TEP Receives Approval to Develop Two Innovative Energy Storage Facilities

TUCSON, Ariz.–(BUSINESS WIRE)–Tucson Electric Power (TEP) will enter into long-term agreements with
E.ON Climate & Renewables and NextEra Energy Resources for the
construction of two large, innovative energy storage systems.

The projects, approved today by the Arizona Corporation Commission
(ACC), will be used to improve service reliability and study how such
systems can support the expansion of solar power resources and other
renewable energy technologies.

“We hope that innovative systems like these will help us achieve our
long-term renewable energy goals without compromising the reliability or
affordability of our service,” said David G. Hutchens, TEP’s President
and Chief Executive Officer. TEP is working to deliver at least 30
percent of its power from renewable resources by 2030, doubling the
state’s 2025 goal.

In June 2015, TEP issued a request for proposals to lease a large, 10
megawatt (MW) energy storage system. With bids submitted by more than 20
qualified vendors, TEP was able to select two competitively-priced
proposals.

“Because our project partners were motivated to demonstrate the
capabilities of their respective technologies, they submitted favorable
bids that will allow us to build both projects for less than our
original estimated cost to build a single 10 MW system,” said Carmine
Tilghman, a TEP Senior Director who oversees the company’s renewable
energy programs. “These systems will help us build a more resilient grid
at a reduced cost to consumers.”

Both projects will be developed under 10-year contracts with performance
agreements to protect customers and the company from financial risks
associated with investing in new technologies.

The projects include:

  • A 10-MW lithium nickel-manganese-cobalt (NMC) facility at a TEP
    substation near Interstate 10 and West Grant Road. The system will be
    built by NextEra Energy Resources, based in Juno Beach, Fla., and is
    expected to be in operation late this year.
  • A 10-MW lithium titanate oxide (LTO) storage facility and accompanying
    2-MW solar array located at the University of Arizona Science and
    Technology Park southeast of Tucson. The facility will be built by
    Chicago-based E.ON Climate & Renewables and is expected to be
    completed in the first quarter of 2017.

The systems will be used primarily to help maintain the required balance
between energy demand and supply. Energy storage systems can boost power
output levels more quickly than conventional generating resources. If
the voltage frequency of the regional electric grid suddenly dropped,
power producers like TEP would be required to quickly ramp up output to
boost frequency and maintain reliability.

The systems also can help prevent power outages during periods of high
energy demand by supporting stable voltage on TEP’s energy delivery
system. In the event of an outage, the systems could provide about 5 MW
of power for up to an hour.

Use of these energy storage systems will help TEP avoid using more
expensive generating resources for system disturbances. They also will
allow the company to defer costly investments in other system
infrastructure.

In the future, energy storage systems could be used to help ensure the
quality and reliability of electric service during continued expansion
of renewable resources. TEP will continue investing in large solar
arrays and other community scale renewable resources that add
cost-effective capacity to its renewable energy portfolio. TEP
anticipates an additional 800 megawatts (MW) of new renewable capacity
by the end of 2030, boosting its total renewable energy portfolio to
approximately 1,200 MW.

TEP provides safe, reliable electric service to approximately 417,000
customers in Southern Arizona. For more information, visit tep.com.
TEP and its parent company, UNS Energy, are subsidiaries of Fortis Inc.,
which owns utilities that serve more than 3 million customers across
Canada and in the United States and the Caribbean. To learn more, visit fortisinc.com.

Contacts

Tucson Electric Power
Joseph Barrios, 520-884-3725
jbarrios@tep.com