Local energy demand is expected to increase significantly over the next decade, compelling Tucson Electric Power to develop additional resources to keep energy reliable and affordable.

This revised outlook reflects increasing interest from data center developers and others proposing projects with significant energy needs. Although TEP’s most recent Integrated Resource Plan (IRP) anticipated annual growth of about 1%, we’ve since engaged in preliminary discussions of potential projects that could boost local energy demand by more than 50 percent over the next decade.

Utilities nationwide are making similar adjustments to accommodate the impacts of maturing artificial intelligence, expanded domestic manufacturing, accelerating electrification and other investments backed by unprecedented federal incentives. After a decade of annual 0.5% demand growth, grid planners across the United States are suddenly anticipating 5-6% annual demand growth from 2025 through 2030, according to a message delivered to an industry conference in April by David Crane, Undersecretary for Infrastructure at the U.S. Department of Energy.

TEP is collaborating with public sector partners to respond to proposals from data service providers and other prospective businesses that could create significant new energy needs.

“Meeting these unprecedented needs will require accelerating the buildout anticipated by our last IRP in order to maintain a safe, reliable and resilient grid,” said Michael Sheehan, Vice President of Fuels, Resource Planning and Wholesale Marketing.

That plan called for 2,600 megawatts (MW) of new generation and 1,300 MW of new energy storage by 2032, partly to help us offset the retirement of our remaining 892 MW of coal-fired resources by that year. Based on what we’ve learned since then, Sheehan explained, we’ve started working to make more energy available sooner, a task made more challenging by competition for limited resources among many utilities pursuing the same objective.

TEP anticipates building a combination of resources that could include hydrogen-ready natural gas-fired generators, solar arrays, wind farms, and energy storage. Our goal is to provide the most cost-effective, reliable and environmentally responsible mix of energy resources possible through an all-of-the-above approach that will be critical to serving emerging energy needs.

TEP will seek to mitigate any impact on customers by developing the most cost-effective mix of energy resources, with a focus on reliability, up-front expense, and ongoing costs like fuel, maintenance and emission controls. Large power users often have a beneficial long-term impact on electric rates because their efficient use of generating resources subsidizes service for other customers.

TEP’s rates have increased at less than the rate of inflation over the past 25 years, and we plan to extend that remarkable record of affordability going forward.  One of the ways we do that is by selecting projects through an all-source request for proposals (ASRFP) process. This process identifies the most cost-effective projects among competing, technology-agnostic proposals that satisfy specific energy requirements.

Prioritization is also important as we work with local leaders in responding to proposals that support their economic development objectives. While we’re committed to serving any customer in our service area, our resource development plans are focused on supporting our existing customers while capitalizing on growth opportunities that create broad positive impacts for our community.

TEP isn’t alone in fielding new requests for long-term energy resources. Other utilities also have announced updates to their recent load forecasts:

• Earlier this year, Georgia Power boosted its projected load growth over the next seven years from 400 MW to 6,600 MW – a 16-fold increase from the forecast in its 2023 IRP.
• In July, Southern California Edison’s parent company told analysts the utility now expects to add 5,600 MW over the next decade, up from the 4,200 MW forecast issued two years earlier.
• The Electric Reliability Council of Texas, which operates that state’s electric grid, announced in April that its 2030 load forecast had increased by 40,000 MW since just last year.

TEP is uniquely capable of satisfying our community’s increasing energy needs through cost-effective investments in new, cleaner resources that will power the growth of our local economy. It’s all part of our plan to reliably and affordably achieve net zero carbon emissions by 2050.