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Posted Feb 16, 2014, 10:21 PM
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APS natural-gas plant in Tempe to be demolished
Quote:
The half-century-old natural-gas plant towering over Tempe east of Arizona State University will be demolished to make way for more powerful, compact and efficient generators, utility officials said.
Arizona Public Service Co. plans to spend $600 million to $700 million dismantling the two steam generators at its Ocotillo Power Plant and replacing them with five shorter generators that use less water and fuel to make electricity. The company hopes to complete the project in 2018.
The two steam-driven generators provided nearly one-third of the electricity for APS during hours of peak demand when they opened in 1960. They now provide a fraction of the company’s supply as the metro area has grown.
“We have sort of a love story with Ocotillo,” said Pat Dinkel, APS vice president of resource management. “They served Arizona through a phenomenal growth period. These units were built before we built coal and nuclear and other units. This was the cornerstone of building Arizona for the last 50 years.”
APS plans to begin seeking permits for the project next month, Dinkel said. In addition to OKs from the city and Maricopa County, the project will need approval from the Arizona Corporation Commission and Department of Environmental Quality.
The Ocotillo site, on the northwestern corner of University and McClintock drives, also houses a solar-power plant, switchyard and an area leased for solar testing, all of which will remain amid the upgrades.
The tall generators will be removed after the new ones come online in 2018. The old generators can burn oil or natural gas, although APS almost never uses oil anymore because of the emissions.
APS will maintain two smaller “simple-cycle” generators at Ocotillo that were built in the 1970s and add five larger ones. Simple-cycle gas plants burn natural gas and force hot air through a turbine to make electricity, somewhat akin to giant jet engines.
The new units use a fraction of the water required to make electricity with the steam generators, Dinkel said.
The new units not only will generate more electricity, which APS needs to replace expiring contracts to buy power from other utilities, but also will allow the company to respond faster to increases in power demand.
The two older units run about 10 percent of the year. They are troublesome because replacement parts are difficult to find, and the units take six hours or more to start up. That means APS must fire up the generators at 2 a.m. in the winter to meet peak electricity demand at 8 a.m. on cold mornings. They have to start before noon in the summer to meet peak demand at dusk.
The new units will be able start up in about 51/2 minutes and be at full power in 10 minutes.
That is important not only to respond when other power plants experience interruptions, but also to match the variable output of solar and other renewable-energy sources being placed on the grid.
APS officials said that they have examined other proposals to meet the company’s increasing power demands and that increasing the capacity at Ocotillo is the best option.
Salt River Project faced a similar situation in the early 2000s when it negotiated to expand the Santan Generating Station in Gilbert.
Nearby residents bitterly fought SRP’s $500 million plan to increase the capacity of the plant from 300 megawatts to more than 1,000. The Ocotillo expansion is smaller and, unlike Santan, will make the plant less visible once complete.
Both projects, however, involve weighing the benefits of building power plants near the people who use them or building them in rural areas with miles of transmission lines and substations to get the power to the city.
Building power plants in or near the metro area also avoids the electricity that is lost in long transmission lines.
Increasing power demand
APS generally relies on power plants outside metro Phoenix, but utility officials said the power grid is much more reliable with some generation inside the urban area that they own and can control without calling upon merchant power plants to purchase electricity when they need it most.
“We need some (generation) close to where people consume power,” Dinkel said. “Ocotillo is the only generation we have on the east side of the Valley. We’ve studied this with the SRP system. We are joined at the hip with them.”
APS is not seeing customer demand grow as fast as during the early 2000s, but it also must replace some contracts for power from other utilities that expire in coming years.
The Ocotillo addition will not be as visible as the current structure, but the newer generators won’t be much quieter than the existing facility, Dinkel said. People nearby may hear them less because they will be to the west of the property, farther from the property boundary than the current generators, he said.
APS officials said they have talked with ASU and city officials and soon will begin notifying the public about their plans.
“The city of Tempe is excited about this, as they should be, with the increased construction jobs there,” Dinkel said.
Tempe Councilman Kolby Granville, who was recently briefed on the project, said he will reserve final judgment on the new plant until he sees the completed plans. But he sees few drawbacks to the early proposal.
“My understanding is it’s more power with less pollution and smaller stacks that look less ugly. I really don’t see any downside,” he said.
Though Gilbert residents fought SRP’s Santan project, Granville believes the Tempe plant will be embraced because it is expected to be less of an eyesore.
“My hunch is this is going to go as smooth as these things can,” he said. “The thing that they’re removing looks like something out of a post-apocalyptic ‘Mad Max’ movie. And the thing that they are adding looks like a modern power plant.”
Granville does not believe APS will garner any city incentives for the project.
The completed plant is expected to generate increased property taxes for the city and state because of higher valuation.
The Ocotillo plant pays about $600,000 in property taxes annually, which will increase to $8 million after five years, raising revenue for the city and state, according to APS.
But Granville said revenue is not the only factor the council considers when deciding whether to support projects that will drastically change the face of the city.
“You weigh impact on the surrounding community,” he said. “You weigh impact to the city in the way of increased revenue and the quality of life. ... Those are all things that are not 12 months of construction jobs. Those are things that affect people for 30, 50 years into the future.”
Community outreach will be a critical component to gaining the public’s trust and support, he said.
Natural gas a key fuel
While APS is continuing to add solar power and other renewable energy to its supply, natural gas will remain an important power source, Dinkel said.
“We have a better balanced portfolio than most utilities with nuclear, gas, coal, renewables and energy efficiency,” Dinkel said. “Balance comes at a price. You are never optimal for one resource at a moment. You manage your risk over time.”
Tim James, a senior sustainability scientist at the ASU School of Sustainability and a professor at ASU’s W.P. Carey School of Business, said that APS, SRP and other utilities are turning to natural gas because it is safe.
“It’s just cheaper, basically,” he said. “There is not much regulatory risk with natural gas.”
The cost is important because any expense the utility experiences is passed on to customers through their electric bills.
James compared building gas plants to the controversy over the Navajo Generating Station, a coal-fired plant near Page, which is facing more than $1 billion in upgrades to comply with U.S. Environmental Protection Agency anti-pollution requirements. Natural-gas plants are nowhere near as risky, James said.
“It just makes the most sense,” he said.
Utilities can continue to add renewable power such as solar, but solar still has the major shortcoming of not being able to store electricity for use when the sun goes down, James said. Solar-thermal power plants such as the Solana Generating Station near Gila Bend, which produces power after dark by storing heat in molten salt, are too expensive to rely on for all of APS’ energy, he said.
“Solana is a clever facility but more expensive than traditional methods of generation would be,” he said.
He acknowledged that residents complained about the expansion of the Santan plant.
“But you don’t hear anything about it now, do you?” he said. “There are tons of (gas plants) all over the Valley.”
APS has another gas plant in the West Valley, and SRP has another in Tempe.
Dinkel said APS continues to monitor concerns over natural-gas production and the controversy over hydraulic fracturing, or fracking, the intentional breaking up of the rock around gas wells to produce more fuel.
“There is risk with every single technology,” Dinkel said. “There is no purely, totally safe technology. Clean-coal technologies are not ready. We don’t want to be building new coal. Nuclear is not ready. We are not ready to build new nuclear from a cost perspective and permitting. Solar is important to our portfolio but can’t do everything. Gas has to be the filler right now.”
Even if natural-gas prices have shown short-term volatility, projections are for the fuel to see stable prices in the long term, he said. APS also has a fuel-hedging program to limit the company’s exposure to price fluctuations.
“There is no economic way of working around gas anytime soon,” he said.
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