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Released February 19, 2025 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Earlier this month, three electric utilities in Arizona joined a small but growing group of utilities, data centers and states in announcing an interest in investigating new nuclear generation. On February 5, an unusual tripartite news release from the Grand Canyon State's three largest electric utilities said they were "working together to explore adding nuclear generation in Arizona."
The utilities--Arizona Public Service Company (APS) (Phoenix, Arizona), the electric utility unit of Pinnacle West Capital Corporation (NYSE:PNW) (Phoenix); public power utility Salt River Project (SRP) (Tempe, Arizona); and Tucson Electric Power Company (TEP), a subsidiary of Fortis Incorporated (NYSE:FTS) (St. Johns, Newfoundland)--said they "have been monitoring emerging nuclear technologies and have a shared interest in evaluating their potential to support growing energy needs in the state."
The three utilities serve a total of about 3 million customers in the Grand Canyon State. APS serves nearly half of that total.
APS is the 29.1% owner and operator of the Palo Verde Nuclear Generating Station, a three-unit, 4,200-megawatt (MW) nuclear plant located about 50 miles west of Phoenix. SRP owns about 17.5% of that facility. Nuclear power accounts for about 30% of the electricity delivered in the state.
Like electric utilities around the country, all three Arizona utilities have been closing coal-fired generation and building renewable generation and battery energy storage projects in recent years.
"Energy demand in Arizona is increasing rapidly," said Ted Geisler, president of APS, which is leading the new-build nuclear investigation effort. "To ensure a reliable and affordable electric supply for our customers, we are committed to maintaining a diverse energy mix. While new nuclear generation would take more than a decade to develop, the planning and exploration of options must begin now."
APS' electric demand and capital expenditures have risen sharply in recent years, driven by the construction of data centers, semiconductor manufacturers, cybersecurity facilities, medical technology companies, battery and energy-storage manufacturers and population growth.
"For the three-year period ended 2023, (APS') annual retail electricity sales growth averaged 2.6%, adjusted to exclude the effects of weather variations," according to Pinnacle West's third-quarter 2024 10-Q form filed at the U.S. Securities and Exchange Commission (SEC). "Due to the expected growth of several large data centers and new large manufacturing facilities, we currently project that annual retail electricity sales in kilowatt-hours will increase in the range of 4.0% to 6.0% for 2024 and 2025 and that average annual growth will be in the range of 4.0% to 6.0% through 2027."
SRP General Manager and Chief Executive Officer Jim Pratt said, "SRP is exploring all options to meet the growing energy needs of the Phoenix metropolitan area affordably, reliably and sustainably. We appreciate the collaboration with our neighboring utilities to help determine the role new nuclear generation could play in powering Arizona's future."
SRP also has been decarbonizing and embracing clean energy in recent years. It closed coal-fired units in Northern and Eastern Arizona and added significant amounts of renewable generation. Last year, it signed a 480-MW power purchase agreement (PPA) with Alphabet Incorporated (NASDAQ:GOOGL) (Mountain View, California) unit Google to provide electricity to a data center Google planned to build and operate in Arizona. The PPA covered solar and wind generation and battery energy storage. The projects will be operated by operated by NextEra Energy Incorporated (NYSE:NEE) (Juno Beach, Florida). For more on that, see March 19, 2024, article - Google Signs PPA with Salt River Project to Support Upcoming Arizona Data Center.
The February 5 statement also quoted TEP President and Chief Executive Officer Susan Gray as saying "New nuclear generation could provide Arizona with reliable, around-the-clock carbon-free energy to power economic growth while helping us make progress toward a clean energy future. We know the development timeline would be long, so it makes sense for our state's energy providers to begin this preliminary evaluation as soon as possible."
About 20% of TEP's electricity came from renewable resources in 2023, the company said. It added over 450 MW of wind and solar generation in 2021, and currently hundreds of megawatts of renewable energy and battery energy storage systems (BESS) are being built. The utility has committed to becoming a net-zero emitter of CO2 by 2050.
That statement said the utilities would consider small modular reactors (SRMs) capable of generating up to 300 MW, as well as larger-sized traditional nuclear units.
The utilities have applied for a grant from the U.S. Department of Energy (DOE) to begin preliminary exploration of a potential site for additional nuclear energy for Arizona. If approved, the grant would support a three-year site selection process and possible preparation of an early site permit application to the U.S. Nuclear Regulatory Commission.
The grant application is an initial step in a larger collaborative effort by the utilities to explore the possibility of adding nuclear energy in the state, the statement said. This joint effort could see the selection of a preferred nuclear site in the late 2020s, at the earliest, potentially enabling additional nuclear power to be in operation in the early 2040s. The utilities said retired or soon-to-be-retired coal-plant sites could be considered as a future nuclear site.
Environmentalists oppose the investigation of more nuclear generation in Arizona. In a note to "The Arizona Republic," the state's leading newspaper, Sandy Bahr, director of the Grand Canyon chapter of the Sierra Club, said, "Nuclear power is problematic on many levels. It is bad for (customers) and always costs more than predicted, (and) uses too much water in a place that is water constrained. Nuclear power is another way to saddle (customers) with enormous costs and saddle our state with an unsustainable generation source."
Electric utilities in a variety of states, including Tennessee, Wyoming, South Carolina and Indiana, are either investigating SMRs or trying to secure legislative support for SMRs. Specifically:
If all of these activities collectively suggest that a second nuclear renaissance may be emerging, it would be good to remember how the first nuclear renaissance ended: badly and at great cost, with only two new units built.
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) platform 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).
The utilities--Arizona Public Service Company (APS) (Phoenix, Arizona), the electric utility unit of Pinnacle West Capital Corporation (NYSE:PNW) (Phoenix); public power utility Salt River Project (SRP) (Tempe, Arizona); and Tucson Electric Power Company (TEP), a subsidiary of Fortis Incorporated (NYSE:FTS) (St. Johns, Newfoundland)--said they "have been monitoring emerging nuclear technologies and have a shared interest in evaluating their potential to support growing energy needs in the state."
The three utilities serve a total of about 3 million customers in the Grand Canyon State. APS serves nearly half of that total.
APS is the 29.1% owner and operator of the Palo Verde Nuclear Generating Station, a three-unit, 4,200-megawatt (MW) nuclear plant located about 50 miles west of Phoenix. SRP owns about 17.5% of that facility. Nuclear power accounts for about 30% of the electricity delivered in the state.
Like electric utilities around the country, all three Arizona utilities have been closing coal-fired generation and building renewable generation and battery energy storage projects in recent years.
"Energy demand in Arizona is increasing rapidly," said Ted Geisler, president of APS, which is leading the new-build nuclear investigation effort. "To ensure a reliable and affordable electric supply for our customers, we are committed to maintaining a diverse energy mix. While new nuclear generation would take more than a decade to develop, the planning and exploration of options must begin now."
APS' electric demand and capital expenditures have risen sharply in recent years, driven by the construction of data centers, semiconductor manufacturers, cybersecurity facilities, medical technology companies, battery and energy-storage manufacturers and population growth.
"For the three-year period ended 2023, (APS') annual retail electricity sales growth averaged 2.6%, adjusted to exclude the effects of weather variations," according to Pinnacle West's third-quarter 2024 10-Q form filed at the U.S. Securities and Exchange Commission (SEC). "Due to the expected growth of several large data centers and new large manufacturing facilities, we currently project that annual retail electricity sales in kilowatt-hours will increase in the range of 4.0% to 6.0% for 2024 and 2025 and that average annual growth will be in the range of 4.0% to 6.0% through 2027."
SRP General Manager and Chief Executive Officer Jim Pratt said, "SRP is exploring all options to meet the growing energy needs of the Phoenix metropolitan area affordably, reliably and sustainably. We appreciate the collaboration with our neighboring utilities to help determine the role new nuclear generation could play in powering Arizona's future."
SRP also has been decarbonizing and embracing clean energy in recent years. It closed coal-fired units in Northern and Eastern Arizona and added significant amounts of renewable generation. Last year, it signed a 480-MW power purchase agreement (PPA) with Alphabet Incorporated (NASDAQ:GOOGL) (Mountain View, California) unit Google to provide electricity to a data center Google planned to build and operate in Arizona. The PPA covered solar and wind generation and battery energy storage. The projects will be operated by operated by NextEra Energy Incorporated (NYSE:NEE) (Juno Beach, Florida). For more on that, see March 19, 2024, article - Google Signs PPA with Salt River Project to Support Upcoming Arizona Data Center.
The February 5 statement also quoted TEP President and Chief Executive Officer Susan Gray as saying "New nuclear generation could provide Arizona with reliable, around-the-clock carbon-free energy to power economic growth while helping us make progress toward a clean energy future. We know the development timeline would be long, so it makes sense for our state's energy providers to begin this preliminary evaluation as soon as possible."
About 20% of TEP's electricity came from renewable resources in 2023, the company said. It added over 450 MW of wind and solar generation in 2021, and currently hundreds of megawatts of renewable energy and battery energy storage systems (BESS) are being built. The utility has committed to becoming a net-zero emitter of CO2 by 2050.
That statement said the utilities would consider small modular reactors (SRMs) capable of generating up to 300 MW, as well as larger-sized traditional nuclear units.
The utilities have applied for a grant from the U.S. Department of Energy (DOE) to begin preliminary exploration of a potential site for additional nuclear energy for Arizona. If approved, the grant would support a three-year site selection process and possible preparation of an early site permit application to the U.S. Nuclear Regulatory Commission.
The grant application is an initial step in a larger collaborative effort by the utilities to explore the possibility of adding nuclear energy in the state, the statement said. This joint effort could see the selection of a preferred nuclear site in the late 2020s, at the earliest, potentially enabling additional nuclear power to be in operation in the early 2040s. The utilities said retired or soon-to-be-retired coal-plant sites could be considered as a future nuclear site.
Environmentalists oppose the investigation of more nuclear generation in Arizona. In a note to "The Arizona Republic," the state's leading newspaper, Sandy Bahr, director of the Grand Canyon chapter of the Sierra Club, said, "Nuclear power is problematic on many levels. It is bad for (customers) and always costs more than predicted, (and) uses too much water in a place that is water constrained. Nuclear power is another way to saddle (customers) with enormous costs and saddle our state with an unsustainable generation source."
Electric utilities in a variety of states, including Tennessee, Wyoming, South Carolina and Indiana, are either investigating SMRs or trying to secure legislative support for SMRs. Specifically:
- The Board of Directors for the Tennessee Valley Authority (Knoxville, Tennessee) has authorized spending up to $350 million to investigate next-generation technologies, including building one or more SMRs at its Clinch River nuclear site in Tennessee. For more on that, see February 3, 2025, article - TVA Deepens Investigation of Small Modular Nuclear Reactors.
- TerraPower (Bellevue, Washington) is moving forward to build a 345-MW SMR on the site of a soon-to-be-idled coal-fired station in Kemmerer, Wyoming. This planned project, Natrium, will use sodium as a coolant rather than water. For more on that, see January 15, 2025, article -- Wyoming Authorizes Preliminary Construction of Small Nuclear Plant.
- South Carolina news organizations have quoted officials from two of the state's largest electric utilities--units of Dominion Energy Incorporated (NYSE:D) (Richmond, Virginia) and Duke Energy Corporation (NYSE:DUK) (Charlotte, North Carolina)--as well as lawmakers, as agreeing that an SMR in the Palmetto State's future. Public power utility Santee Cooper (Moncks Corner, South Carolina) has a somewhat more complicated view of nuclear power. It and a partner utility cancelled a planned two-unit expansion of the Virgil C. Summer Nuclear Power Station in 2017, after investing about $9 billion. Santee Cooper (Moncks Corner, South Carolina) currently is engaged in an attempt to sell the uncompleted Summer Units 2 and 3 to another company. For more on that, see January 25, 2025, article -- Santee Cooper Seeks Buyers for Incomplete South Carolina Reactors.
- An executive with the Indiana Michigan Power Company (Fort Wayne, Indiana), a unit of American Electric Power Company Incorporated (NASDAQ:AEP) (AEP) (Columbus, Ohio), has been quoted in Indiana news reports as supporting a legislative move to create incentives to build a SMR in Indiana.
If all of these activities collectively suggest that a second nuclear renaissance may be emerging, it would be good to remember how the first nuclear renaissance ended: badly and at great cost, with only two new units built.
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) platform 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).
