Four years ago, the biggest electric company in Arizona declared that solar energy plants paired with batteries were the cheapest way to power the state, marking a major departure from fossil fuels.Months later, the largest coal-fired power plant in the West, the Navajo Generating Station, shut down outside of Page, ending a 45-year run.
Arizona Public Service Co. and Salt River Project appeared to dive headfirst into renewables at the expense of coal.
Yet today, four coal plants in rural Arizona, as well as some in neighboring states, continue to power Arizona despite declarations that renewables are the cheapest option.
Renewables generate power without producing haze or mercury pollution — and without carbon emissions that contribute to climate change — prompting environmental advocates and consumers to ask why utilities still use coal at all. Arizona utilities say it’s not so simple, and that they have good reason to burn coal, at least for a while longer.
“Coal is a resource that is very reliable,” said Justin Joiner, APS resource management vice president. “It is diverse from natural gas and other resources and has its benefits. It’s a baseload resource. It operates at a constant output. And helps with our evening quite a bit.”
When SRP customers turn on a light, about one-fourth of the electrons are coming from coal plants, while APS customers are using a bit more than 20% coal power.
Utility officials like to use the term “glide path” to describe how they plan to phase out coal over the next decade or so. Both Joiner and an SRP representative used the phrase in separate interviews.
APS plans to go coal-free by 2031, and Tucson Electric Power will do the same by 2032. But SRP and rural electric cooperatives serving the state have not set timelines for retiring their last plants.
These are the coal plants that continue to power Arizona and their projected closure dates, if they’re determined.
Cholla Power Plant: This Joseph City plant, west of Holbrook, is partially shut down, with APS planning to close the remainder in 2025.
Coronado Generating Station: SRP is helping the town of St. John’s identify other potential uses for this plant, which the utility has decided will not run past 2032.
Springerville Generating Station: This plant has four units. Tucson Electric Power plans to start cycling one of its units offline during cool months this year, and shut it down in 2027. It will run its second unit there no later than 2032. Out-of-state utility Tri-State Generation and Transmission has not announced a closure date for the third unit, and SRP has not announced a closure date for the fourth, the last coal generator built in Arizona.
Apache Generating Station: This combination coal and gas plant near Cochise, east of Benson, is run by Arizona G&T Cooperatives, which provides power to rural utility cooperatives in the state and has no plans to close it.
Four Corners Power Plant: APS runs the facility outside Farmington, New Mexico, for co-owners, including PNM Resources Inc. of New Mexico, Tucson Electric Power Co., SRP, and the Navajo Transitional Energy Co. The plant and mine are on Navajo land. APS announced the plant would run part-time starting this year and close by 2032.
Craig Station: This Colorado plant is partly owned by SRP and other utilities. The SRP-shared units will close in 2025 and 2028, while the last unit is expected to close in 2030.
Hayden Generating Station: Like Craig Station, SRP is a co-owner of this Colorado plant, which is slated to close its two units in 2027 and 2028.
Report: Coal costs more than renewables nearly everywhere
A recent report from Energy Innovations, a clean-energy advocacy organization based in San Francisco, outlines pressures on coal plants that have forced nearly half the nation’s coal generation to shut down in recent years.
The report suggests that, thanks to rapid decreases in the cost of solar and wind, perhaps just one coal plant in the entire country has strong enough economics to justify staying open on a cost basis. That analysis even ignores environmental concerns that favor renewables. The plant is Dry Forks Station in Wyoming, according to the analysis.
The report concludes that it would be cheaper to replace every other coal plant in the nation with solar and wind, including those serving Arizona.
“Now, new federal tax credits in the IRA make the economic case for replacing coal with clean energy unequivocal,” the report said.
The report isn’t meant to argue all coal plants except Dry Forks Station should shut down today, but to start a conversation about their eventual replacement, which is inevitable, said co-author Mike O’Boyle.
“The big takeaway I’m hoping people take from this report is that coal plants have been, over the last four to five years, getting more expensive to operate, while renewables have been getting cheaper,” said O’Boyle, who works for Energy Innovations and earned his law degree from Arizona State University.
Each coal plant is different, he said.
“Every coal plant has its own unique story,” he said. “And every utility has their own case for why they are continuing to operate coal.”
Utilities continue to cite price, reliability
Arizona’s biggest coal-burning utilities said they agree with the overall premise of the Energy Innovation report, that renewables are often the lowest-price option for new power plants.
But they contend they must stick to their “glide path” to retire coal plants because, at least today, the remaining coal plants are cheaper to operate than Energy Innovations estimated. They also are more reliable and the utilities have committed to the nearby communities that they will help them transition their economies away from coal.
“We are signing (renewables) as fast as we can,” said Joiner, from APS. “As we do that we are making sure we are keeping the lights on, that we have reliability. We know how vital it is to keep the lights on to keep the air conditioning on here in the summer. It is life and death here. We cannot get it wrong. We cannot make a mistake.”
He said the utility looks for opportunities to retire plants if it makes financial sense, and has recalculated the costs following the Inflation Reduction Act to take the solar and wind tax credits and other benefits into consideration.
“We are always watching the markets,” he said.
Bobby Olsen, SRP’s senior director of corporate planning, said the public utility will benefit from the Inflation Reduction Act, and that the utility also has recalculated the costs of solar and wind since it passed.
“SRP agrees solar can produce energy at a relatively low cost, but it does not cost effectively replace coal while also providing the same reliability benefits,” Olsen said. “As the (Energy Innovation) report acknowledges, the value of a power generation resource depends on much more than the cost of energy on a dollar-per-megawatt-hour basis.”
Both APS and SRP officials said the cost of power from their existing coal plants, with the exception of the soon-to-close Cholla plant, are lower than what Energy Innovation estimated, though they declined to share the exact prices.
“Even if the solar is paired with significant amounts of four-hour battery storage, as the report suggests, that would substantially increase cost and would not provide the equivalent reliability benefit to SRP’s power system as a coal resource,” Olsen said.
Arizona’s electric cooperatives, which have long stood by their coal plant, are now branching into solar and batteries. But they are not yet ready to give up coal.
“It’s a very complex formulation that’s difficult to distill down to a simple coal-versus-solar premise,” said Patrick Ledger, executive vice president and CEO of Arizona G&T Cooperatives, which provides power to rural utility cooperatives in the state.
He said the benefits of the Inflation Reduction Act are still unclear for nonprofits such as his, and supply-chain issues are creating backlogs for solar and battery projects.
“That being said, we are actively modernizing our generating fleet despite these challenges,” he said, citing three stand-alone battery projects to be built this year and a solar and battery project in the works.
“We do intend to maintain our one remaining coal unit as long as it makes sense for reliability and fiscal responsibility,” Ledger said.
Coal closures affect local communities
The rapid closure of coal plants across the country has caused considerable strife in communities around them and the mines that supply them. Arizona utility officials said they want to continue to work with communities near the remaining plants to ensure they are not left with giant holes in their economies.
“As the report acknowledges, many communities depend on coal plants for jobs and tax revenues. For this reason, even if alternative resources were more cost-effective on a faster timeline, the transition from coal must still happen on a glide path,” Olsen said.
One takeaway of the report is that not only can solar and wind compete on price with coal, but oftentimes utilities could build those renewables cheaply near a retiring coal plant and take advantage of the existing high-voltage transmission lines.
“If you can locate a lot of these projects near existing or old coal plants, you can see how you can start to reinvest and create new economic opportunities for those communities,” O’Boyle said.
The phrase utility industry people use to describe the shift from coal is “just transition,” which is shorthand for a fair way to remove coal as the backbone of an economy and help the communities replace it with something more sustainable.
“A just transition is top of mind for APS for our employees and the communities in which these facilities are located,” Joiner said. “We are not just hitting the eject button out of these communities that have reliably served our needs for decades.”