TEP Sundt PlantGeneration Modernization Project

Conrad SpencerProject Director

February 14, 2018

TEP’s Future Generation

• Arizona Corporation Commission(ACC) mandate is 15% retail sales from renewable resources by 2025

• TEP Submitted its Integrated Resource Plan (IRP) to the ACC in April 2017

• Goal to have 30% retail sales from renewable resources by 2030

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Intermittent Generation Requirements

3The chart above represents the change in retail load on a 10-minute basis (52,560 intervals) over the course of a year.

+ 50 MW

- 50 MW

+ 100 MW

-100 MW

2016 Historical Requirements10‐minute changes based on retail load only.  No renewables.

2016 Requirements10‐minute changes in both retail load and renewable resources

275 MWac Utility Scale50 MWac Distributed Generation

325 MWac Total Renewables

Intermittent Generation Requirements

4The chart above represents the change in retail load on a 10-minute basis (52,560 intervals) over the course of a year.

+ 50 MW

- 50 MW

+ 175 MW

-175 MW

2016 Historical Requirements10‐minute changes based on retail load only.  No renewables.

2024 Requirements10‐minute changes in both retail load and renewable resources

600 MWac Utility Scale200 MWac Distributed Generation800 MWac Total Renewables

Renewable Generation Fluctuations

14:25, 220

14:34, 172

14:45, 227

16:21, 251

16:51, 114

14:25, 20

14:34, -60

16:24, 54

16:47, -91

-300

-250

-200

-150

-100

-50

0

50

100

0

50

100

150

200

250

30012

:01

12:0

912

:17

12:2

512

:33

12:4

112

:49

12:5

713

:05

13:1

313

:21

13:2

913

:37

13:4

513

:53

14:0

114

:09

14:1

714

:25

14:3

314

:41

14:4

914

:57

15:0

515

:13

15:2

115

:29

15:3

715

:45

15:5

316

:01

16:0

916

:17

16:2

516

:33

16:4

116

:49

16:5

717

:05

17:1

317

:21

17:2

917

:37

17:4

517

:53

18:0

118

:09

18:1

718

:25

August 8, 2017 Renewable Fluctuations

Macho Springs Red Horse Total City Utility Renew UNSE Utility Renew TOT_RENEW_MW ACE

48 MW drop followed by 55 MW rise in Total Renewables

137 MW drop in Total Renewables

80 MW drop in ACE

145 MW drop in ACE

Typical 2030 Winter Day Load Profile

6Source: TEP IRP page 68

TEP Internal study

• TEP Generation and Resource Planning performed high level economic study with internal resource planning models

• Used replacement of two steam units with reciprocating capacity as fundamental assumption

• Benefits were substantial improvement in heat rates and ramp rates

• Approval given to pursue possible sites and air permit modeling

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TEP Technology Assessment

• Technology assessment to review the lowest cost options to assist in the integration of renewables conducted by Burns and McDonnell Engineering

• Options considered were large frame gas turbines, aeroderivative gas turbines, combined cycle, reciprocating engines(10 MW and 20 MW class), wind, solar, batteries

• Reciprocating engines were the lowest cost option that met all of TEP’s needs. Reliability minimum generation requirement and fast response.

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Typical Reciprocating Engine Generator

Site Selection Criteria

• Five sites in the Tucson area were evaluated

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Environmental/Air Permit RequirementsFuel SupplyLand RequirementsCommunity ImpactTransmission RequirementsSystem Control & Reliability Impact

LOCATION OF RICE PROJECT

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Large Generator Interconnection

• TEP Generation filed a Large Generator Interconnect application on March 31, 2017 with TEP LGIP department

• System Impact study was completed Oct 31, 2017• Interconnection Facilities study is competed and

design is underway to meet a January 2019 energization of Generator Step-up transformers(GSU)

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Recip Vendor Bid Process

• Only two vendors offered 20 MW class machines. FairbanksMorse(MAN) and Wartsila

• TEP team went to Germany, France, & Italy to see manufacturing facilities of both vendors

• RFP went out June 1, 2017. Scope of supply was broken into each major system from tip of the stack to the low side of the GSU.

• Both vendors submitted bids on August 17, 2017

• Wartsila was selected on cost basis from the tip of the stack to low side of the GSU.

EPC Bid Process –Final Engineering Construction

• Accion Power hired as independent monitor and website host

• RFP went out July 7, 2017

• Bid walk held July 21, 2017

• Technical specs for project with Wartsila scope of supply posted on Sept 6, 2017

• Bids were due October 20, 2017

• Selection of Ashton Construction (local Tucson firm)

• Sargent & Lundy engineering

Schedule

• Break ground April 2018

• Engines on site Oct 2018

• First five engines in commercial operation June 1, 2019

• Second five engines in commercial operation Oct 1, 2019

Site Arrangement

3 D Model of TEP RICE Project

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Certificate of Environmental Compatibility

• Application for a Certificate of Environmental Compatibility filed with the Arizona Power Plant and Transmission Line Siting Committee of the Arizona Corporation Commission(ACC), Filed December 8, 2017

• Public Hearings were held on January 17-19, 2018 in Tucson

• Vote was 8-0 in favor of issuing the CEC• The ACC commissioners will vote in next Open

meeting March2018

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Air Quality Permitting Process• Sundt site is a major stationary source for purposes of the Prevention of

Significant Deterioration (PSD) program and holds a Class I Air Quality Permit issued by Pima County Dept. of Environmental Quality.

• RICE project requires preconstruction PSD review and a Significant Revision of the Class I Permit.

• Permitting process includes the following key steps:• TEP requests accelerated permit process from PDEQ March 2017• TEP submits permit application (8/3/2017)• PDEQ determines application is administratively complete

(8/23/2017)• PDEQ performs technical review and prepares draft permit and

supporting documentation • Public notice and comment process• PDEQ transmits proposed action to U.S. EPA for review• Final action by PDEQ

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Status of Significant Permitting Process • 8/23/2017– 2/9/2018– Technical Review Period

• Technical Review Working Group Meetings with PDEQ, PDEQ Consultant, EPA Region 9, National Park Service, TEP, and TEP Consultants

• The Technical Review Working Group has held approximately 20 teleconference meetings

2/9/2018: Began public notice and comment process and concurrent review by U.S. EPA2/15/2018: Open House3/1/2018: Public Hearing3/12/2018: End public notice and comment process3/26/2018: End U.S. EPA review period4/16/2018: Final decision issued by Pima DEQ

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Air Study Results • Dispersion modeling of the RICE project unambiguously

demonstrates de minimis air quality impacts (i.e., project will not cause or contribute to violations of ambient standards or PSD increments)

• Modeling performed using required modeling software and procedures

• Analysis conservatively did not consider emission reduction from retiring Units 1 & 2

• Modeling demonstrates project will cause no impairment to visibility, including especially rigorous analyses in Saguaro National Park and Galiuro Wilderness

• Analysis conservatively did not consider emission reduction from retiring Units 1 & 2

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Comparison of Tucson Area NOx Emissions

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0

100

200

300

400

500

600

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

Tons

Per

Yea

r

(Sum of all units at Sundt, DeMoss Petrie, and North Loop)

Existing Steam Turbines Simple-Cycle Gas Turbines RICE

Benefits

• Project Benefits:• Fast start < 5 minutes (allows integration of more

intermittent renewables)

• 40% better fuel efficiency than steam units that will be retired

• 60% reduction in NOx emissions from total plant with the retirement of steam units 1 & 2 and reduced use of units 3 & 4

• 70% reduction in ground water usage (current usage is 685,000,000 gallons per year, new usage will be less than 230,000,000 gallons per year

2017 2019 2020 2021 2023 2030

December 2017San Juan Unit 2

Retirement-170 MW

2018Gila River

Unit 2550 MW

June 2022San Juan Unit 1

Retirement-170 MW

2019Reciprocating

Engines200 MW

July 2031Four Corners Power

Plant Retirement-110 MW

2017Battery Storage 20 MW

2030Target 30%

Renewables by 20301,000 MW

December 2019Navajo Generation Station Retirement

-168 MW

2020Wind

Project100 MW

2020Solar-Battery

Project100 MW - Solar

30 MW - Storage

2021Wind

Project150 MW

TEP Long Term Resource Plan

Conclusions

• This RICE project is the lowest cost option for TEP to provide fast flexible generation to allow for

- the additional integration of renewables - provide Reliability minimum generation

requirements-provide a bridge to the future use of additional battery technologies

TEP

• Questions?

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