Navajo Generating Station (NGS), the coal-fired power plant that has supplied a significant amount of CAP’s energy for three decades, is scheduled to close at the end of 2019.
Once CAP learned of the owners’ intention to close the plant, the first question was – where will CAP get its power?
To that end, the CAWCD Board of Directors developed policies to determine how we might acquire post-NGS power resources. The cornerstone of those policies is to manage risk through diversification. CAP’s plan is that no more than 20% of our energy will come from any single source.
Buying the right power, at the right time
In order to buy the right power at the right time, CAP needs to look closely at its operational needs.
CAP takes delivery of Colorado River water at the Mark Wilmer Pumping Plant near Lake Havasu City. Because the water is immediately pumped more than 800 feet uphill, that one plant accounts for approximately 60% of CAP’s energy use.
“At Mark Wilmer we can schedule our power usage for certain hours,” says Brian Young, CAP’s power programs manager. “And so, at least in the current market, it’s more favorable to buy packages of energy – what we call firm energy products – in blocks for targeted hours.”
CAP’s other pumping plants operate using a more constant load throughout the day, referred to as the baseload. That baseload need can be met with long-term, around-the-clock resources, such as solar, hydro and natural gas generation.
Building a power portfolio
Early in 2018, CAP posted a request for proposals (RFP) focusing on long-term resources for its baseload power. Two awards were made. One is for a five-year Power Purchase Agreement (PPA) with Salt River Project for 35 megawatts of power that can come from any source and is not tied to a particular resource. The other is for a 30-megawatt agreement with a new solar facility that will be constructed by 2020 near Salome, Arizona.
“Solar is unfirmed power, which means that whatever it generates, you get,” Young explains.
CAP has one other existing power resource, its contract for Hoover Dam hydropower, which can be used during the hours CAP is not getting the full output from the solar plant.
For the rest of its power needs, CAP will go to the open market to buy blocks of energy from the lowest bidder.
Operations continue per usual
Once NGS goes offline, CAP will continue to operate very much as it does today – filling Lake Pleasant in winter and spring months and releasing from Waddell Pump/Generating Plant in the summer months without taking much off the Colorado River. In the fall months, CAP will resume pumping off the river to ensure we take advantage of Arizona’s full allotment.
CAP develops its water rates based on cost of operation, with pumping energy as a large rate component. Moving forward, market energy prices are projected to be lower than NGS. Thus, based on the current market, CAP is forecasting that customers are likely to see a savings.
NGS will stop accepting coal deliveries in August, and they estimate they will be out of coal in October. Barring unforeseen circumstances, they will end operation toward the end of 2019.