APS files update with Arizona commission on new demand-side energy program

Arizona’s largest investor-owned electric company, Arizona Public Service Co. (APS), filed an update with the Arizona Corporation Commission on the preliminary results of a request for proposals (RFP) the company issued to develop an innovative clean energy program.

In December 2020, the Commission adopted a proposal directing APS to develop a distributed demand-side resources (DDSR) Aggregation Tariff. The tariff would compensate aggregators of DDSRs – which include smart thermostats, connected hot water heaters, smart pool pumps, batteries, and bundled energy efficiency – for the value that each resource provides the grid. It would also save commercial and residential customers of APS money through the synchronization of potentially millions of DDSRs on the grid.

APS officials said the DDSR Aggregation Tariff has not been established anywhere else in the United States. “This tariff will make the state of Arizona the leader in aggregating these new and evolving demand-side technologies,” APS officials said.

APS issued an RFP on June 30 to help inform the tariff valuation analysis and design framework and allow aggregators of DDSRs to bid directly to APS. The RFP brought in bids for three distinct use cases for DDSRs: systemwide peak capacity during summer months; locational peak capacity during summer months and load shifting during non-summer months on specific distribution feeders; and ancillary services such as voltage and frequency support. The deadline for submission was Sept. 7.

On Oct. 15, APS filed a progress report with preliminary results of the RFP, including the number of bidders, the number of bids, the types of DDSRs, and the capacity amounts, among other information. Overall, APS received responses from six respondents, who submitted a total of 12 bids across the three use cases. Bids ranged in capacity from 1 megawatt (MW) to 40 MW. They encompassed a wide range of DDSR technologies, including residential and commercial energy storage, residential thermostats, managed electric vehicle charging, and commercial demand response. There was also a range of proposals for when it could be brought online, with some saying they could do it as soon as June 1, 2022.

“The RFP marks a positive step in the development of Arizona’s innovative DDSR Aggregation Tariff concept,” Márquez Peterson, chairwoman of the Commission, said. “Our smart infrastructure, combined with Arizona’s digital connectivity and demand curve, which is unique to the Western United States, make the Desert Southwest, and Arizona specifically, the perfect place to study demand-side optimization and lead on cutting-edge energy innovations and regulatory policies.”

APS is currently evaluating the bids and plans to pick a short list of finalists by Oct. 26. The company intends to make awards by Nov. 30 and finalize the contracts by March 1, 2022.

“I’m happy to see the level of interest and participation among the respondents,” Peterson said. “Their responses play a vital role in helping us learn more about these emerging technologies and whether they can help customers save. I look forward to seeing the cost estimates when APS files its future progress reports. The information should give us a more accurate picture of the real value of these resources for the grid.”