wind resource Northern and central AZ has better potential, still not excellent Transmission needed in most cases Intermittent, wrong time 5

6 Solar Photovoltaic (PV) Several technologies Fixed panels Single Axis tracker Double axis tracker Concentrating Intermittent - significant variance with clouds Comes up quickly drops off just as quickly Good AZ resource potential Land requirements - good news/bad news 6

7 Solar Thermal Several technologies Parabolic trough Power tower Dish-Stirling Engine High water consumption unless dry cooled Thermal inertia dampens cloud effects, extends capacity later into the afternoon Good AZ resource potential Thermal Storage or Gas-Hybridization firms output 7

8 Biomass/Biogas/Biodiesel Biomass: Diversity of solid fuels available, but limited Relatively low cost resource Direct fired, cofired or gasified Biogas Landfill or Anaerobic Digestion Relatively low landfill gas production due to dry climate, but widespread Animal manure based projects are feasible Biodiesel - Competes with transportation use Base load and firm resources Carbon Neutral emissions 8

9 Geothermal Mature technology Base load and firm resource Transmission needed in most cases Minimal resource potential in AZ High and uncertain exploration costs 9

10 LCOE $/MWh 300 Conventional Resources 2009 Levelized Cost of Delivered Electricity ($/MWh) Peaking Resources Base Load and Intermediate Resources 250 $249 $243 Interconnection & EHV 200 Generation $172 $ $115 $ $100 $85 $ Aero-Derivative CT LM6000 Frame 7FA Combustion Turbine (CT) Aero-Derivative CT LMS 100 Integrated Coal Gassification Combined Cycle (IGCC) with CCS Integrated Coal Gassification Combined Cycle (IGCC) Nuclear Combined Cycle (CC) Pulverized Coal Energy Efficiency Typical Capacity Factor % 10% 10% 18% 70% 75% 85% 50% 85% Varies Fuel Cost Assumptions $/mmbtu: ( Natural Gas $8.00, Coal $2.50, Nuclear $0.60 ) 10

11 Renewable Resource, MW System Peak, MW Renewable Resource Capacity Profile Typical Summer Load Profile versus Renewable Availability 12 Summer Load Profile System Peak 2,500 AZ Wind NM Wind 10 Solar PV Solar 1-Axis 2,000 Solar 2-Axis 8 Solar CSP Solar CSP 6 Hour 1, , Hours 11

12 LCOE 2009 $/MWh $250 Renewable Resources 2009 Levelized Cost of Delivered Electricity ($/MWh) $200 $166 $172 $181 $197 $150 $140 $120 $100 $107 $140 $151 $169 $153 Backup Capacity Delivery Generation $50 $100 $79 $91 $0 Biomass Direct NM Wind Turbine AZ Wind Turbine Solar (1-Axis) Solar Thermal, CSP Solar Thermal, CSP 6 HR Solar PV Capacity Factor % System Peak % Water Usage 83% 38% 30% 24% 30% 38% 17% 100% 9% 9% 51% 70% 87% 24% Low Low Low Low 12

13 $/MWh Renewable Technologies (Delivered) Costs Adjusted for Technology Innovations, $/MWh $ Utility Scale Fixed PV $ $ Wind Biomass CSP $ Utility Scale (1-Axis) PV $ $50.00 $

14 Renewable Resource Strategy Summary First Meet RES Available, Proven Technologies Small Involvement with New Technologies (R&D) Competitive, Viable, Cost-Effective Projects Portfolio Balance, No Big Bets Maximize Community Benefits Environmental Benefits Diversified Technologies 14

15 RFP Process Competitive Solicitation Followed ACC Procurement Best Practices Independent Monitor Open Process Bidder s Meetings Solid Participation Diverse Technologies and Proposals

16 RFP Process continued Thorough Analysis Threshold Screening, Sufficient Response Deliverability, Transmission Technology Risk Viability of Project, Bidder s Strength, Permitting Levelized Cost of Energy Calculated LCOE Adjusted for TEP s System Energy Value, Timing of Generation Capacity Value, Coincident Peak Contribution Intermittency, Effects on System Delivery Costs

17 PV - Single Axis Renewable Energy Ventures 25 MW Sited in Tucson area Connected directly to TEP grid, no transmission requirements On-line Late 2010, early 2011 Expected output of 57,000 MWh/year

18 Thermal Solar with Storage Bell IPC 5.5 MW Connected directly to TEP grid, no transmission requirements Partially an R&D project On-line early 2012 Expected output of 18,000 MWh/year

19 Landfill Gas DTE 1.5 MW Connected directly to TEP grid, no transmission requirements On-line early 2011 Expected output of 11,000 MWh/year Base load resource

20 Wind with Solar PV Fixed Western Wind Resources Combined project - 10 MW wind kw solar PV Sited in UNS Electric service territory Connected directly to UNSE grid, no transmission requirements On-line early 2011 Expected output of 18,000 MWh/year

21 MWh 700, , , ,000 REST Compliance Plan Excluding Distributed Generation Future Resources (TBD) Short-Term Renewable Purchases Carryover Credits 2009 Short-Term Renewable Purchases Wind Solar LFG 300, , ,

22 August 2009