ENERGY & SUSTAINABILITY COMMITTEE SPOTLIGHT A Trip to Palo Verde on Voting Day – Water and Energ

On November 6th, 2018, as many citizens were exercising their unalienable right to vote here in Arizona, ten members of the AZ Water community convened at the Palo Verde Generating station to get a glimpse of the largest nuclear generating station in the country which recently was the focus of the contentious renewable energy mandate proposed by Prop 127. Opponents of 127, with local utility Arizona Public Service serving as the focal point in the public eye, argued that a mandate such as this would doom Palo Verde to closure and Arizona would incur a massive economic loss in both jobs, GDP and clean energy. Big thanks to the APS for hosting and providing lunch especially Mr. Rick Lange for the hospitality and information along with the Platinum Sponsors of the event, CPM and Nexus Integrated Solutions, for helping to make this exciting tour a reality!

Palo Verde is the largest nuclear power facility in the United States (9th in the world) and the only nuclear power plant in the world that uses reclaimed water for its cooling. Arizona Public Service Company (APS) operates and owns 29.1% of the plant. Its other major owners include the Salt River Project (17.5%), the El Paso Electric Company (15.8%), Southern California Edison (15.8%), PNM Resources (10.2%), the Southern California Public Power Authority (5.9%), and the Los Angeles Department of Water and Power (5.7%). Palo Verde was originally permitted in 1985 and a permit extension was granted in 2011 which will run through 2045 (resembling the timeline granted for a standard Arizona driver’s license). The reuse water is supplied by the 91st Ave WWTP owned by the Sub-regional Operating Group (SROG) whose members include the cities of Phoenix, Scottsdale, Glendale, Mesa, and Tempe. As one of the only nuclear plants not constructed on a large body of water, reclaimed water is pumped 36 miles through pipes from the 91st Ave WWTP to the Palo Verde Generating Station. Likely the efficiency of recirculation at Palo Verde, one of the most water efficient nuclear plants in the world utilizing recirculation of water over 20 times through a state-of-the-art treatment plant on site, could serve to keep the plant flourishing as the energy mix continues the shift to a more renewable driven portfolio. Given the vast number of interested parties within the framework of running this nuclear generating asset shutting it down would be a very highly complex endeavor. Does the perceived dichotomy of the solar vs. nuclear paradigm represent an accurate illustration of the water/energy landscape in Arizona?

Those advocating for 127 sought to promote solar energy as a cheaper alternative and the proposition relegated both nuclear and biomass to non-renewable energy sources seeking to maximize the energy capture throughout the year in the sunniest state in the country primarily through solar panels. Projections contained in studies offered by both sides of the argument offered differing costs, levying what appears to be subjective favorability to admonish the oppositional data. But where does water fit into these antithetical paragons? Does the use of water for cooling towers provide any clarity in navigating the nuanced battle over energy resource allocation and should water resource availability be more central in the discussion?

Palo Verde is the only nuclear power plant in the world that operates with a zero-liquid discharge, which ensures no waste water is discharged to the environment. Water use by energy generation technology shows that nuclear, especially those like Palo Verde which utilize recirculation, are within the national benchmark shown with an annual usage of 23 billion gallons per year. Initially this water usage seems enormous. Is the plant already destined for closure due to the current economics with an overabundance in current supply of natural gas driving commodity prices to historical lows over that past decade? Technological advances in the solar and storage industry in the next decade will further drive the economics of adaptation to renewable sources with battery storage bolstering the resiliency of the grid in the age of electrification and many other nuclear plants are projected to be retired based the projections by the EIA shown here. But this also may be due more to an irrational perceived risk of nuclear following natural disaster driven events, like the one recently in Fukushima, than the actual inherent risks presented which when looked at within the framework of the carbon economy and mortality rates related to energy source. Incorporating the current over generation of solar being sent to Arizona from California due to their grid being unable to handle the additional loads at certain times and the fact that CA actually PAYS AZ to take this energy proves that solar generation is very viable but a grid that can handle the peaks and valleys associated with the ‘duck curve’ is critical. Clearly the answers are not as unequivocally clear as the lampoonery of political ads would lead you to believe.

The total water consumed in Arizona is around 2.5 trillion gallons per year with the agricultural sector accounting for about 70% and energy generation using a paltry 3%, about half of the 6% used in industrial purposes. For a water focused evaluation of conservation of water resources, the data lends to a greater focus on agricultural efficiencies and not merely the evapotranspiration rate improvements through innovative irrigation techniques but moreover the possible means of cultivation being explored and assessing the viability for new methods such as hydroponic applications. Hydroponics would use significantly less water but have a larger energy use than conventional agricultural methods and has been shown to work very well for certain crops. Notably lettuce is one of the leading candidates because it provides 10x yields per square meter of land allocated using 13x less water but at a steep price. The energy needed for lighting, recirculating pumps and other apparatus is a staggering 80x more in hydroponics than conventional methods. Is there a place for this type of technology in Arizona? The answer is not clear and the cost in energy currently seems insurmountable, but that could change under continued drought conditions and the increased energy could be gathered through renewable sources.

Given that in 2017 lettuce accounted for approximately $1.3 Billion in Arizona (approximately 50%) and we are bombarded by recall notifications for pathogen exposures related to consumption of lettuce the time may come when consumers demand greater control over the supply chain health and safety conditions, which coupled with ongoing increases in efficiencies for hydroponic technologies, decreasing prices for solar and storage, aging electric transmission and distribution infrastructure, and water scarcity could cause a tipping point in the near future. factors continue to decrease. This is just one example which by no means is perfectly adaptable to the Arizona economy, but the overarching theme is that energy and water are interlaced into the fabric of most all decisions Arizonans must make and these decisions are not mutually exclusive or binary, there will always be tradeoffs. There are already examples of utility infrastructure costs in transmission and distribution being large enough to compensate for energy storage costing factor such as in Punkin Center, AZ where APS recently installed 8 MWh of battery storage. Fundamentally these types of rural applications of end line customers with failing electric infrastructure shall be great candidates for renewables with storage now and this pool of eligible candidates will continue to grow as more equipment needs repair and solar and storage costs continue to march downward.

As members of the water focused community here in Arizona the current drought implications are well known. The regional energy connectivity coupled with the water resources paradigm marries a number of state, local and national debates currently being waged wherein Arizona plays a central role as the state from whom the largest water cuts will be assessed if Lake Mead enters drought levels. As AZDWR and CAP embark on a historic renegotiation of water rights storage and attempt to avert an ostensibly unavoidable federal curtailment as levels of lake mead continue their perilous decent to drought levels, the implications of how water is utilized in energy generation could eventually play a role in Arizona’s future economic development opportunities, but agriculture seems to be a far greater avenue to drive efficiency gains.

The Drought Contingency Plan illustrates the unambiguous reason Arizona should be very focused on this issue as the clear leader in cuts associated with Lake Mead elevation drops. With this water resource debate, clearly the price of water will be affected. The cost of the water allocations to Palo Verde have increased substantially since the renegotiation with SROG in 2010 where the cost per acre-foot of water was $53 and with the escalators from that agreement the cost will soar to over $300 per acre-foot in 2025. This rate increase was renegotiated over 18 months to account for the increased interest in treated wastewater rights seen in the marketplace and required approval from all city councils within the SROG. Time will tell whether the market rates for water dictate this price to be a good value in 2025 as the increasing sensitivity to drought could make this accelerated pricing model quite cost effective. Increases in the price of water are eventually going to come to Arizonans if we want to maintain the quality of life under the expanding population base, but is that really such a bad thing?

Currently Phoenix is near the lowest cost among all major cities in the country in respect to water/sewer/stormwater rates which seems rather counterintuitive given the current state of water resource availability and the debates raging over water rights.

Several years ago, the Arizona Department of Environmental Quality revised the 2001 standards on direct potable reuse standards which took effect January 2018. This ultimately opens the door for utilization of highly treated effluent from wastewater treatment plants to be sent directly to the potable water system. The ability to utilize wastewater effluent directly into potable water may not have a massive effect directly on the water supply with municipal water use accounting for about a third of what agriculture consumes currently, although there will be a net increase. But the savings on energy costs for pumping will be greatly reduced by utilizing water from the plant and not pumped from the aquifer which could have well heads much deeper and farther from the water treatment and distribution systems.

Combined with the contentious political atmosphere and unabated political spending where we as a nation poured over $5.2 Billion into the 2018 midterms, Arizona saw record breaking spending levels on both sides of Prop 127 spending, a cost even greater than the aggregate spending in pursuit of tribal gaming rights in 2002. Gaming revenues in 2016 in Arizona were $1.902 Billion so clearly this energy debate is a huge deal! One cannot help but question their own ability to decipher the best path forward in the digital age as political polarization shepherds in feelings of perpetual inherent ignominious defeat and in almost all cases the most money wins. Invariably water and energy are acutely correlated to economic development which will lead to many future debates over the fundamental basis for which the voting public shall dictate the direction of our future utilization of both.

As it stands, Prop 127 was handily defeated lending to the interpretation that Arizona is not ready to have rigid mandates set on how energy is generated and thus leaves that to the Arizona Corporation Commission where Commissioner Tobin currently has set forth a renewable centric Arizona’s Energy Modernization Plan (ACC) which would lead to 80% renewables by 2050. As it stands this plan is clearly utilizing a longer horizon for implementation, but it could be inferred that simply by having the proposition 127 vote may have already helped to shape the future of AZ energy resources being driven towards a more renewable mix even in defeat. The ability to provide clean and constant water and power to Arizona will continue to be at the forefront of these forms of debate for the foreseeable future and we as members of AZ Water and advocates for water knowledge within the state should continue our charge of promoting intelligent decision making as it relates to water.