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Released March 08, 2023 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Above-average customer growth, coupled with a commitment to decarbonize its electricity supply, has pushed up planned capital spending for Arizona Public Service Company (APS) (Phoenix, Arizona), the electric utility that is the principal subsidiary of Pinnacle West Capital Corporation (NYSE:PNW) (Phoenix, Arizona).
APS, which serves about 1.3 million customers, is the largest supplier of electricity in Arizona. It has a service area that stretches from the Phoenix urban core westward, nearly to the California state line, and northward beyond Flagstaff.
The utility's customer growth and sales growth are well above the national averages, with residential customer growth about double the national average.
Click on the images at right to see APS' recent history and near-term projections of sales growth and residential customer growth.
Industrial customers and homeowners continue to flock to the Grand Canyon State, APS officials told investors in a March 1 presentation. Specifically:
Click on the image at right to see APS' acceleration of coal-plant retirements.
Those early retirements, plus the ramp-down of existing and planned generation contracts, has created a yawning supply-demand gap of about 6 gigawatts (GW) by 2035, APS officials told investors.
Click on the image at right to see APS' projected 6-GW generation shortfall by 2035.
APS plans to close that gap in several ways. Since 2020, the utility has signed contracts for more than 2.1 GW of clean energy and storage capacity, to be in service by the end of 2025. Further, last April it issued an all-source request for proposal (RFP) for between 1 GW and 1.5 GW of resources, including up to 600-800 megawatts (MW) of renewable generation, to begin operations between 2025 and 2027.
An all-source RFP means that APS would consider any resource, including demand-side programs, supply-side generation additions or energy-storage systems. It has not yet announced the results of that bid, but is expected to do so soon.
"Arizona is one of the fastest-growing states in the country, and the power we provide communities and businesses is the backbone of our state's prosperity, safety and well-being," said Justin Joiner, APS vice president of resource management, last April when announcing the all-source RFP for new generation. "There's a historic population boom happening and it's our job to plan and invest in an affordable energy future with long-term sustainability and reliability our customers can count on 24/7, 365 days a year."
For the three-year period, 2023 through 2025, APS officials told investors that the utility planned to make capital investments totaling about $5.3 billion. By contrast, in 2022, it invested about $1.5 billion in capital projects.
Click on the image at right to see APS' 2022 capital outlays, and planned investments over the 2023-2025 period.
Industrial Info is tracking about 48 capital projects involving APS that total about $3 billion. A good bit of that planned spend will go to decommission and demolish the three-unit Navajo Generating Station, located on the southern rim of the Grand Canyon, and to remediate the plant's ash ponds. That 2.25-GW plant closed in 2019. But there also is a healthy amount of spending on transmission projects, renewable generation, battery energy storage systems (BESS) and controls upgrade at the Palo Verde Nuclear Power Station, located west of Phoenix, where APS is the operator and largest owner. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Industry Project Database can click here for the list of APS project reports.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
APS, which serves about 1.3 million customers, is the largest supplier of electricity in Arizona. It has a service area that stretches from the Phoenix urban core westward, nearly to the California state line, and northward beyond Flagstaff.
The utility's customer growth and sales growth are well above the national averages, with residential customer growth about double the national average.
Industrial customers and homeowners continue to flock to the Grand Canyon State, APS officials told investors in a March 1 presentation. Specifically:
- Taiwan Semiconductor (NYSE:TSM) (Hsinchu, Taiwan) has increased its planned investment in chip-making facilities to $40 billion, from an earlier announced $12 billion
- Procter & Gamble (NYSE:PG) (Cincinnati, Ohio) is making a half-billion-dollar investment in a manufacturing facility
- Williams-Sonoma Incorporated (NYSE:WSM) (San Francisco, California) has leased more than 1 million square feet of distribution space
- Nestle USA (Arlington, Virginia), KORE Power (Coeur d'Alene, Idaho) and Chang Chun Petrochemical (Tapei, Taiwan) are building large facilities in the state
Those early retirements, plus the ramp-down of existing and planned generation contracts, has created a yawning supply-demand gap of about 6 gigawatts (GW) by 2035, APS officials told investors.
APS plans to close that gap in several ways. Since 2020, the utility has signed contracts for more than 2.1 GW of clean energy and storage capacity, to be in service by the end of 2025. Further, last April it issued an all-source request for proposal (RFP) for between 1 GW and 1.5 GW of resources, including up to 600-800 megawatts (MW) of renewable generation, to begin operations between 2025 and 2027.
An all-source RFP means that APS would consider any resource, including demand-side programs, supply-side generation additions or energy-storage systems. It has not yet announced the results of that bid, but is expected to do so soon.
"Arizona is one of the fastest-growing states in the country, and the power we provide communities and businesses is the backbone of our state's prosperity, safety and well-being," said Justin Joiner, APS vice president of resource management, last April when announcing the all-source RFP for new generation. "There's a historic population boom happening and it's our job to plan and invest in an affordable energy future with long-term sustainability and reliability our customers can count on 24/7, 365 days a year."
For the three-year period, 2023 through 2025, APS officials told investors that the utility planned to make capital investments totaling about $5.3 billion. By contrast, in 2022, it invested about $1.5 billion in capital projects.
Industrial Info is tracking about 48 capital projects involving APS that total about $3 billion. A good bit of that planned spend will go to decommission and demolish the three-unit Navajo Generating Station, located on the southern rim of the Grand Canyon, and to remediate the plant's ash ponds. That 2.25-GW plant closed in 2019. But there also is a healthy amount of spending on transmission projects, renewable generation, battery energy storage systems (BESS) and controls upgrade at the Palo Verde Nuclear Power Station, located west of Phoenix, where APS is the operator and largest owner. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Industry Project Database can click here for the list of APS project reports.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
