Solar Energy Seminar Tucson Electric Power Company

Carmine Tilghman Director – Renewable Resources

Sept 18, 2012

Customer Survey - UA Eller MBA

Key Responses:

• Seventy-three percent (73%) of respondents would pay no more than $5.00 per month for the REST surcharge.

• Respondents were generally unfamiliar with both the Renewable Energy Standard (RES) and the RES Implementation Plan process.

• Approximately half (47%) of the respondents were unaware

of the REST surcharge on their bill.

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Customer Survey - UA Eller MBA

Key Responses: • Respondents supported a mix of renewable resources with

solar energy as the primary resource.

• Respondents preferred their renewable energy to be inexpensive and sourced within Arizona.

• Respondents considered addressing carbon emissions a

much lower priority for TEP than providing reliable service and keeping rates low.

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Who’s Involved?

• Arizona Corporation Commission – Governing body that regulates electric service providers

• Electric Utilities – All public service corporations serving retail electric load; such

as TEP, APS, UNS Electric, and Cooperatives (Trico, etc.) • Renewable Energy (RE) Industry Stakeholders

– RE providers, advocacy groups, etc. • Customer/ratepayer advocacy groups

– RUCO, SWEEP, large industrials, Tribes, Chambers, Cities, etc • Ratepayer

– Interested individuals

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History

• April 1999 - ACC holds first discussions regarding a Renewable Portfolio Standard (RPS) as part of electric competition rules.

• 2000-2001 - TEP becomes one of the first utilities in the nation to develop large scale solar facility in Springerville.

• Feb 2001 - Arizona Corporation Commission (ACC) approves “Environmental Portfolio Standard” – known as the EPS

– 0.8% by 2004, up to 1.1% by 2012, small surcharge

• Jan 2004 – ACC begins discussion to modify EPS

• Nov 2006 – ACC approves Renewable Energy Standards & Tariff (REST) rules. Decision Order No. 69127 (Nov 14, 2006).

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Renewable Energy Standards & Tariff

Q. What is the REST? A. The Renewable Energy Standards &

Tariff (REST) is a requirement to serve a portion of an affected utility’s annual retail electricity sales from eligible renewable energy resources.

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Renewable Energy Standards & Tariff

Q. What is an “Eligible Renewable Energy Resources”? A. An Eligible Renewable Energy Resource is an energy

resource that is replaced rapidly by a natural, ongoing process and that is not nuclear or fossil fuel.

Eligible renewable energy resources are applications of the defined technologies that displace conventional energy resources that would otherwise be used to provide electricity to an Affected Utility’s Arizona customers.

Technologies include: solar, wind, biogas, biomass, eligible hydropower, fuel cells, geothermal, landfill gas, and distributed resources, etc.

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Renewable Energy Standards & Tariff

Q. So how much renewable energy does TEP need? A. The REST requirement is a percentage of our retail load. It

increases 0.5% annually until 2015, then increase 1.0% annually until we hit 15%.

30% of each year’s number must be from customer-sited

distributed resources, split equally between residential & non-residential.

For 2012, the requirement is 3.5%, which is approximately

325,000,000 kWh or the equivalent annual consumption of almost 30,000 homes.

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Renewable Energy Standards & Tariff

Q. How does TEP get the renewable energy it needs?

A. Currently, the 30% required to from

customer-sited DG (such as residential solar system) is procured through incentive programs where the company provides monetary incentives in exchange for the REC’S. The remaining amount comes from larger utility-scale projects, which are connected directly to the grid like other power plants.

TEP measures the production of all renewable

systems to show the ACC we have met the requirement.

1 kWh of energy = 1 Renewable Energy Credit

(REC) 8

Renewable Energy Standards & Tariff

Q. How does all of this get paid for?

A. Each year, the TEP is required to file an Implementation Plan, outlining programs and budgets to meet the ACC requirements under the REST. Once the plan and budget has been approved, an associated surcharge for each customer class is also approved. The surcharge has traditionally been based on a consumption basis (per kWh) with a maximum monthly amount.

Currently, the average residential pays about $3 per month.

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Current Incentive Programs

Q. What programs does TEP currently have available?

A. TEP currently has two types of incentive programs: Up-front Incentive (UFI) and Performance Based Incentive (PBI).

A UFI of $0.20 per watt is available for residential and small

commercial solar PV systems. A UFI of $0.50 per watt (equivalent) is available for residential

and small commercial solar hot water systems. PBI’s for larger systems are competitively bid. **To date, 92% of residential budget has been reserved.

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Community Solar Program

TEP’s Bright Tucson Community Solar Program was nationally recognized by Solar Electric Power Association (SEPA) as an innovative, first-in-nation community solar program.

For a $0.02 per kWh premium, customers

can purchase “solar blocks” of energy from a local solar facility.

Each solar block of 150 kWh is exempt from

conventional fuel charges and REST surcharges, while fixing the base fuel rate at today’s rate for up to 20 years.

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Utility Scale Solar Projects

TEP currently has 6 utility solar projects in operation totaling 22 MW, with 5 projects under construction totaling an additional 73 MW, and another 64 MW scheduled to built by the end of 2013.

Combined with other renewable resources and

customer-sited solar facilities, TEP will have more than 250 MW of renewable energy resources by then end of 2013, producing enough energy to power the equivalent of 50,000 homes!

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NRG Solar - Marana

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Size: 34 MW Approx 300 acres On-line: Oct 2012

Solar Zone at the UASTP

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• Total of 7 utility scale solar facilities • Partnership with the University of Arizona to develop Solar Zone • Approximately 170 acres • Largest utility-scale, multi-technology in nation • Partner with AzRISE and others to develop energy storage facility • Will include 4 acre test facility for emerging technologies

Research and Development

• Solar Zone at the UASTP – Nation’s largest multi-technology utility scale development project.

• University Research – AzRISE – Energy storage projects incl. battery and CAES – Advanced fixed, ground mount, & tracking systems – BIPV testing

• Intermittency modeling/studies through EPRI & NREL • Collaborative efforts from private and public institutions

around the Nation, incl. other Universities and private entities such as IBM

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What else is TEP doing?

Schools Program: Designed to provide small solar systems to local high schools

at no cost to the school, and includes educational materials and exercises for elementary through junior college.

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Sabino High School AZ School for the Deaf & Blind

What else is TEP doing?

TEP is committed to the advancement of solar energy, and making Southern Arizona a national and global leader in solar energy development, testing, and integration.

The solar facilities expected to be on-line by 2013 represent

close to half a billion dollars of investment in southern Arizona, resulting in tens of millions of dollars into our economy.

TEP is spending almost $30 million each year to build and

own it’s own solar resources.

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TEP’s Most Recent Accomplishments

• 2012 SEPA Solar Utility of the Year

• TEP Ranked #6 in 2010 in solar installations (kWh per customer)

• TEP & UNSE ranked in Top 20 in 2011 in

solar installations (kWh per customer)

• First in Nation Community Solar Program, recognized by SEPA

• Redefined utility procurement process

• Developing “First in Nation” mine tailing project

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Additional Information

For additional information on TEP’s Renewable Programs: www.tep.com/renewable

Southern Arizona Solar Standards Board: www.sassb.org Arizona Research Institute for Solar Energy (AzRISE): www.azrise.org Arizona Corporation Commission (Electric Utilities Division): http://www.azcc.gov/divisions/utilities/electric.asp

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Questions?

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Single Axis Tracking Systems 79 MW

• SunEdison •NRG Solar

• U of A Science & Tech Park

Concentrated PV 15 MW U of A Science & Tech Park

Flat Panel PV 11 MW • Springerville

•U of A Science & Tech Park

Solar CSP 5 MW • Areva Project