TEP, UniSource Issue New All-Source Request for Proposals for Additional Energy Resources
- TEP and UniSource are seeking new generation facilities, energy storage systems, and energy efficiency resources through a joint ASRFP.
- The ASRFP targets resources to support the companies' 2023 integrated resource plans (IRPs) and seeks submissions by March 8, 2024.
- TEP's 2023 IRP plans to add 2,240 MW of wind and solar generation and 1,330 MW of energy storage by 2038, aiming for an 80 percent reduction in CO2 emissions by 2035.
- UniSource's 2023 IRP plans to more than double its electric energy resources by adding 350 MW of solar and wind resources, 200 MW of natural gas turbines, and 225 MW of energy storage systems by 2038.
- None.
Insights
The quest for new generation facilities and energy storage systems by Tucson Electric Power (TEP) and UniSource Energy Services indicates a proactive approach to energy management and infrastructure development. This move is significant, as the energy sector is rapidly evolving with the integration of renewable resources and energy storage solutions. The pursuit of 625 megawatts of renewable and energy efficiency resources, alongside 825 megawatts of 'firm capacity' resources, showcases the companies' commitment to diversifying their energy portfolio.
From an economic standpoint, the investment in renewable energy and energy storage is likely to have a positive impact on the companies' long-term financial stability. The shift towards renewables is not only environmentally beneficial but also aligns with global trends towards sustainable energy practices, potentially offering a competitive edge. Moreover, the implementation of demand response programs is a strategic move to enhance grid reliability and manage peak energy demands, which could result in operational cost savings and improved customer satisfaction.
TEP's aim to accelerate its clean energy expansion and reduce carbon dioxide emissions by 80 percent by 2035 is a bold and ambitious target that reflects growing concerns over climate change and environmental sustainability. The integration of 2,240 megawatts of wind and solar generation and 1,330 megawatts of energy storage by 2038, represents a significant shift towards a lower carbon footprint. The addition of 400 megawatts of natural gas turbines is a pragmatic approach to ensure grid stability during the transition to renewable energy sources.
UniSource's plan to more than double its electric energy resources with the addition of solar, wind and energy storage systems, while also incorporating natural gas turbines, mirrors a similar strategic approach to energy diversification and environmental stewardship. These initiatives are likely to be well-received by environmentally conscious investors and could potentially influence the regulatory landscape, encouraging other utilities to adopt more aggressive carbon reduction strategies.
The financial implications of TEP's and UniSource's plans are multifaceted. The capital expenditure required for the development of new energy resources could impact short-term financials, with potential increases in debt levels or equity financing. However, the long-term benefits could include lower operational costs due to improved energy efficiency and less exposure to volatile fossil fuel prices. Investors should note the timeline for commencement of service by 2026-2027, which indicates a clear strategic roadmap and allows for the assessment of project execution risks and capital allocation.
Furthermore, the companies' integrated resource plans (IRPs) suggest a thorough analysis of future energy needs and a structured approach to meeting these demands. This foresight can be reassuring to investors, as it demonstrates management's commitment to long-term planning and risk mitigation. The potential for combined technology projects could also lead to innovative solutions that may offer competitive advantages in the energy market.
The joint ASRFP, issued in December 2023, targets resources to support the companies’ 2023 integrated resource plans (IRPs), which describe how each company plans to meet customers’ increasing energy needs over the next 15 years while maintaining affordable service.
“We’re looking for opportunities to add reliable, cost-effective resources to satisfy the growing energy needs in communities we serve,” said Susan Gray, President and Chief Executive Officer. “As in our previous ASRFP, we’re particularly interested in resources that can provide service during the late afternoon and early evening hours of summer, when our customers typically use the most energy.”
In the ASRFP, TEP and UniSource are seeking bids for all resource types, including:
- Up to 625 megawatts (MW) of renewable and energy efficiency resources. This could include new wind and solar generating systems and new energy efficiency initiatives, including demand response programs that reduce usage during periods of high energy demand.
- Up to 825 MW of “firm capacity” resources that can be called on at any time, including energy storage systems designed to provide at least four hours of continuous energy every day during the summer for the companies to dispatch as needed. This also could include demand response programs that provide incentives to customers who curtail energy usage at specific times of the day and year when usage is typically highest.
The companies will review proposals before summer and anticipate selecting successful proposals this fall. Both companies are seeking resources that can commence service as soon as May 1, 2026 but no later than May 1, 2027. Projects with combined technologies are eligible for consideration.
TEP’s 2023 IRP describes how the company will accelerate its clean energy expansion while reducing carbon dioxide (CO2) emissions and other environmental impacts. TEP expects to add 2,240 megawatts (MW) of wind and solar generation and 1,330 MW of energy storage by 2038, as well as 400 MW of natural gas turbines to help offset coal plant retirements and support higher use of variable wind and solar energy. This balance was determined to be the most cost-effective way to maintain reliability while achieving an 80 percent reduction in CO2 emissions by 2035, a goal set in TEP’s 2020 IRP.
UniSource’s 2023 IRP outlines the company’s plans to more than double its electric energy resources amid increasing resource constraints on the regional electric grid. The plan calls for the addition of 350 megawatts (MW) of solar and wind resources, 200 MW of natural gas turbines and 225 MW of energy storage systems by 2038. UniSource currently has about 300 MW of generating capacity.
The ASRFP process is being supported with evaluation and independent monitoring services provided by Sargent & Lundy. More information, including bidder registration and ASRFP material, is available at uns2024asrfp.com.
In October 2023, TEP announced plans for Roadrunner Reserve, a 200-MW, 800-megawatt-hour battery energy storage system. The project was selected as a result of TEP’s April 2022 ASRFP. TEP will own and operate the system, which will be designed and built by
About TEP and UniSource
TEP provides safe, reliable electric service to more than 445,000 customers in
UniSource provides electric service to more than 101,000 customers in
TEP, UniSource and their parent company, UNS Energy, are subsidiaries of Fortis Inc. (TSX/NYSE: FTS), which owns utilities that serve more than 3 million customers across
View source version on businesswire.com: https://www.businesswire.com/news/home/20240116222231/en/
Joseph Barrios
(520) 884-3725
jbarrios@tep.com
Source: Tucson Electric Power
FAQ
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