Panelists:
- Carter Livingston, Stakeholder Relations Specialist, AES
- Dr. Greg Barron-Gafford, Professor and Director of Food, Energy, and Water Resilience Solutions; Biosphere 2
- Andy Rhea, Supervisor of Key Accounts, Southwest Gas
- Richard Rosales, Public Affairs Manager, APS
- Bill McClellan, Director of Resource Planning, Acquisition & Development, SRP
Moderator:
- Court Rich, Director of Energy and Utility Infrastructure, Rose Law Group
By Hannah Kovach | Rose Law Group Reporter
Population growth, manufacturing and data center development are driving sharp increases in Arizona’s electricity demand, with Salt River Project projecting it may need to nearly triple its current capacity over the next decade.
During Pinal Partnership’s Energy Experts Breakfast, utility representatives, energy developers and researchers outlined what that growth could mean for Pinal County, including new power plants, renewable energy projects, natural gas infrastructure and data centers.
The panel, moderated by Co-Founder and Director of Rose Law Group’s Energy and Utility Infrastructure, Court Rich, featured Carter Livingston, stakeholder relations specialist at AES; Dr. Greg Barron-Gafford, professor and director of Food, Energy and Water Resilience Solutions at Biosphere 2; Andy Rhea, supervisor of Key Accounts at Southwest Gas; Richard Rosales, public affairs manager at Arizona Public Service; and Bill McClellan, director of Resource Planning, Acquisition and Development at Salt River Project.
McClellan said SRP expects peak electricity demand to grow by approximately 5.7% annually over the next decade, more than double the 2.8% annual growth recorded during the previous decade.
“That may not sound like a lot, but just to provide some context. If you look over the last decade, that was about 2.8% year-over-year growth. So, it’s more than doubling,” McClellan said.
SRP also set a system peak-demand record on July 24th. Meeting continued growth will require significant investments in generating resources, transmission lines, and other infrastructure.
SRP currently relies on approximately 12,000 to 13,000 megawatts of power to meet customer demand. McClellan said the utility may need an additional 15,000 to 20,000 megawatts during the next decade.
“We’re going to have to nearly triple that amount of capacity to be able to maintain reliability for our customers. We’ve got to look at every option that’s available,” McClellan said.
Rosales said APS is experiencing a similar surge in demand as residential, commercial and manufacturing growth continues across the state.
“It’s very interesting, but a lot of it is the same growth,” Rosales said.
APS is planning years ahead through its integrated resource and transmission plans. The company is proposing two new generating units at the Saguaro Power Plant in Pinal County and the Desert Sun natural gas plant west of Gila Bend. APS also plans to convert two units at the Cholla Power Plant from coal to natural gas.
As utility companies plan for that growth, panelists raised concerns about whether existing customers could be left paying for infrastructure required to serve major new energy users.
McClellan said one of the greatest risks companies face is investing in infrastructure years in advance for a large customer that later decides not to locate within the utility’s service territory.
SRP has introduced measures requiring major new users to make financial commitments toward infrastructure built specifically to serve them.
“We’re confident that those new measures that we put in place ultimately protect our customers. We’ll continue to make sure the procedures, processes and policies that we put in place ultimately make sure that everyone is paying their fair share,” McClellan said.
As part of its pending rate case before the Arizona Corporation Commission, APS has proposed increasing rates by more than 45% for extra-high-load-factor customers, a category that includes data centers.
“Data centers, or extra-high-load-factor customers, we don’t want to categorize them as just data centers, they’ll be looking at a 45% rate increase just to cover the cost with all the infrastructure needed,” Rosales said.
Rosales also noted that APS has received inquiries representing approximately 20,000 megawatts of potential data center demand.
However, he emphasized that APS will prioritize existing customers and growth from homes, businesses and manufacturers before agreeing to serve additional data center loads.
“We’re not bringing in all this extra power, natural gas, just to serve data centers,” Rosales said.
Southwest Gas is also seeing increased interest from data centers that may use natural gas to generate electricity on-site.
“We’ve seen a lot of interest, in very recent times, for data centers powered by natural gas,” Rhea said.
He also mentioned that hyperscale data centers can require power comparable to a generating plant, creating significant demand for electricity and natural gas.
“Data centers are really power plants. The amount of power that they need for these hyperscale data centers is really on the power plant level,” Rhea said.
To protect existing ratepayers, Southwest Gas may require data centers to secure their own natural gas supplies and agree to certain safeguards before infrastructure is built.
“We are anxious to serve them. They’re great customers, and we need to support the economic growth and economic benefits in the territory. By the same token, though, we need to balance that by protecting our existing ratepayers from having increased costs,” Rhea said.
Panelists also addressed public concerns and misinformation surrounding utility-scale solar projects.
Barron-Gafford said researchers have received questions about whether solar developments could increase local temperatures, change weather patterns, contaminate soil or water, or damage nearby crops.
“A lot of what drives our research are the questions that get brought up,” Barron-Gafford said.
University of Arizona researchers installed sensors around solar facilities to measure air temperature, soil temperature, humidity and potential effects on nearby agriculture.
The research has been conducted in Pima, Pinal, and Cochise counties.
“I feel very strongly that we can say no. It will not impact your crops miles away. It will not impact your agriculture negatively 500 feet away, not even 100 feet away,” Barron-Gafford said.
He encouraged residents to continue bringing questions to researchers and attend an upcoming open house to see and sample crops grown through the university’s agrivoltaics research.
“The University of Arizona and our other state universities are your partners. Bring the questions,” Barron-Gafford said.
Livingston said renewable energy developers must establish long-term relationships with the communities where their projects are located.
“It is extraordinarily important how we work with the communities. It’s not just one day. It’s 20 years,” Livingston said.
While renewable resources remain important to Arizona’s energy portfolio, panelists said natural gas will be needed to maintain reliability as demand grows.
Rhea discussed the proposed Transwestern Pipeline Desert Southwest expansion, an approximately 500-mile, 48-inch-diameter pipeline that would bring additional natural gas from the Permian Basin into Arizona. APS and SRP are participating in the project as existing interstate pipelines approach capacity.
The additional supply could support proposed APS projects, SRP’s planned expansion of the Coolidge Generating Station and the proposed Marigold Energy Center, which may include up to 675 megawatts of natural gas generation.
SRP is also working with Electrical District No. 2 and Electrical District No. 3, allowing local utilities to participate in energy projects and use some of the power generated nearby.
Turning to how those projects could affect the county, Rich asked why additional power generation matters to Pinal County residents.
“Why should Pinal County care if your companies ever build another power plant?” Rich said.
The answer largely came back to economic development.
McClellan said reliable and affordable electricity must be available to attract manufacturers, data centers and other major employers to Pinal County. He added that energy projects can provide power to local utilities serving nearby communities.
“If we want these customers to come to the Phoenix area, to Pinal County, we have to have reliable, low-cost power,” McClellan said.
The need to prepare Pinal County for continued growth also shaped opening remarks from U.S. Rep. Juan Ciscomani, R-Ariz.
As the only member of the Arizona delegation serving on the House Appropriations Committee, Ciscomani said his position helps him advocate for local infrastructure funding.
“Within the appropriations committee, I sit on the transportation subcommittee in appropriations. Why is that important? Because this is where the funding comes from for a lot of the projects that we can apply for,” Ciscomani said.
Ciscomani highlighted funding for road improvements, water infrastructure, schools, health care and public safety, including $3.7 million for the expansion of Thornton Road near Lucid Motors in Casa Grande.
“These are projects that we can bring back to our communities and have a very, very local, targeted impact,” Ciscomani said.