Tracking our 2030 target. During 2022, the share of APS’s energy supply from clean resources was 51%, which includes energy from nuclear, renewables and demand side management (DSM). We are on track to reach our goal of 65% clean resource mix by 2030. In addition, by 2030, we aim for 45% of our generation portfolio to be from renewable energy. Renewable energy is measured in accordance with the Arizona Corporation Commission’s Renewable Energy Standard as a percentage of retail sales. In 2022, 12% of sales were from renewable energy.

Learn more about our plans in our Integrated Resource Plan and an article that explains the  meaning of carbon-free energy.

Opportunities for coal reduction. In June 2021, APS and the owners of Four Corners entered into an agreement that would allow Four Corners to operate seasonally at the election of the owners beginning in fall 2023, subject to the necessary governmental approvals and conditions associated with changes in plant ownership. Under seasonal operation, one generating unit would be shut down during seasons where electricity demand is reduced, such as the winter and spring. The other unit would remain online year-round, subject to market conditions as well as planned maintenance outages and unplanned outages.

Planning a responsible transition from coal. The transition away from coal-fired power plants and toward a clean energy future will pose unique economic challenges for the communities around these plants. APS worked with stakeholders and leaders of the Navajo Nation to consider the impacts of ceasing operation of APS coal-fired power plants on the communities surrounding those facilities to propose a comprehensive coal communities transition plan. The proposed framework provided for substantial financial and economic development support to build economic opportunities and addresses a transition strategy for plant employees. We are committed to continuing our established partnership with the Navajo Nation by addressing other areas as well, including expanding electrification and developing tribal renewable projects. Our proposed plan supports the Navajo Nation, where the Four Corners Power Plant is located, and the communities surrounding the Cholla Power Plant and the Hopi Tribe, which is impacted by closure of the Navajo Generating Station. On November 2, 2021, the Arizona Corporation Commission (ACC) approved a modified plan that will provide:

• Navajo Nation - $10 million and up to $1.25 million for the electrification of homes and businesses
• Navajo County Communities - $500,000
• Hopi Tribe - $1 million and up to$1.25 million for electrification of homes and businesses

Adding clean resources to meet customers’ growing energy needs. Since our initial announcement in 2020, we’ve procured over 2,509 megawatts (MW) of clean energy and storage – all of which are expected to be in service for APS customers no later than 2025. All 2,509 MW were procured through competitive solicitations or as a Qualifying Facilities through Public Utilitie Regulatory Policies Act of 1978, ensuring competitive pricing for new resources as we plan to serve our growing economy.

Linking our commitment to executive compensation. In February of 2022, the Human Resources Committee revised the metrics for our performance share grants and added a clean megawatt installed metric to reflect our commitment to our clean energy commitment.

For additional information, please see our Proxy Statement.

Steady production of carbon-free nuclear power from Palo Verde Generating Station. The station continued to do its part, producing clean nuclear power with a 92.59% capacity factor (an important measure of efficiency) for 2022.

Providing tools and programs to empower customers. APS’s demand-response programs use a virtual network of smart home products, like thermostats, water heaters, and energy storage to reduce energy use on Arizona’s hottest summer days and shift energy demand to when more solar power is available. This shift is just one of the strategies and innovative solutions for our customers to use to help us reduce carbon emissions to meet our clean energy goals.

Going beyond the generation mix to help reduce emissions in other sectors. To help achieve a cleaner environment and enable more drivers to adopt electric vehicles (EVs), APS is providing business customers with free EV-charging equipment, installation and maintenance through the Take Charge AZ program. As of year-end 2022, we have installed 668 Level 2 (L2) charging ports at businesses, schools and government buildings across Arizona with more stations expected to be added through 2023. In addition, in partnership with Electrify Commercial®, we installed five new Direct Current Fast Charger (DCFC) charging stations throughout Arizona. The Arizona locations are in Sedona, Show Low, Globe, Payson and Prescott. APS is excited to increase access to charging stations in our local communities and enable more drivers to go electric.

Learn more about customer tools and programs and the role of customers in designing Arizona’s clean energy future .

In 2021, we announced plans to allow for seasonal operations at Four Corners Power Plant beginning in 2023. Compared to current conditions the shift to seasonal operations could reduce annual carbon emissions from the plant by an estimated 20-25%, furthering APS’s commitment to exit coal by 2031 and the individual sustainability goals of the plant’s other owners.

In addition, we have committed to end the use of coal at our remaining Cholla units by 2025 and made an overall commitment to stop relying on coal by 2031, which means we will exit the Four Corners Power Plant seven years earlier than our original plan. We have retired more than 1,000 MW of coal-fired electric generating capacity. These closures, in addition to other measures taken by APS, have resulted in a reduction of carbon emissions of 24% since 2005, which is equivalent to removing more than 891,000 passenger vehicles from the roads.

With the transition away from coal-fired power plants, we work closely with impacted employees and local communities to ease the transition and support long–term economic planning for a future beyond coal.

Learn more about our  coal communities transition plan.

Nuclear. Palo Verde Generating Station has been the nation’s largest power producer of any kind for 31 years – all of it clean and carbon-free. As the heart of the APS generation fleet, it provides the foundation for the reliable service our customers count on.

The plant is a critical asset to the Southwest, generating more than 31 million megawatt-hours annually – enough power for roughly 3.4 million households or 8.5 million people. In addition, Palo Verde provided much needed support during the recent Texas power crisis by delaying the start of equipment reliability repairs enabling full-power output when it was most needed.

Nuclear energy works with renewable generation to create a more reliable, diverse clean-energy portfolio. Palo Verde produces clean energy at all hours supporting the basic electrical needs of our customers when solar and wind are not available. Without nuclear energy, carbon emissions would increase due to a greater reliance on carbon-emitting fossil fuels to fill the inevitable energy void during periods of low renewable generations, such as after sunset. Nuclear energy can facilitate increased adoption of EVs and improve the environment by supplying zero-emission energy to charge EVs and large-scale batteries.

While Palo Verde has seven owners in four states, nearly half of its output is dedicated to serving Arizona consumers. Electricity generated by the plant annually displaces more than 14 million metric tons of greenhouse gas (GHG) emissions that otherwise would have been produced. It is estimated that Arizona’s energy-related emissions would be about 16.6% higher without the displaced carbon emissions from Palo Verde.

Additionally, as the nation’s only nuclear plant not located on a body of water, Palo Verde recycles more than 20 billion gallons of wastewater annually from surrounding municipalities to cool the plant. This represents more than 37% of all effluent used in Arizona.

Learn more about Palo Verde Generating Station .

Renewables. With nearly 300 sunny days each year in Arizona, APS and its customers are transforming sunshine into a renewable energy source that powers an increasing number of homes and businesses across the state. APS supports customers interested in protecting the environment and reducing their energy bills by installing renewable energy technologies like rooftop solar systems at their homes, schools and businesses. More than 156,500 solar systems on customer rooftops and parking structures are already connected to the APS smart grid, providing more than 1,400 MW of robust solar capacity. In 2022 the amount of residential solar generating capacity installed in APS service territory was 18% higher than 2021. Nationally, only Hawaii and California have more residential solar capacity per capita than Arizona. As the largest electricity provider in the state, APS and its customers have been a big part of that achievement:

• APS ranks fourth nationally for the percentage of residential customers with rooftop solar systems
• APS customers installed a record amount of residential solar capacity in 2022
• 13% of all residential customers in APS territory have a solar system

Renewable Energy Portfolio. In 2006, the Arizona Corporate Commission (ACC) adopted the Renewable Energy Standard (RES). Under the RES, electric utilities that are regulated by the ACC must supply an increasing percentage of their retail electric energy sales from eligible renewable resources, including solar, wind, biomass, biogas and geothermal technologies. The renewable energy requirement is 12% of retail electric sales in 2022 and increases annually until it reaches 15% in 2025.

At the end of 2022, APS had a diverse portfolio of existing and planned renewable resources totaling 3,894 MW, including solar, wind, geothermal, biomass and biogas. Of this portfolio, 2,418 MW are currently in operation and 1,476 MW are under contract for development or are under construction. Renewable resources in operation include 264 MW of facilities owned by APS, 736 MW of long-term purchased power agreements, and an estimated 1,418 MW of customer-sited, third-party owned distributed energy resources.

 

APS’s strategy to achieve its RES requirements includes executing purchased power contracts for new facilities, ongoing development of distributed energy resources and procurement of new facilities to be owned by APS. In May 2022, APS issued a Request for Proposal (RFP) to address resource needs for 2025 and beyond. The 2022 RFP solicits competitive proposals for approximately 1,000 MW to 1,500 MW of resources, including up to 600 MW to 800 MW of renewable resources to meet the needs of 2025 and 2026 while also considering resources that can be online as late as 2027. The 2022 RFP stopped accepting bids on July 15, 2022, and APS sent notifications to shortlisted bidders on September 23, 2022. As a result of the 2022 RFP, and as of December 31, 2022, APS has signed a PPA for 300 MW of solar plus energy storage resources and a PPA for 216 MW of wind resources. Once APS secures those important resources and closes out the 2022 RFP, APS intends to issue APS’s next RFP to address future resource needs.

Learn more about our Integrated Resource Plan and RFP expansion for APS- owned solar.

Demand Side Management. Technologies such as smart thermostats, LED lighting, water heaters and efficient EV Chargers have given customers more power to control their energy usage and potentially reduce their costs. As more emerging technologies such as energy storage devices become commercially viable, they will continue to change how customers interact with us. By being proactive and working with our customers to identify and respond to their changing needs, we remain well positioned to deliver value. Furthermore, by providing customers the opportunity to manage their energy and peak demand, we can expand the use and understanding of load-management technologies, encourage customers to reduce CO2 emissions, use energy during off-peak hours and better align with solar production and system peak conditions. Taking these innovations to scale will help us achieve our bold clean energy commitment.

Learn more about our evolving residential energy management to be a clean peak resource.

APS’s demand-response programs use a virtual network of smart home products, like thermostats, water heaters, and energy storage to reduce energy use on Arizona’s hottest summer days and shift energy demand to when more solar power is available. Chief among the programs connected to the APS virtual power plant is the company’s signature residential thermostat program, APS Cool Rewards. With more than 73,800 residential smart thermostats enrolled, customers benefit from incentives, discounts, and energy-savings options for voluntarily conserving energy. APS Cool Rewards boasts a capability of shedding more than 100 MW of energy from APS’s smart grid. This energy avoidance saves customers money, helps the environment, and builds a more robust electrical grid. APS has a 2023 goal of reaching 100,000 thermostats to provide over 130 MW of summer capacity.

Learn more about the role of our customers, virtual power plant and customer programs.

Hydrogen. One of the more promising emerging opportunities is the use of hydrogen. A substantial majority of the world’s industrially produced hydrogen creates carbon dioxide as a byproduct. However, when hydrogen is produced by electrolysis using clean electricity (such as nuclear, solar or wind energy), the resulting hydrogen is carbon-free. Producing hydrogen when there is an excess of carbon-free electricity creates an energy vector that can be used as another clean energy storage technology for meeting peak demand. This clean hydrogen can also be used as an energy carrier for evolving hydrogen transportation technologies, and as a feedstock to produce synthetic hydrocarbons that introduce no new carbon into the environment.

APS is one of three utilities chosen by the Department of Energy's Office of Nuclear Energy and Office of Energy Efficiency & Renewable Energy to participate in a hydrogen production project in partnership with Idaho National Laboratory. The goal is to improve the long-term economic competitiveness of the nuclear power industry through the integration of hybrid energy systems such as hydrogen production. The multi-phase project will examine how hydrogen can be produced by clean nuclear power. Experience from the pilot project will offer insights into methods for flexible transitions between electricity and hydrogen generation missions in solar-dominated electricity markets and demonstrate how hydrogen may be used as energy storage to provide electricity during operating periods when solar is not available.

Learn more about the Palo Verde & Idaho National Lab hydrogen partnership.

APS is also excited to be leading the charge with public universities, sister energy companies and others in pursuit of an Arizona hydrogen economy. In fact, the Southwest clean Hydrogen Innovation Network (SHINe), of which APS is a leading member, received the green light from the Department of Energy to submit a full application for federal funding to help drive this initiative.

Learn more aboutthe SHINe Program .

Energy Storage. APS deploys several advanced technologies on its system, including energy storage. Storage can provide capacity, improve power quality, be utilized for system regulation, integrate renewable generation, and, in certain circumstances, be used to defer certain traditional infrastructure investments.

Energy storage can also aid in integrating higher levels of renewables by storing excess energy when system demand is low and renewable production is high and then releasing the stored energy during peak demand hours later in the day and after sunset. APS is utilizing grid-scale energy-storage projects to benefit customers, to increase renewable utilization, and to further our understanding of how storage works with other advanced technologies and the grid. We are preparing for additional energy storage.

In 2018, APS issued a Request for Proposal (RFP) for approximately 106 MW of energy storage to be located at up to five of its AZ Sun sites. Based upon its evaluation of the RFP responses, APS decided to expand the initial phase of battery deployment to 141 MW by adding a sixth AZ Sun site. These battery storage facilities are expected to be in service during the summer of 2022. On August 2, 2021, APS executed a contract for an additional 60 MW of utility-owned energy storage to be located on APS’s AZ Sun sites. This contract, with a 2023 in-service date, will complete the addition of storage on all current APS-owned utility-scale solar facilities.

Additionally, in February of 2019, APS signed two 20-year Purchase Power Agreements (PPAs) for energy storage totaling 150 MW. These PPAs were subject to ACC approval to allow for cost recovery through the Power Supply Adjuster (PSA). APS received the requested ACC approval on January 12, 2021, and service under the agreements is expected to continue in 2023.

As a result of its December 2020 RFPs, APS executed four 20-year PPAs for resources that include energy storage: two PPAs for standalone energy storage resources totaling 300 MW; and two PPAs totaling 275 MW solar plus storage resource. The PPAs were also subject to ACC approval to enable cost recovery through the PSA. APS received the requested ACC approval on December 16, 2021. Service under the agreements is expected to begin in 2023 and 2024.

As of the end of 2022, APS planned to install more than 1200 MW of energy storage by 2025, including the energy storage projects under PPAs and AZ Sun retrofits described above. The remaining energy storage is expected to be made up of resources solicited through current and future RFPs

Learn more about our energy storage strategy.

Overall Air Emissions. In 2022, APS’s carbon dioxide emissions were about 12.55 million metric tons. This represents a 24% decrease in annual carbon dioxide emissions since 2005.

We also track emissions of other traditionally tracked air pollutants. Since 2005, as a direct result of our commitments to reduce air pollution and institute operational efficiency enhancements, we have achieved reductions in annual emissions of Nitrogen Oxides (NOx) of 82% and annual emissions of Sulfur Dioxide (SO2) of 85% from our overall fleet.

Learn more about air emissions data.

Carbon Intensity. For internal tracking to our Clean Energy Commitment, we monitor carbon intensity, which we define as the measure of total carbon emissions, measured in pounds per megawatt hour of energy delivered by APS to our customers. It includes total emissions from APS-owned generation and power purchase agreements, as well as megawatt hours from distributed generation and megawatt hours saved from demand side management.

Learn more about carbon intensity data.

Greenhouse Gas Reporting. To track our progress toward our Clean Energy Commitment, we report our Scope 1 and Scope 2 carbon emissions. Scope 1 emissions include all direct emissions arising from the sources we own and control (e.g., emissions associated with fuel combustion in boilers, furnaces, and vehicles). These direct emissions result from activities that physically release greenhouse gases into the atmosphere. In 2022, our Scope 1 emissions were about 12.6 million metric tons.

Scope 2 emissions include all indirect emissions associated with electricity, steam, heating, or cooling purchased for use in our owned and controlled operations. These indirect emissions occur outside of our reporting boundary and are emitted by power- generation sources owned or controlled by another party. Scope 2 also includes indirect emissions associated with Transmission and Distribution (T&D) line losses from electricity that is not generated by the company transmitting or distributing the power. In 2020, our Scope 2 emissions reporting boundary changed to include of T&D line losses from purchased power. In 2022, our market-based Scope 2 emissions were about 91,700 metric tons.

Learn more about greenhouse gas emissions data.

CDP Recognition. Through significant demonstrable action on climate-change risk, Pinnacle West is leading corporate environmental ambition, action and transparency worldwide. CDP collects and analyzes environmental data and benchmarks companies for investors to use in financial decisions. Our scope 1, 2 and some of scope 3 GHG emissions reported to CDP are third-party verified.

For many years, Pinnacle West has been recognized for leadership in corporate sustainability by global environmental nonprofit CDP. With the ongoing drought in the Southwest, Pinnacle West is proud to have achieved a Leadership score from CDP in Water Security in 2022 for the fourth year in a row.

Learn more about our CDP responses and documents.

Agency reporting. We submit a comprehensive annual report of our GHG emissions to the Environmental Protection Agency (EPA) as required by federal law. Additionally, we are required to report releases of chemicals listed in the federal Toxic Release Inventory (TRI) program to the EPA. Our reportable releases under the TRI program primarily include air emissions from power plants and coal ash disposal. Reports for Four Corners Power Plant and the Cholla Power Plant can be found on the EPA TRI web site.