Energy Storage, Utilities, Solar, Sourcing Renewables - January 8, 2025
Arizona Public Service Receives $1.8B Loan for RE, BESS
The U.S. Department of Energy’s Loan Programs Office (LPO) announced a conditional commitment for a loan guarantee of up to $1.81 billion to Arizona Public Service Company (APS), the largest electric utility in Arizona.
The loan guarantee would help finance APS’ investments into several new or upgraded transmission projects, renewable power generation and grid-integrated energy storage systems, according to a statement. APS seeks to invest in a broad range of new infrastructure technologies to meet expected demand growth while lowering its emissions and saving their 1.4 million customers money on their electricity bills.
The first investment to be supported by the proposed loan is the construction of the Agave Battery Energy Storage System (BESS) Phase 1 project, a four-hour duration, 150-MW (600-MWh) BESS located next to an existing solar PV site. It will provide several primary functions and benefits, including ensuring stable and reliable grid operations when integrating renewable energy, system peak shaving, and storing excess renewable generation.
The projects funded by the LPO loan in the future could include, but are not limited to, additional BESS facilities, new renewable energy generation projects including solar PV or wind-energy generation, and transmission projects.
All electric utilities receiving an Energy Infrastructure Reinvestment (EIR) loan must provide assurance to DOE that financial benefits received from the financing will be passed on to the customers of that utility. APS’ proposed loan is expected to reduce upward pressure on electricity rates for APS ratepayers due to the reduced cost of debt associated with LPO financing and APS customers are expected to benefit from approximately $250 million in total savings over the life of the loan guarantee.
If finalized, this transaction would support new, clean-energy infrastructure investments, enhance the reliability of energy supply, reduce long-term operational costs, and lower electricity rates. Consistent with APS’ 2023 Integrated Resource Plan and U.S. EPA regulations, the renewable energy generation financed by the loan guarantee would support replacing generation from the planned retirement of coal-fired generation assets.
This financing opportunity supports APS’ publicly stated goals of delivering affordable 100% clean and carbon-free electricity by 2050. This commitment is supported by interim goals of achieving a resource mix that is 65% clean energy, with 45% of its generation portfolio coming from renewable energy by 2030, and a plan to exit from coal-fired generation in 2031.
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