New Modeling: Palo Verde Stays Open with Arizona's Prop. 127

The Palo Verde Nuclear Generating Station will stay open in a future where Arizona electric utilities Arizona Public Service (APS), Tucson Electric Power (TEP) meet the 50 percent renewable energy standard in Arizona’s Proposition 127, and Salt River Project and utilities in Colorado, Nevada, and New Mexico also pursue a lot more renewable energy.

This finding, based on a NRDC energy modeling analysis conducted by renowned energy firm ICF, adds to the already-substantial evidence — from earlier modeling we released June 5, from the U.S. Energy Information Administration and the U.S. Department of Energy’s National Renewable Energy Laboratory —  that Palo Verde is viable in a high-wind-and-solar energy future.

These robust analyses contradict the unsubstantiated claims of Arizona’s largest for-profit electric utility, APS, that more renewable energy would force them to shut down Palo Verde early. APS, which owns 29.1 percent of the Palo Verde plant, has vociferously opposed  Proposition 127, on the November general election ballot in Arizona. Prop. 127 would require APS and other utilities regulated by the Arizona Corporation Commission (ACC) to get 50 percent of their electricity from renewable sources like wind and solar by 2030. As part of their “No” campaign, APS has claimed that Prop. 127 would require them to shut down Palo Verde in 2025, something that would not just be unnecessary and imprudent but also outside their authority.

APS’s real reason for opposing Prop. 127, in all likelihood, is that its passage would throw a wrench into their plans to build a lot more gas-fired power plants. APS had proposed building another 5.4 GW of new gas in the next 15 years in its most recent long-term plan (a plan that the Arizona Commission Council took the unprecedented step of refusing to even acknowledge, ordering APS to cut their planned reliance on new natural-gas plants in favor of more renewable energy and storage).

This blog post will detail our modeling inputs and results. To learn more about the model itself, read here and here.

Inputs for this round of IPM modeling

Arizona is not the only state in the interconnected Western grid that is thinking about making big commitments to renewables, and resource decisions in one state can impact others. To capture this, we updated and expanded our earlier Arizona-specific modeling to include not just the 50 percent renewable portfolio standard (RPS) in Prop. 127, but also “50 percent by 2030” standards that apply to utilities in Colorado, Nevada, and New Mexico. We also included a “25 percent by 2025” standard for Arizona’s Salt River Project (SRP), a large utility not regulated by the ACC or subject to Prop. 127, but which nonetheless is likely to pursue more renewables.

We again used ICF’s industry-standard Integrated Planning Model (IPM®), a detailed model of the electric power system that is routinely used by the electricity industry and regulators, including the U.S. Environmental Protection Agency, to assess the effects of environmental regulations and policy. It integrates extensive information on power capacity and generation, technology performance, transmission, energy demand, electricity and fuel prices, policies, and other factors. IPM then determines the most cost-effective way to meet electricity needs, based on its detailed representation of the U.S. electricity system. It can build new power plants, retire existing plants, or ramp them up and down to meet demand in the lowest-cost way.

Inputs are largely the same as those we used in earlier modeling, though Colorado, Nevada, and New Mexico utilities must now meet stronger  renewable standards and use resources located in-state. Arizona is allowed to use some portion of New Mexico wind for compliance, though the model finds Arizona solar the most cost-effective option.

Results

Under the strengthened renewable portfolio standards described above, utilities in the Western Interconnection (represented as the Western Electricity Coordinating Council footprint) add 18 Gigawatts (GW) of new solar capacity by 2030, 10 GW of wind, and more than 3 GW of 4-hour energy storage to help balance the grid. Existing gas capacity does not decline because it is still used for balancing, though faster improvements in storage could change this. Notably, the model finds it more cost-effective to balance renewables with energy storage than with new gas-fired capacity, and additional solar and wind also help avoid a big build-out of new gas-fired power plants,  such as the one APS proposed in its 2017 Integrated Resource Plan.

The table shows electricity generating capacity in the West under strengthened renewable energy standards. Palo Verde remains even as solar and wind capacity grows substantially.

The model shows nuclear capacity declining through 2030, but Palo Verde’s 4 GW of capacity stays online. The decline in nuclear capacity reflects Pacific Gas and Electric’s 2016 decision to shut down the Diablo Canyon nuclear plant’s two units in 2024 and 2025. In its drive to choose the least-cost energy mix, the model also decides to retire nuclear in the Pacific Northwest by 2020. The model keeps Palo Verde open because it’s the lowest-cost non-renewable power plant in the West, able to spread its fixed cost of operation over a lot of electricity output. The model’s decision on Palo Verde shows that Arizona and the West have sufficient demand and available transmission capacity to use Palo Verde’s electricity in a high-renewables future.

Our earlier, Arizona-focused modeling found the same: Palo Verde stays open, operating at full-tilt in a high-renewables future, but this round of modeling includes more renewables in Arizona and around the West than we included earlier. In this modeling, which includes extra renewables for SRP, Arizona builds an additional 3 GW of new utility-scale solar by 2030. Around the West, this modeling includes an additional 2 GW of wind and 7 GW of solar, compared to the earlier modeling.

Conclusion

This four-state-RPS study adds to the weight of the evidence—including analyses conducted by the U.S. Government and financial firms—that Palo Verde is a very viable nuclear plant in a highly-renewable Western energy grid, despite APS’s unsubstantiated claims to the contrary.

About the Authors

Dylan Sullivan

Senior Scientist, Climate & Clean Energy Program

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