Arizona Public Service Company is the largest electric utility, and the highest tax payer in Arizona, USA, and the principal subsidiary of publicly traded S&P 500 member Pinnacle West Capital Corporation , which in turn had been formerly named AZP Group, when Arizona Public Service reorganized as that holding company in 1985.With 4,000 MW of generating capacity, APS serves more than one million customers in 11 counties throughout most of the state, but mainly concentrated in northern and central Arizona. APS is one of the two suppliers of electricity to the Phoenix metropolitan area .APS is regulated by the Arizona Corporation Commission , the state agency that, by mandate of Article 15, Section 2 of the state's constitution, regulates energy utilities in Arizona, with the notable exception of SRP and the rural electrical districts.The holding company, Pinnacle West Capital, through its APS utility sells wholesale and retail power to the wider western United States and also provides energy-related services. Through another major subsidiary, Pinnacle West also developed and manages real estate in Arizona. Pinnacle West left the real estate business in 2010.The utility company also operates three nuclear reactors. Its Palo Verde Nuclear Generating Station in Arizona, the largest nuclear plant in the U.S., came under scrutiny by the Nuclear Regulatory Commission in 2005 when operational problems began to cause prolonged outages. Wikipedia.
News Article | May 10, 2017
With more than 17 hours of content and 12 hours of dedicated networking, Solar Summit 2017 is certainly going to be time well spent. We like to run our events with conversations between an analyst who has put in the time studying these markets, and industry participants who are living in the day-to-day market realities. We’ll welcome to the stage Google, First Solar, NRG, GE, Sunrun, SunPower, Deutsche Bank, Sharp Electronics, Nexamp, Arizona Public Service, sPower, the Solar Energy Industries Association, EDF Renewables, the U.S. Department of Energy, NREL and many more. Shayle Kann, head of research here at GTM, will take the stage with John Smirnow, an expert attorney on international trade and customs, to discuss the Suniva bankruptcy and the pending trade dispute between America and Asia. Shayle and John have been following America’s solar trade wars closely over the years, and we look forward to hearing directly from them. Because our events are designed and planned by top industry analysts and experts, they attract the high-level decision-makers you want to do business with. Attendees include professionals from Tesla, Delta, PG&E, Mitsubishi Electric, LG, National Grid, Georgia Power, S&P Global Market Intelligence, Exelon, Florida Power & Light, SolarWorld and about 600 others from across the solar landscape. We do have some seats left for our expected-to-sell-out show, so take a look at the event site and register today to join us. We hope to see you in sunny Arizona next week, May 17-18.
News Article | May 25, 2017
With two grid-scale batteries newly in place, Arizona Public Service is learning the elements of energy storage operation that you can't read in a book. The utility is using the pair of 2-megawatt/2-megawatt-hour lithium-ion battery systems from AES to test how the technology performs in the desert climate of the greater Phoenix area, where summer temperatures routinely crest 100 degrees Fahrenheit. The Advancion systems have been inserted into a distribution grid that has seen rapid uptake in distributed solar generation as a result of the Solar Partner Program, which places APS-owned PV modules and smart inverters on customer homes. Advanced battery vendors tout the technology's ability to ease renewable integration and correct power quality on the lines. APS wants to find out just how well this works in practice. "No utility, to our knowledge, has ever done two identical batteries specifically sited in two different locations along a feeder," said Scott Bordenkircher, director of technology innovation and integration at APS. That distinction enables a controlled experiment wherein Bordenkircher and his colleagues can test the locational value of storage for voltage control and power quality. Typically, equipment at the substation regulates voltage for the whole feeder; voltage runs high at the head of the feeder to ensure it maintains an appropriate level at the end. Grid-scale batteries open up alternative solutions. APS put the batteries on a distribution feeder in a wide open valley northwest of Phoenix, where the Festival Ranch housing development has created a load pocket. The West Valley has the highest penetration of rooftop solar in the Phoenix area, helped by the frequency of new builds with west-facing roofs that can capture the late afternoon sun. The Festival Ranch feeder already has 68 homes participating in the Solar Partner Program, in addition to other solar customers. One battery went in at the substation, and the other sits in a walled enclosure halfway down the feeder, on a swath of open land adjacent to the housing tract. Now the utility can test whether one works better than the other, and how they compare to the traditional approach to voltage control. "You've got a lever point in the middle of the feeder that has a much better chance of acting on both ends as opposed to having to force it from just one end," Bordenkircher said. Similarly, it could be better able to smooth out fluctuations from the rooftop solar and smart inverters by being located in the midst of them. If a cloud passes overhead and knocks out 200 kilowatts of midday rooftop capacity, the utility has to call up additional generation elsewhere. The battery can do it from across the street. "It's a shock absorber -- it tends to level out the entire feeder by being able to quickly absorb or discharge depending on the situation," said project manager John Pinho. The trial run will also test the batteries for peak shaving, although the 2-megawatt-hour energy capacity somewhat limits the usefulness for absorbing 4- or 5-hour peaks. APS has access to the land for the mid-feeder battery for two years. If the demonstration proves successful, it may seek an extension, but it will also be possible to pull out the 60,000 pounds of batteries, lift the 100,000-pound container out, and move it to some other useful location. Future battery installations will be informed by the data these systems gather on basic operations in the Arizona heat. Bordenkircher wants to make sure they charge and discharge as expected in a real-world field setting. The testing will also measure parasitic load, which is how much energy the battery consumes in the course of operating. That number impacts the ultimate cost and value of ownership. That kind of data exists for batteries elsewhere, but different feeders have different effects on battery operations, Bordenkircher said. Data on a battery's performance in Southern California don't necessarily translate to how it will behave on an APS feeder in the outskirts of Phoenix, so a local calibration is needed. The climate control keeps the interior of the battery at a balmy 75 degrees, even in the middle of a desert valley. (Image credit: APS) The batteries aren't doing anything that can't be done by conventional distribution equipment, like regulators, capacitor banks and integrated volt/VAR control. For correcting voltage, energy storage currently costs more by 40 percent to 60 percent, Bordenkircher said. But that's only if you count that one application, and a storage unit can perform many functions. "We're not 100 percent sure on what the math is going to come out to be yet," he said. But factoring in some peak-shaving, load-following for distributed solar, and the declining costs of battery cells, there's reason to believe storage will be a clearer sell very soon. "There's no question that energy storage is definitely the next frontier; we've just got to get it right," he said. "We've got to look at it from how do we do it efficiently and in an optimal fashion, rather than just throw a bunch of batteries everywhere and kind of cross your fingers." It's hard to blame the utility for a methodical approach. Lithium-ion installations are still expensive and new for utilities, and the costs of getting it wrong are high. An early foray into grid-scale energy storage went sour when a 1.5-megawatt Electrovaya storage system APS owned and operated in Flagstaff caught fire in 2012. The new batteries, which are the utility's first grid-scale acquisition since the Flagstaff incident, come equipped with fire-suppression tanks the size of a person, and multiple layers of sensors to provide advance warning and response if anything starts operating erratically. Communication links beam 14,000 data points per second to a 24/7 monitoring station that AES set up in Phoenix. APS is moving ahead with its next battery procurement, having released an RFP for a 2-megawatt / 8-megawatt-hour battery for the town of Punkin Center. This growing rural town about 90 minutes northeast of downtown Phoenix needed 20 miles of new line to increase reliability. APS determined that energy storage penciled out as a more cost-effective and versatile investment than replacing the traditional T&D infrastructure. That new math is already coming into force, even without state mandates to drive it. Field operations can reveal challenges that are hard to envision at the planning table. For the Festival Ranch project, a key takeaway was that reliable communication links are harder to maintain than they might appear. "We have to be able to know what it's doing and when it's doing it, and if we want to make it change to do something else, we have to be able to communicate," Pinho said. "If anything fails in the linkage that's required for all this communication, then the system can't necessarily do what you want it to do." That sometimes puts the installation's effectiveness at the mercy of the cell signal providers. A blip at a cell repeater could initiate radio silence for crucial seconds when the batteries might be needed to discharge or charge. The Festival Ranch storage system has already experienced brief blips like that, Bordenkircher said. This experience has changed the way his team thinks about the communications side of storage planning. In remote locations, a storage system may even require building out additional infrastructure to create more robust lines of connection. "If we had it next to the substation, all our substations have fiber. Not an issue," Pinho said. "But when you're not at a substation or you're in a remote area like Punkin Center -- and we're going to have more and more of those places, not less and less -- that becomes bigger than probably we anticipated it would be." Simpler grid technology from earlier times could sit and operate passively. The evolution of batteries' intelligence simultaneously opens up new potential and heightens the sensitivity of the network to brief lapses in connectivity. We'll hear from Arizona Public Service at GTM's upcoming Grid Edge World Forum at the end of June in San Jose, California. We'll have three days of sessions that address virtually all facets of the grid edge. We'll have the most influential executives, entrepreneurs and analysts from across the energy sector to meet during unparalleled networking opportunities and exhibition. Come join the audience of global utilities, emerging start-ups, and fast growing industries like EVs and customer energy management. Learn more here.
News Article | April 19, 2017
PHOENIX--(BUSINESS WIRE)--Pinnacle West Capital Corporation’s (NYSE: PNW) Board of Directors today declared a quarterly dividend of $0.655 per share of common stock, payable on June 1, 2017, to shareholders of record on May 1, 2017. Pinnacle West Capital Corp., an energy holding company based in Phoenix, has consolidated assets of nearly $16 billion, about 6,200 megawatts of generating capacity and 6,300 employees in Arizona and New Mexico. Through its principal subsidiary, Arizona Public Service, the Company provides retail electricity service to nearly 1.2 million Arizona homes and businesses. For more information about Pinnacle West, visit the Company’s website at pinnaclewest.com.
News Article | May 2, 2017
"Rapid transformation is taking place throughout the electric power industry, and innovation is a key component to delivering the safe, reliable, affordable, and clean energy that our customers need and expect," said EEI President Tom Kuhn. "This year's Edison Award finalists each have created new, original energy solutions, as well as sustainable plans to implement them, and are leading our industry in delivering the energy future our customers want." A panel of former electric company chief executives will select the winners for the 90th annual Edison Award, which will be presented in June at the EEI Annual Convention in Boston. American Electric Power (AEP) – In just five years, AEP engineers created an innovative new transmission line design called the Breakthrough Overhead Line Design (BOLD). BOLD is the most transformational line design in almost 50 years – delivering more capacity and higher efficiency in a compact, aesthetic form. Arizona Public Service Company (APS) – APS's Solar Partner Program has broken new ground in the industry by using advanced grid technologies to enable the continued growth of distributed generation, while developing a business model to make rooftop solar available to customers, regardless of income or credit level. The company placed 10-megawatts of rooftop solar panels on the homes of 1,600 customers, and successfully deployed advanced inverters and developed other technologies to manage power quality and reliability issues. Edison International – Southern California Edison built the world's first battery and natural gas turbine hybrid system at two existing peaker power plant sites in collaboration with its strategic partners. These Hybrid Enhanced Gas Turbines have achieved unprecedented levels of operational flexibility and are capable of responding instantaneously to electric system needs while reducing emissions and operating costs. Westar Energy – Westar Energy developed the world's first mobile and adjustable-voltage transformer in order to enhance energy grid resiliency. This transformer can be moved on ordinary semi-trucks and provides 80-percent coverage of critical transformers on the company's transmission system, with the ability to be in place and in operation in a matter of days. Jamaica Public Service – In 2016, Jamaica Public Service worked closely with both internal and external stakeholders to build consensus and execute on its plan to convert the Bogue Power Station from diesel fuel to liquefied natural gas. This was a milestone achievement for Jamaica, as LNG forms an integral part of the country's fuel diversification strategy, and significantly advances JPS' efforts to lower fuel costs and reduce emissions. Ontario Power Generation (OPG) – Following the closure of the last of its coal generating stations in 2014, OPG made significant investments in 2016 with a series of complex and diverse initiatives in pursuit of a lower carbon future. This included a pumped storage project, a groundbreaking nuclear refurbishment, hydroelectric developments, and Indigenous partnerships. Today, OPG is Ontario's largest low-cost clean power generator. Tohoku Electric Power – Tohoku Electric Power's Shin-Sendai Thermal Power Station was severely damaged following the 2011 earthquake that struck Japan. Since the earthquake, Tohoku Electric Power has invested in plant reconstruction and revitalization and development in the disaster-affected areas. As a result, the company has reduced its fuel costs and emissions, increased efficiency, formulated new disaster countermeasures, and accelerated overall efforts to restore and serve local communities. EEI is the association that represents all U.S. investor-owned electric companies. Our members provide electricity for 220 million Americans, and operate in all 50 states and the District of Columbia. As a whole, the electric power industry supports more than 7 million jobs in communities across the United States. In addition to our U.S. members, EEI has more than 60 international electric companies as International Members, and hundreds of industry suppliers and related organizations as Associate Members. To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/eei-announces-finalists-for-2017-edison-award-300449871.html
News Article | April 17, 2017
APS chose Archer as its Supplier of the Year in the performance category. Arizona Public Service started in the electricity business more than 130 years ago, just a few years after the gunfight at the OK Corral in Tombstone, Ariz. Now, it brings power to over 2.7 million people. This longest-serving electric company in Arizona has announced its Supplier of the Year Awards for 2016, honoring the business partners that help them succeed. Out of the more than 4,500 suppliers, vendors and partners, APS chose Archer as its Supplier of the Year in the performance category. “Archer has been a partner for us in every sense of the word,” Lisa Carrington, critical infrastructure protection transition team manager at APS, said during the awards ceremony this week. “They had a team on site with me for two and a half years, helping us do something that was a monumental task for APS,” she added. Archer helped APS implement the new NERC CIP cybersecurity regulation, Carrington noted, as well as prepare for an audit. "It was incredibly challenging,” she said. “Archer Energy Solutions was there with us every day, long days, providing their technical guidance, their expertise, their knowledge of industry and their knowledge of auditing. APS and Archer will continue to work together." “It is an absolute pleasure working for APS,” said Archer Managing Partner Stacy Bresler. "We are passionate about our client’s successes, and always aim to ensure we are adding value where it is most needed. Security is paramount in critical infrastructures, and it isn’t easy to build a solid and sustainable program. We partner with our clients to build solutions that work within their organizational structures while helping them break the barriers that come with adopting new ways of doing things.”
News Article | May 2, 2017
PHOENIX--(BUSINESS WIRE)--Pinnacle West Capital Corp. (NYSE: PNW) today reported consolidated net income attributable to common shareholders of $23.3 million, or $0.21 per diluted share of common stock, for the quarter ended March 31, 2017. This result compares with $4.5 million, or $0.04 per diluted share, for the same period in 2016. “ The first quarter proved to be a strong start to our year and continued to build on the momentum of a growing customer base,” said Pinnacle West Chairman, President and Chief Executive Officer Don Brandt. “ According to the U.S. Census Bureau, Maricopa County – home to 70 percent of our customers – was the nation’s fastest growing county in 2016. With Arizona’s population expected to grow 21 percent through 2025, it’s clear that people view Arizona as an attractive place to live and do business. “ And, if approved by the Arizona Corporation Commission, our regulatory settlement will position us to manage this growth through innovation and reliability and help ensure a sustainable energy future benefiting our customers, shareholders and the communities we serve.” The 2017 first-quarter results comparison was positively impacted by the following factors: These positive factors were offset in part by the following items: Pinnacle West invites interested parties to listen to the live webcast of management’s conference call to discuss the Company’s 2017 first-quarter results, as well as recent developments, at 12 noon ET (9 a.m. AZ time) today, May 2. A replay of the webcast can be accessed at pinnaclewest.com/presentations. To access the live conference call by telephone, dial (877) 407-8035 or (201) 689-8035 for international callers. A replay of the call also will be available until 11:59 p.m. (ET), Tuesday, May 9, 2017, by calling (877) 481-4010 in the U.S. and Canada or (919) 882-2331 internationally and entering conference ID number 10311. Pinnacle West Capital Corp., an energy holding company based in Phoenix, has consolidated assets of more than $16 billion, about 6,200 megawatts of generating capacity and 6,300 employees in Arizona and New Mexico. Through its principal subsidiary, Arizona Public Service, the Company provides retail electricity service to nearly 1.2 million Arizona homes and businesses. For more information about Pinnacle West, visit the Company’s website at pinnaclewest.com. Earnings per share amounts are based on average diluted common shares outstanding. For more information on Pinnacle West’s operating statistics and earnings, please visit pinnaclewest.com/investors. This press release contains forward-looking statements based on our current expectations, including statements regarding our earnings guidance and financial outlook and goals. These forward-looking statements are often identified by words such as “estimate,” “predict,” “may,” “believe,” “plan,” “expect,” “require,” “intend,” “assume,” “project” and similar words. Because actual results may differ materially from expectations, we caution readers not to place undue reliance on these statements. A number of factors could cause future results to differ materially from historical results, or from outcomes currently expected or sought by Pinnacle West or APS. These factors include, but are not limited to: These and other factors are discussed in Risk Factors described in Part 1, Item 1A of the Pinnacle West/APS Annual Report on Form 10-K for the fiscal year ended December 31, 2016, which readers should review carefully before placing any reliance on our financial statements or disclosures. Neither Pinnacle West nor APS assumes any obligation to update these statements, even if our internal estimates change, except as required by law.
News Article | February 15, 2017
Pulling a cohesive narrative out of the DistribuTech conference’s thousands of participants and menagerie of electrical doohickeys is like synopsizing James Joyce’s Ulysses. Amid the cacophony, however, a few trends emerged. The sophistication of software used to manage an increasingly decentralized grid continues to grow, as Jeff St. John observed. Meanwhile, utility representatives expressed caution about the dislocations stemming from that decentralization. "Our main charge is to make sure our customers have reliable power," said James Boston, manager of market intelligence at San Antonio utility CPS Energy, which recently deployed a demonstration microgrid. "Utilities are generally cautious to make sure these things are tested, are proven, before we put customers’ reliability in any type of jeopardy." A spot of optimism from both utilities and grid edge enthusiasts appeared in the form of microgrids. In the last few years, the drop in prices for solar photovoltaics and energy storage, the arrival of advanced grid-forming inverters, and the impacts of solar penetration on the flow of electrons through the grid have made microgrids more cost-effective and attractive. “Ten years ago, resiliency was the only reason you would buy a microgrid, because the energy would cost too much to create -- it would never be cheaper than a grid,” said Mark Feasel, vice president of smart grid at Schneider Electric. “Now with PV and CHP with natural gas, in many states you can generate energy cheaper than you can buy it.” Cheap technology, though, is not sufficient to usher in the age of the microgrid. “The challenge is on the commercial side,” said Ken Horne, director for smart grid at Navigant, on a panel at DistribuTech. “Not all value streams from these investments are readily monetizable.” Now, more than ever before, utilities and other energy companies are experimenting with those business models. Many models are emerging, but three distinct concepts stood out at the conference: microgrids to defer transmission and distribution costs, microgrids as a service to a customer, and microgrids developed for both customer and grid-wide benefit. Not surprisingly, utilities tend to like microgrids when they can own them, control them and recover their costs through the rate base. If the commercial microgrid-as-service model takes off, though, it could usher in a broad deployment of this technology without asking ratepayers to put their money on the line. San Diego Gas & Electric delivers power to the town of Borrego Springs via a single radial transmission line running through the desert. Lightning strikes and desert flash floods threaten that line, resulting in historically poor reliability, Chief Engineer Thomas Bialek explained at the DistribuTech panel. The utility needed to maintain or improve reliability for the nearly 2,800 Borrego Springs customers, but the traditional fix -- building out a parallel transmission line -- was pricey. A microgrid would be three or four times cheaper, Bialek said. So that’s what they did. The system, paid for by SDG&E, the Department of Energy and other partners, combines diesel generators, large and small batteries, and rooftop solar PV. SDG&E's microgrid kept the desert town of Borrego Springs powered during a flash flood-induced outage (Source: SDG&E) The microgrid has already proven itself in the face of adversity. When a flash flood in September 2013 downed transmission poles and lines leading to the town, the microgrid fired up and restored power to 1,056 customers while the grid repairs unfolded. That covered the core city center, so that those residents who didn't have power yet could move to central facilities for shelter from the heat. In this use case, the microgrid doesn’t challenge or complicate the utility’s role -- it helps achieve the core mission of reliability for all customers, however remote. “If they were redoing from scratch all the rural electric cooperatives, I doubt they would build all those miles and miles of lines,” Bialek said. Up in metropolitan Toronto, distribution utility PowerStream faced a similar conundrum. It powers a remote town called Penetanguishene well north of Toronto, fed by very long transmission lines under constant threat from storms and snow. “When we tried to improve reliability in this town where reliability was historically poor, we thought, ‘We could put out more conventional assets to solve the problem or we could do something more innovative,’” said Shuvo Chowdhury, smart grid project lead at the utility. They decided to test whether a microgrid really could defer a traditional grid investment. The installation took a year from detailed design to deployment and commissioning, and includes a 500-kilowatt-hour lithium-ion battery from Samsung SDI with an advanced microgrid controller and 750 kilovolt-ampere inverter. The microgrid can island and run the town for 42 minutes, considerably longer than the usual outage of 10 minutes. When an outage is not expected, the battery can earn some revenue by arbitraging from cheap to expensive generation. “The major play is for resiliency, but most of the time, you don’t use it for that,” Chowdhury said. “We’ve had a very mild winter, so we haven’t had as many outages. Not that I’m asking for some.” There is still work to be done, then, to optimize the design of such a system for return on investment. It’s one thing to prove a microgrid is cheaper than wires upgrades, and it’s another to design and operate it in a way that pays for itself as quickly as possible. A different model is emerging to give customers access to microgrid services while shielding them from risk. This approach adopts the power-purchase agreement model from the solar industry to sell microgrids as a service. Schneider Electric will be supplying one of these microgrids at the public safety headquarters and correctional facility in Montgomery County, Maryland, the company announced Wednesday. Under this structure, Duke Energy’s renewables arm will own and operate the microgrid. Montgomery County will pay a 25-year PPA for the energy created onsite as well as the secure power for the critical facilities in the event of an outage. Schneider connected the customer with the investor and supplies about half of the equipment that Duke will purchase to construct the setup. Duke has plenty of experience developing renewable energy and maintaining electrical infrastructure, and a big enough balance sheet to absorb a large upfront investment. “For the past 10 years, Duke Energy Renewables has been successful selling wind and solar power through power-purchase agreements, so we extended that model to the Montgomery County microgrid project, meeting the customer’s need for reliability, security and affordability,” said spokesperson Tammie McGee. Montgomery County has a triple-A credit rating, but limited expertise in the construction of microgrids, not to mention a limited budget for capital investment and maintenance. Thus, Duke can trust the county to pay incrementally over the next 25 years for resilience, energy cost stability and expanded renewables. The structure avoids the risk of using taxpayer dollars to buy the emerging technology itself. “Not only are we preparing for outages, but these facilities are in a better condition for day-to-day operations,” said Eric Coffman, Montgomery County chief of energy and sustainability, tuning in virtually to a launch event at the conference. In this case, the local government is the customer, but ratepayers themselves don’t bear the cost or risk of the installation. Duke owns the assets as a private investor; the county pays for service. It’s easy to see how this model would work for commercial and industrial applications. It also carries implications for the equitable improvement of the grid. “If this works out in some commercial arrangement, why should we put that in the rate base and hope the business model works?” said Feasel, Schneider’s smart grid leader. “Because eventually, if it doesn't work, poor Grandma [living] in public housing is going to pay more, and that's not fair.” In the pay-for-service model, he continued, the customer pays the agreed-upon amount, the developer makes sure everything works, and if something breaks, the suppliers have to replace it. Ratepayers are not on the hook for any of that. Elsewhere, though, utilities are exploring ways to build out microgrids with partial ratepayer support. The general model derives from the dual nature of most microgrids as both a local, independent service and a grid-tied resource. In the partially rate-based model, the utility builds a customer-sited microgrid in a place where resilience is in high demand, but uses some of the assets for broader grid services when the customer doesn’t need backup. The customer pays for its expected use of the facility, and the utility asks its public utilities commission for permission to recover costs from the grid-serving portion of the project. Arizona Public Service has undertaken two such projects, using diesel generators rather than solar and storage. One is at Marine Corps Air Station Yuma, the other is at Aligned Data Center, going up in Phoenix. Data centers place a premium on uninterrupted power, so APS used the microgrid as a way to attract the center to its territory. The host customers contribute based on their expected usage of the facility, said Scott Bordenkircher, APS director of transmission and distribution technology innovation and integration. When those facilities don't need backup power, though, the microgrids can serve the broader grid with peaking energy, frequency response, voltage regulation and spinning reserve. The utility is asking for cost recovery based on the stacked values the microgrids provide for ratepayers at large. "I've got to do these certain things anyway, now I can do them with this. What does that look like from a cost-comparison standpoint?" Bordenkircher said of the decision-making process. "In fact, it's far cheaper using the microgrid generation than it is through other means." This is one of those calculations that makes sense in principle but could get tricky when it comes to divvying up the costs in real-world situations. The microgrids are up and running, but APS is still waiting to hear back from regulators on the rate case that would reimburse the grid side of the projects. A rendering depicts the futuristic aerotropolis development Peña Station Next, where Panasonic's new office will host a microgrid (City and County of Denver). Over in Colorado, utility Xcel Energy has partnered with the city of Denver and Panasonic to create a $10.3 million microgrid in Peña Station Next, a “smart city” development under construction near the airport. Panasonic is anchoring the new development with an office to house the operations center for its nationwide network of utility-scale solar installations. Such a facility needs to run at all times. Meanwhile, Xcel was looking to improve grid reliability in the area and brace for a feeder heading toward 30 percent solar penetration. The company had received permission from the state public utility commission to recover costs for testing energy storage on the grid, making the deal even more attractive. Peter Bronski with Panasonic's marketing and content strategy team described the project as “a microgrid with fuzzy boundaries,” because the components don’t all live within the fence in the way one might expect. The microgrid includes 1.6 megawatts of solar owned and operated by Xcel but installed on a carport at Denver International Airport. Panasonic is footing the bill for 259 kilowatts of solar PV on its own roof and will host the 1-megawatt, 2-megawatt-hour lithium-ion battery from Younicos. That battery is located in front of the meter, but on Panasonic's side of the islanding switch. The partnership, then, leverages private land and funding to deploy equipment with the potential to help the broader grid. Panasonic will enjoy an estimated 4 hours of backup for its critical facilities. The utility gets solar integration, grid peak demand reduction, energy price arbitrage and frequency regulation. The partners will watch and learn how the batteries work for two years, testing the ability of the battery to stack different jobs in real life. After that study period, Xcel and Panasonic will finalize a more formal agreement for use and payment for the rest of the battery’s life. It's also possible to do this sort of project without a rate case. CPS used company funds to construct a demonstration microgrid at Fort Sam Houston in Joint Base San Antonio, to operate with analytics funded by a National Renewable Energy Laboratory grant. The company chose a library as the project site, to gain experience with real usage patterns without putting any critical operations on the line just yet. That approach doesn't constitute a business model per se, but it's a way to develop early microgrids and figure out sustainable business models down the road. Several microgrids have arrived, then, but microgrids as a class are still in a state of arriving. This category of project has entered the grid and started carrying real loads, but the examples discussed here still serve an exploratory purpose, gathering data for a better understanding of how they can work in the future. Given the diversity of markets and customers, it's reasonable to expect that no one model will win out. The sources interviewed for this story agreed that the microgrid market is still in its infancy, and a thriving market for this asset won't arrive for perhaps five or 10 years. In some cases, regulatory policies will impose constraints, particularly where utilities are barred from owning distribution and generation, and where storage is classified as the latter. The precedent set by the Arizona Corporation Commission in the APS rate case will also be a sign of the viability of the hybrid model for leveraging private and public capital. It is noteworthy that utilities are not shying away from this type of grid experiment. Utility representatives repeatedly dismissed the idea that a proliferation of microgrids could catalyze a death spiral like the one once expected from distributed solar generation. They're not worried about grid defection from customers who can run their own miniature grids. Part of that is logistical. For secure, nonstop power, localized generators would run into air permit issues, and solar-plus-storage still requires a big upfront expenditure, said APS' Bordenkircher. "I don't see [a microgrid] as becoming my 24/7 power source of choice," he said. "It's going to provide a secondary service that I need, not a primary service." It's cost-effective to run a microgrid on grid power most of the time, and island it in an emergency; to achieve full independence drives the costs up fast. Additionally, microgrids offer utilities a new source of revenue, which is especially welcome as traditional utility business models face changes in the years ahead. The skills required to design and operate a microgrid -- electrical engineering, grid balancing and the like -- are already areas where utilities specialize, noted David Chiesa, who watches over S&C Electric Company's microgrid market segment as senior director of business development. Meanwhile, distributed solar and energy storage are spreading on their own steam and complicating the business of grid operation, as seen on the feeder where Xcel is building the microgrid. Microgrids offer a way to compartmentalize these distributed resources and mitigate their effects on the grid at large, before things get out of hand. "Why do you think they’re experimenting with it now?" Chiesa said. To really enable a utility-driven microgrid market to flourish, microgrid design will need to become more standardized, he added. "If you look at microgrids today, they're all perfect little snowflakes," Chiesa said. "That's anathema to fleetwide management. [...] Utilities are going to want their microgrids to look more like a fleet." Several pathways forward have become clear. Microgrid developers need to log more hours of run time and shave the costs of designing and building. But they've got an essential crowd-pleaser on their hands: a product that combines the safety and reliability of traditional grid architecture with the control and flexibility of distributed energy. Make sure to attend Greentech Media’s Grid Edge World Forum 2017, our premier conference and exhibition focused exclusively on tomorrow’s distributed energy system. Join us to discuss and debate the latest issues impacting tomorrow’s distributed energy system, and examine the trends and innovation happening at the grid edge. Learn more here.
News Article | March 1, 2017
Arizona Public Service, electric industry representatives and solar advocates have reached a rate design settlement that could help bring an end to years of fierce policy debates in Arizona. "This settlement was a compromise with a lot of different parties involved and a lot of different interests recognized," Stefanie Layton, director of revenue requirements at APS, told GTM. "And it’s an agreement that’s a win for customers." "The term sheet provides an opportunity for continued investment in smarter and cleaner energy infrastructure," she added. "It gives our customers more choices and control through new rate options and allows for continued solar leadership in Arizona.” In a key development, the settlement plan dismisses APS' original request to implement mandatory demand rates for all residential and small commercial customers. Instead, it gives all new distributed solar customers the option to take a demand-based rate or a time-of-use (TOU) rate. It also allows non-solar customers to adopt a demand or TOU rate, but does not require that they select an alternative. However, after May 1, 2018, all new APS customers will move to a time-varying rate by default. If the settlement is approved by the Arizona Corporation Commission (ACC), new solar customers would also see a change in their self-consumption and grid export rates. The settlement would set the self-consumption offset rate around 12 cents per kilowatt-hour, which includes a grid access fee that APS solar customers must pay. The new export rate, based on the ACC's newly adopted resource proxy model, would be 12.9 cents per kilowatt-hour. Arizona solar customers are currently compensated for their excess solar generation at rates between 13 and 14 cents per kilowatt-hour. The "Resource Comparison Proxy" (RCP) methodology referred to in the settlement was approved in December as part of a yearlong value-of-solar proceeding (E-00000J-14-0023). Going forward, solar export rates will either be determined by the RCP, or by an avoided-cost methodology that uses five-year forecasting to evaluate the costs and values of energy, capacity and other services delivered to the grid from distributed generation. Export rates are to be reevaluated on an annual basis. While the export rate is subject to change, the proposed settlement released today keeps compensation distributed solar customers roughly on par for the near term. And while new rooftop solar customers are required to adopt one of four new TOU or demand-based rate options, solar stakeholders indicated that these options are workable. Significantly, the agreement also guarantees that existing rooftop solar customers will have 20 years of full retail-rate net metering on their current utility rate plan. According to the Arizona Solar Energy Industries Association (AriSEIA), the settlement, if adopted, would shrink Arizona's solar industry, but allow the market to remain intact. "The future of Arizona's solar industry was very much on the line in this case, and while this settlement doesn't help Arizona solar grow, it allows solar to remain a viable option for some Arizonans," said Brandon Chesshire of Sun Harvest Solar, board president of AriSEIA, in a statement. Anne Hoskins, chief policy officer at Sunrun, praised the collaborative nature of the agreement and underscored Sunrun's commitment to serving the Arizona market. But she also stated that the settlement "does not fully recognize the multitude of benefits that rooftop solar brings to all Arizonans." “As recent research confirms, rooftop solar power can deliver benefits above the retail rate of electricity and provides opportunities to all customers through grid modernization, local jobs, and affordable clean energy choices," Hoskins said. Sunrun and other solar stakeholders will continue to make their case that Arizona regulators should account for the full spectrum of benefits distributed solar provides during the annual export rate review process. Alex McDonough, Sunrun's new vice president of policy, added that his company does not view the Arizona outcome as a precedent for how the industry should value solar, "but we do support having collaborative discussion about how to make policies workable for solar and provide customers choice." The decision to forge a settlement agreement is widely viewed as the preferable alternative to months of legal debates over APS' proposed rate plan. Thirty of the 40 parties involved in the case signed on to the agreement, including ACC staff and the Residential Utility Consumer Office. Signatories to the settlement agreed to refrain from undermining it through ballot initiatives, legislation or advocacy at the ACC. Overall, the settlement proposal will increase the average residential electricity customer's monthly bill by $6, but that's down from the $11 increase APS initially requested. The deal also includes other customer benefits, including a $15 million refund in unspent cash earmarked for efficiency projects, an additional $13 million to assist low-income customers, and a rate-hike freeze until June 1, 2019. APS will also be permitted to spend $10 million to $15 million per year to install solar for low-income customers and at multi-family units. The utility also agreed to place a moratorium on new self-build generation prior to January 1, 2022, excluding distributed energy projects, renewable energy generation, microgrids and upgrades to existing infrastructure. The settlement is still subject to debate and a vote by Arizona's five elected utility commissioners.
News Article | February 15, 2017
The Arizona Corporation Commission (ACC) approved Tucson Electric Power’s proposed rate plan on Wednesday, which includes several new pricing options and monthly fees for rooftop solar customers. This is the first utility rate case to advance since regulators voted to eliminate retail-rate net metering in December -- following a three-year value-of-solar proceeding. The new Tucson Electric Power (TEP) plan requires residential and small commercial customers to pay a monthly fee to cover the costs of a second electric meter used to measure solar output, according to a company statement. Residential customers are required to pay $2.05 per month, while commercial customers are required to pay an additional 35 cents. Existing solar customers are exempt from the fees. The new charges will make distributed solar only moderately less attractive, but they could soon be coupled with more significant changes. The ACC’s December decision replaced the retail-rate credit solar customers receive for excess power they produce, with two new valuation methodologies based on the lower wholesale rates utilities pay for solar from large-scale power plants. Regulators determined that both methods would be established in utility rate cases and updated on an annual basis. Arizona regulators did not address the solar export rate in TEP’s case, however. The utility noted that additional changes for solar customers, including revised compensation rates, are expected later this year. Commissioner Bob Stump, whose term ended in December, said the new valuation methods will ensure “all ratepayers will be treated fairly and that technological innovation will continue to thrive.” Commissioner Bob Burns offered a dissenting opinion, noting that a broader range of distributed solar benefits should have been taken into account. Rooftop solar customers aren’t the only ones who will see revised rates this year. The average residential TEP customer will see their monthly bill increase by about $8.50 compared to rates paid in November 2015, when TEP first submitted its rate request. “The increase covers the cost of new energy resources, upgraded distribution networks and other necessary upgrades to secure and expand TEP’s energy grid,” according to a press release. In addition, when the rate changes take effect on or before March 1, residential and small commercial customers will have the option to choose from new Time-of-Use (TOU), Peak Demand and Demand TOU plans as alternatives to their existing rate. The new plans will reduce the basic service charge from $13 to $10, and enable customers to reduce their bills by limiting their electric use during peak periods. “Our new rates include a new suite of pricing plan options for customers that offer new savings opportunities and contribute to the long-term sustainability of our local energy grid,” said TEP President and CEO David Hutchens, in a statement. “These new rates also support our ongoing investments in cost-effective energy resources that help us provide safe, reliable service.” Last year, Arizona regulators rejected a proposal from TEP’s sister utility, UniSource Energy Services, to impose mandatory demand charges for residential customers. The utility’s lack of experience implementing demand rates was cited as one of the top stakeholder concerns. TEP’s new voluntary rates may offer a response to that critique, and could pave the way for a broader rollout of demand-based rates in TEP territory in the future. Arizona’s largest utility, Arizona Public Service (APS), already offers a voluntary demand rate, with roughly 120,000 customers currently subscribed. Last summer, APS submitted a request to implement mandatory demand rates for residential customers, as well as reduce compensation for rooftop solar customers. The ACC is also expected to rule on the APS case this year.
Arizona Public Service | Date: 2011-07-19
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