Arizona Coal Plant Valuation Study

The Arizona Coal Plant Valuation Study provides new information on Arizona’s coal-fired power plants. The Strategen study finds that Arizona’s electric utilities can save more than $3 billion by replacing all remaining coal-burning power plants with new renewable energy resources. Strategen analyzed the cost of replacing 11 existing coal units that provide power to Arizona customers with renewable energy, like solar and wind, as well as market purchases. These savings exceed $10 billion when also accounting for the societal costs of greenhouse gas emissions and the financial tools available to help transition away from coal. All units evaluated are slated for retirement after 2035, with the analysis assuming an earlier retirement of 2023.

Using publicly available data and applying conservative assumptions, Strategen found the following:

• Solar resources are cheaper than coal power from all 11 coal units owned by Arizona utilities.

• $3.5 billion: the potential savings if all 11 coal units are replaced with solar plus battery storage.

• $2.8 billion: the potential savings if all 11 coal units are replaced with market purchases.

• Wind resources are lower cost than the coal power at six of the 11 units, with $263 million in potential savings if those six coal units are replaced with wind. 

Strategen calculated the social cost of carbon (SCC) of the 11 units, applying a value of $15.99 per short ton of coal in 2025, which is the price specified in the Arizona Public Service (APS) 2017 Integrated Resource Plan, and found significant savings when switching to renewable sources: 

• $10.2 billion: the potential savings when accounting for SCC if all 11 coal units are replaced with solar plus battery storage. 

• $7.3 billion: the potential savings when accounting for SCC if all 11 coal units are replaced with wind.