Tucson Electric Power will replace coal-burning units with new natural gas generators as it brings 446 MW of renewable resources and a 30-MW battery to its system in 2020.
The 10 20-MW reciprocating internal combustion engines, built by Finnish manufacturing company Wärtsilä, will replace the aging Sundt 1 and 2 coal-fired steam generating units TEP agreed to shut down before firing up the new RICE units by the end of 2019. The utility expects a 60-percent reduction in nitrogen oxide emissions and a 70-percent reduction in water usage (about 455 million gallons) annually compared with the steam units once the new generators are on line.
The utility is about halfway through the project, which in addition to the generators includes construction of a new 138-kV substation at TEP's Irvington Campus in Tucson and approximately 2.6 miles of new and modified 138-kV transmission lines that will connect to the RICE generators.
Total project costs amount to approximately $197 million, according to TEP spokesman Joe Barrios. The breakdown includes about $160 million for the generators, $30 million for substation relocation and modernization, and about $7 million for the transmission work, he said in an email. The project supports TEP's plans to update its technology, improve operations and expand its use of renewable energy to at least 30 percent by 2030 while maintaining reliability.
"Before deciding to pursue approval for the RICE units, we conducted a thorough study of several resource options including energy storage systems," Barrios said. At the time, the levelized cost of lithium ion batteries was nearly $257 per MW, according to a Lazard study, while the RICE units were about $130, he said.
"So, resource costs were nearly half of battery systems," Barrios said.
TEP plans to invest more in energy storage systems as costs decline. "We already have three energy storage projects with a combined capacity of about 22 MW that provide grid-balancing support," Barrios said.
One of the new projects the RICE units will support is the Wilmot Energy Center in southeast Tucson that will include a 100-MW solar array and a 30-MW battery system. Other renewable-energy projects TEP plans to integrate include the 247-MW Oso Grande Wind Farm system under development by EDF Renewables in southeastern New Mexico, which will be transferred to TEP for $370 million, and the 99-MW Borderlands Wind Project being developed in cooperation with NextEra Energy in western New Mexico. TEP will obtain the output of Wilmot and Borderlands through power-purchase agreements (see CEM No. 1534 [20.1]).
TEP expects to have the generators in operation before the end of the year "so they're ready to go when the new renewables come on line" in 2020, Barrios said.