The Promise of Utility Scale Solar Photovoltaic (PV) Distributed Generation

Thomas N. Hansen Tucson Electric Power Presented at: POWER-GEN International 2003 December 10, 2003

Introduction:
The long term commercialization of utility based solar PV electric generation requires the development of safe, reliable, affordable components and systems that meet utility expectations of performance and life cycle cost per kWh production goals, while allowing for full integration of time variant intermittent renewable generation resources in the utility generation portfolio. The higher cost of PV generation as compared to the price of traditionally fueled grid supplied energy is the primary barrier to widespread commercialization of PV systems. Cost reductions available through design, material specification and construction techniques developed by the power industry in response to the need for lower cost traditional generating stations can effect significant cost savings when applied to PV generation systems. As part of its program to meet the Arizona Corporation Commission (ACC) mandated Environmental Portfolio Standard (EPS) annual solar energy generation percentage goals, Tucson Electric Power (TEP) has developed a cookie cutter approach to the design and installation of large utility scale PV systems. This approach has resulted in a 3,780 kW DC at STC rated PV system located on the property of the coal fired Springerville Generating Station in eastern Arizona. In 2001 the ACC passed an EPS setting a goal that all ACC jurisdictional utilities shall derive from renewable energy resources an increasing amount of electricity sold at retail. The EPS requires that 1.1% of retail electricity sold will come from renewable resources in 2007 through 2012 and that 60% of that must be from solar electric generation sources. Various multiplying factors can be applied to reduce the actual amount of electricity produced. These factors provide incentives for in-state location of the renewable generators, early installation, net metering, green pricing programs, in-state manufacturing of renewable generation components and distributed generation. -1-

Although TEP already produces sufficient electricity from landfill gas to meet the non-solar renewable portion of the EPS goals, the EPS requires the installation of just over 10 MW of solar electric generation by 2007. In recognition that the funding for the EPS is not sufficient to meet the goal in the time required, the EPS currently has no penalty provision. Review of the EPS program results in 2003 demonstrated that the EPS has to date been very successful and while no jurisdictional utility has yet met its full renewable energy percentage goals, the EPS has resulted in installation of over 7,000 kW DC at STC of new PV in Arizona in less than three years. For a complete review of the costs and benefits associated with development of renewable resources under the EPS, please see the Cost Evaluation Working Group report at http://www.cc.state.az.us

-2-

Program Planning:
TEP chose two PV based solar generation development programs to meet its EPS goals. Although one large solar thermal generation plant could have met the EPS solar goals, such a project would have done nothing toward developing cost effective customer based solar generation, a long term goal of TEPs energy supply strategy. The SunShare PV hardware buydown program provides financial and maintenance support incentives for customers to install their own PV system. To date the SunShare and other customer partnering programs have over 40 customers with more than 120 kW of installed PV. However, given that meeting the EPS goal requires installation of more than 10,000 kW of PV in seven years, TEP also determined that the solar portfolio must include noncustomer sited solar generation. Therefore, TEP started developing large distributed generation PV systems to meet the portion of the EPS goal not expected to be met by SunShare, initially 90% of the EPS solar goal. As in real estate, siting a solar generator is location, location, location. TEP had been performing solar and wind resource survey work for 5 years prior to the start of the EPS. This survey and data gathering and analysis work had been performed at many TEP owned sites as well as some customer owned sites. The high elevation desert region near the Springerville Generating Station (SGS) in eastern Arizona was found to have better annual average and peak solar insolation levels, cooler annual average temperatures and higher average winds during daylight hours - all factors positively affecting PV solar generation - than any other location surveyed. Cloud cover percentage at SGS was greater than at Tucson, but the net annual effect of all factors resulted in an expected improvement of about 3% net annual AC energy production at SGS over Tucson. In addition, the property tax rates at SGS are less than half of those in Tucson which provides a significant economic benefit for a highly capital intensive project like solar PV. The SGS is operated on 21 square miles land with very little growth of more than native grasses. Consequently, land space was not a concern. A square mile that is very nearly flat with only eight bushes and a bisecting 35 kV transmission line was selected as the location of the solar system. An aerial view of the site taken in late 2002 is shown below for reference. The 35 kV line provides power to the well field pumps that provide raw cooling water for the 760 MW coal fired generating station. The PV system was designed for a completed maximum size of 10 MW AC peak to provide distributed generation support for the pump load, and will be built in phases to reach that size in 2010. TEP was committed to using at least three different types of PV technology at the solar system. The design needed to flexibly accommodate different types of PV modules. The use of different PV technology types in a side by side comparison would provide cost and performance data beneficial to making improvements in future PV technology.

-3-

Springerville Generating Station Solar System Vital Statistics:

Present DC Rating in KW at STC: Present AC Rating in KW at PTC: Present Peak AC 15 Minute Production in KW: Present Number of PV Modules ASE: Present Number of Modules First Solar: Present Number of Modules BP Solarex: Present Number of Modules Total: Present Acres of Ground In Use by Solar Field: Completed Acres of Ground In Use by Solar Field: Present Number of Xantrex PV150 Inverters: Completed Number of Xantrex PV150 Inverters: Expected Annual Net AC Energy Production in 2004: Expected Annual Net AC Energy Production in 2012: Average Annual Temperature: Total Annual Solar Insolation: Average Annual Wind Speed During Sunlight: Site Elevation Feet Above Mean Sea Level: 3,780 KW 2,824 KW 3,720 KW 9,000 Modules 11,280 Modules 12,000 Modules 32,280 Modules 38 Acres 80 Acres 28 64 6,540 MWh 15,000 MWh 49 Degrees F. >2,100 KWH/M2 13+ MPH 6,600 Feet

-4-

System Design and Construction:

The implementation of a multi-year, pay as you build style funded Environmental Portfolio Standard (EPS) allows for development of cookie cutter PV system designs in a size optimized to take advantage of partnering opportunities with the manufacturers of the major components of PV systems to optimize Balance of System (BOS) costs through both material and installation labor cost reductions. This funding method eliminates finance charges which dramatically reduces the life cycle cost of high capital, low operating cost generation such as solar PV. Electrical costs can represent a significant portion of the BOS costs of a PV system. Development of cookie cutter PV system designs in a size optimized to take advantage of standard sizes of electric equipment can maximize the amount of connected PV capacity per electrical connection point, and reduce electrical costs per DC watt. TEP developed some small pilot PV systems of up to 22 kW using four different PV technologies. These systems were designed, built and operated in 1999 and 2000 leading to optimization of a cookie cutter design approach for the larger PV installation at SGS. The design process was started by optimizing the AC interconnection equipment. This allowed for optimal use of standard, readily available electrical components. Some design criteria used in the process: Two stages of transformation were selected 35 kV Delta to 480 Wye and 480 Wye to 208 Delta. The use of double isolation was needed to prevent resonance issues if single phasing occurred on the 35 kV line. A 200 amp 480 volt disconnect was chosen matched to a 200 amp revenue meter and a Xantrex PV 150 inverter. The rated inverter output current is a near perfect match to the NEC code requirement of a maximum of 80% of disconnect current rating. A 150 kVA, 98.9% efficient 208 to 480 air cooled transformer was specified. Four inverters were connected to each 500 kVA 99.2% efficient oil/air cooled 480 to 35 KV transformer. PV output is higher when ambient air temperatures are lower, taking advantage of the higher transformer capacity at lower ambient air temperatures. Ground surface prep was economically determined to be set at +/- one inch vertical in 10 feet horizontal. This gives the array a somewhat jagged look in close up, but annual energy performance is degraded by no more than 0.5%, and scarce funds are minimally spent on ground preparation. A high density ground grid of 250 MCM copper was installed in the ground for lightning protection of electrical components. This included a full perimeter ground grid at the fence. PV array lightning protection was designed into the support structure system as a large scale metal grid to diffuse lightning currents over large areas where they entered the earth. High efficiency PV module array block size was set at 300 feet north-south by 140 feet east-west for the overall system layout.

-5-

Low efficiency PV module array block size was set at 300 feet north-south by 250 feet east-west for the overall system layout. All intermodule DC connections are to be made by MC connectors. Significant training must be given to the installers to ensure proper seating of the connectors by the installers. The DC wiring design was for 0.5% maximum voltage drop from the furthest point of the array to the inverter. A balance of voltage drop design and conduit fill derating required by the NEC was used to determine main DC conductor size as a #4 AWG. The AC wiring and physical layout of the transformers, disconnects, meter and inverter for all systems is cookie cutter identical with the exception of the number of fuses in the DC interconnection cabinet, called the marshalling box. This allowed for very simple replication for different types of PV modules. The National Electrical Code allows electric power to be distributed at a voltage up to 600 volts without need for special voltage equipment or wiring, thus use of 480 volt AC equipment can maximize the capacity per dollar ratio. Availability and price of DC wiring components is much more favorable when the DC design is kept below a working voltage of 600 volts. Due to the SGS site conditions favoring solar generation, the DC array power rating was designed to be no more than 90% of the AC rating of the inverter. Cloud enhancement can at times drive insolation levels over 1500 watts per square meter for 15 minute intervals, demanding that the inverter have some available power capacity to adjust for the onset of this effect. This design point also allows the inverters to spend most of their operating time in the sweet spot of their efficiency curve.

When large numbers of similar systems are to be installed, extra care can be taken using these and other design concepts in the design phase to reduce the cost of both the DC and AC wiring systems. With certain types of PV modules, a single DC electrical trunk connection can be made for more than 5 kW DC at STC of PV modules. This dramatically reduces the cost of the DC electrical trunk system. Proper design of the electrical system and proper construction staging can reduce the installed cost of the electrical portion of a utility scale PV system using skilled union labor to less than $0.30 per DC watt of PV capacity. Likewise, design optimization of the PV array support structure must be performed and the support structure should fill other functions such as lightning protection and erosion control to minimize the cost of the support. Given that utility scale PV systems will likely be installed where there is more land area than is required, advantage can be taken of the extra land. Design can be simple and maximize the number of watts of PV capacity installed per support. It can also take advantage of the strength of the frame already designed into many PV modules or provide a simplistic assembly method for unframed modules. Support structure design can also be optimized to make maximum use of raw material, coating systems available for the dry Arizona climate, existing construction components and simplicity of design to allow use of low cost assembly crews. Supports can be designed to be matched to a particular PV module to take advantage of the PV module frame rigidity. Development of long term -6-

commitments with PV module makers takes advantage of partnering opportunities on structure development. Support structure installed cost after a year of experience in developing construction staging methods can be as low as $0.15 per DC watt of PV capacity. Developing relations with inverter makers is essential to standardize large utility scale inverters, their support software and infrastructure and thus the cost of inverters and inverter installation support components and tooling. Utility scale PV inverters with 99+% reliability, 96+% conversion efficiency and sophisticated service features can now be purchased for less than half of their small PV inverter counterparts on a cost per watt basis. Installed costs of inverters and support systems are now less than $0.40 per DC watt of PV capacity. Ground preparation and grid connection work for a utility scale PV system can be done in sections, allowing for modular construction planning and associated efficiencies of construction. Preparation for the initial phase of the SGS Solar System included blocks for the interconnection of 24 systems, each of 150 kVA AC size, for a total of 3,600 kVA AC rated capacity. The ground prep and grid connection work was completed at a cost of less than $450,000. Assuming that each block will have a DC capacity of 135 KW, the installed cost is $0.14 per DC watt. This includes all surface preparation, underground conduit, concrete foundations, high voltage wiring, high voltage disconnects, soil stabilizer, transformers and grounding to a power plant specification. Even better, the second phase includes blocks for 20 more 150 kVA AC units and cost less than $210,000, for a cost of $0.08 per DC watt. The need for continuous data collection to a standard similar to conventional power plants was recognized as essential to solar system performance tracking and development of preventative maintenance algorithms. The data collection system was designed to interface directly with the inverters and the revenue meter. Data is collected on 10 second intervals and averaged for one minute intervals for archive. The data server is accessible from the Internet. Even remote sites such as the SGS can now be linked via inexpensive satellite ISPs to the Internet. Data collection systems, metering and connection to the Internet, again optimized for utility scale systems, have an installed cost of less than $1,000 for a 150 kVA system. This is less than $0.01 per DC watt. Optimizing the BOS design and installation, resulted in BOS costs of less than $1.00 per DC watt of installed PV capacity in 2003, only the third year of the EPS. This cost level meets a long term goal of many federal government grant opportunities. This benefit would not have been possible with a year to year type of EPS. Time and motion construction reviews provided insight into placement of material and kitting of parts to reduce lost motion in the field. This study was essential to reducing the costs of construction labor.

-7-

The ground preparation, underground conduit and concrete foundation work was performed by an earthwork contractor local to the SGS area, M&S Construction. The electrical grid interconnection work was performed by either TEP or a high voltage electrical contractor located in Tucson, Southwest Energy Solutions. The PV system array, inverter and electrical installation work was managed by Global Solar of Tucson. All units have been successfully completed on schedule and within budget. TEP is responsible for all design work.

-8-

Operating Results:
Installation of 28 large utility scale distributed generation PV systems is complete in Springerville. These systems use PV array building blocks of about 135 kW DC in size. Different PV module technologies have been used, including crystalline silicon, Cad-Tel and amorphous silicon. Testing of new module technologies is supported by TEP. The results of daily energy production performance are shared with interested manufacturers. These systems are heavily instrumented and results are reviewed daily to ensure proper operation of the systems. Effective availability of these systems in 2002 was 99.43%, a very high on line operational record for any generating system. These PV systems have proven to be reasonably cost effective installations using the opportunity provided by the EPS program to eliminate financing charges. Finance charges are a considerable portion of total costs in high capital, low operational cost projects such as PV. Elimination of finance charges to reduce life cycle ownership costs using the pay as you go up front funding concept inherent in the EPS mechanism adopted by the ACC has made a significant reduction in life cycle cost of energy generated with PV. Evaluation of life cycle costs given limited experience with long term operating costs of large scale PV indicate that large utility scale distributed PV generation systems should produce electricity at a simple cost basis of less than $0.11 per kWh at 2003 PV prices. Operating costs are expected to be $0.004 per kWh of that amount. PV module Degradation: One partnering PV module manufacturer recently retested PV modules which had been in service in Tucson for 28 months to test for dirt and time related output degradation. Modules were tested first without cleaning and then after cleaning. Results indicated soiling effect was less than 1% output degradation from modules which had not been cleaned in two years and overall time related degradation of clean modules much less than that expected. 9,000 of these modules are used in the SGS solar system. SGS modules have historically been cleaner than Tucson located modules due to no oily deposits and the ability of snow to very effectively remove solid deposits like bird droppings. The units at Springerville experienced three failures of the electrical grid during 2002. In all three cases all inverters met their IEEE-929 island detection requirements, even with 18 inverters in parallel on the line and some inductive pump motor load, and disconnected nearly instantaneously. As additional inverters are added and the installed capacity of PV approaches the installed load of the pumps and other loads on the radial line, it will be instructive to monitor the transient response of line faults as verification of correct IEEE-929 compliance. The same has been true of all 2003 transmission line power failures with up to 24 inverters connected and operating. While the TEP fleet of large scale PV systems had a very high percentage of effective availability in 2002, there are challenges remaining in maintenance of PV systems. There were 15 separate incidents in 2002 requiring some level of human response to restore the large system to full operation. These incidents were only identified because of the instrumentation and communications that is economically viable on large scale systems.

-9-

The following technical Qualitative PV Module Evaluation is based on 10 months of one minute interval data taken from operation of the Springerville solar units. Units U-1 through U-12 are each composed of 450 ASE 300DG-50 modules, connected with 9 in series. Units U-33 and U-34 are each composed of 2,688 First Solar FS-50 modules, connected 6 in series. Units U-37 through U-40 are each composed of 3,000 BP Solarex MST-43 modules, connected 5 in series. All modules are facing due south at an angle of 34 degrees from horizontal, which is latitude angle. The ASE and BP Solarex modules, with the exception of those in C-12 are commercial products, not test or preproduction modules. However, the First Solar modules are a preproduction module, purchased for testing purposes and were not expected to perform like production modules. Any interpretations of First Solar module data or comparisons with other systems at Springerville or elsewhere must reflect that the First Solar modules are a preproduction version. All units use a Xantrex PV-150 150 KVA inverter proven in operation to be capable of intermittent operation at output levels as high as 157 KVA AC. The 208 volt three phase output of the inverter is stepped up to 480 volt 3 phase at which point it is metered for reporting purposes and then transformed to transmission voltage of 34.5 kV. The site is at 6,600 foot elevation, in eastern Arizona. ASE modules were installed in 2001, 2002 and 2003, all BP modules, except replacement modules, were installed in 2001, and First Solar modules were installed in 2001, 2002 and 2003.

Unit 10 on 10/3/2002
150000 140000 130000 120000 110000 100000 Power in Watts 90000 80000 70000 60000 50000 40000 30000 20000 10000 0 3:00 1500 1400 1300 1200 1100 W/M2 & Volts & Amps 1000 900 800 700 600 500 400 300 200 100 0 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 Time of Day Power Solar Voltage Current

4:00

5:00

6:00

7:00

8:00

- 10 -

Qualitative PV Technology Evaluation:

The crystalline silicon modules from ASE are the best overall performers in terms of reliability and predictability of output. After the initial month of operation during which all module types at SGS experienced some degree of infant mortality, as of February 1, 2003 we have experienced no ASE module failures. DC bus voltage ranges from 450 volts in the winter to 380 volts in the summer, exhibiting a normal pattern of sag as the time approaches noon and the voltage rises again after noon. The modules exhibit expected voltage changes with temperature, lower in summer and higher in winter and power output follows the rule as well. The inverters follow maximum power point with great accuracy. Minimal tuning of inverter constants to accommodate close following of cloud enhancement was needed. The First Solar Cad-Tel modules experienced a level of cracked modules that to date has been less than expected, but has resulted in some loss of energy production. Our experience with the more recent preproduction module additions in 2002 indicates a significant reduction in modules which later develop cracks. It needs to be noted that the development of a crack does not necessarily mean a reduction in module performance as well over 70% of cracked modules were still performing properly a year after the crack developed. There have also been some module output failures that do not exhibit cracks. Designing to match the maximum power point tracking window of thin film modules to a site which in 15 months has experienced ambient temperatures from -22 deg F to +102 deg F, insolation over 1500 w/M2 for 15 minutes and wind speeds in excess of 100 mph is a challenge with thin films. The initial installation of First Solar modules with 6 in series did have difficulty matching a minimum inverter DC bus voltage level of 300 volts in the summer months. However, the second installation of First Solar modules has not had that problem. The modules exhibit expected voltage changes with temperature, lower in summer and higher in winter and power output follows the expected rule as well. The First Solar units also exhibit much higher voltage earlier in the morning under partial light conditions and can start the inverter earlier than either the ASE or BP modules, and under partial light conditions some days have outperformed the ASE systems. The U-34 inverter follows maximum power point with great accuracy, but the U-33 inverter is only able to track max power point about half of the time in a year, since the array max power point is below the 300 volt floor of the inverter the other half of the time. Changes made to the array configuration in 2003 resolved this issue. The second generation First Solar modules installed in 2003 are producing energy well above expectations during the first 4 months of operation. Some tuning of inverter constants to accommodate close following of cloud enhancement was needed on all First Solar inverters. The BP Solarex a-si modules have been challenging. The first delivery of modules appears to have been made from different production runs with different module voltage ratings although the label shows no difference, but individual module voltage level readings show differences. These modules are in U-37 which has been a relatively poor performer from day one and exhibits open circuit voltage about 20 volts below the other three BP units. After the initial degradation period expected of a-si, which took about one week in the summer of 2001, the other three BP units have generally also not been able to reach the 300 volt voltage floor of the inverter. During summer of 2002 and - 11 -

2003 the max power point was about 280 to 290 volts, so power loss was minimal, given the flat IV curve of a-si. As winter 2002 approached and temperatures dropped, the units exhibited a rise in DC voltage and a rise in power output, just like the ASE and First Solar units, and U-38, U-39 and U-40 started to exhibit DC bus voltages slightly above 300 volts in the early morning and the afternoon. However, toward the end of October 2002, the max power point DC bus voltage never climbed above 300 volts on any BP units, and worse, a downward trend in power output started, sometimes as much as 20% below the daily energy output of the ASE units. This effect did reverse in mid July 2003, but it took record high temperatures to promote the self annealing which reverses the loss of energy production performance. Less than 1% of modules had cracked or failed after one year of service and all failed modules were replaced under warranty by September 2002. During the second year of operation the failure rate fell to 30 modules out of 12,000 or 0.25%, a very good record. U-38 exhibits much higher instantaneous output during cloud enhancements than the other BP units. It is as yet not clear if the effect is due to the array or the inverter. U-38, U-39 & U-40 exhibit open circuit voltages within 1 volt of each other during start up and shutdown. They seem to be very similar in voltage characteristics. TEP has generally been satisfied with the performance of the BP systems, with the exception of U-37 and the concern over lost production in cold weather. The inverters are seldom able to follow maximum power point since the units generally have a max power point below the 300 volt floor of the inverter. Significant tuning of inverter constants to prevent inverter trip during cloud enhancement was needed. Monthly operating summaries are posted at GreenWatts.com During 2002, over 3,100 MWh of solar energy was produced at the SGS Solar System. It is expected that over 4,800 MWh of solar energy will be produced by solar energy at SGS in 2003, despite some downtime from a lightning storm that delivered nearly two years of ground strokes to the area of the SGS Solar System in the first 11 minutes of the storm. The high rate of annual energy production from PV at this location is due to the high level of solar insolation, cool temperatures and wind that generally blows during daylight hours. The lightning storm while apparently striking the PV system in at least four locations, did no external physical damage to the arrays, inverters or transformers. The damage found was associated with the data collection system between the 480 volt revenue meter, the inverter control and communications computer and the network switches. All three items are grounded at one location, but the location of the ground is not the same in all cases and the lightning current followed the path between the ground references to cause some damage on almost half of the systems. One previously weakened inverter matrix was also damaged, a contactor coil winding and a single data Cat 5 cable. All damage was repaired within 30 days at a cost of less than 0.1% of the initial cost of the PV system. Addition of surge protection and isolation devices was made to the data collection systems at a cost of less than $200 per inverter that is expected to fully prevent damage from occurring in the future from lightning. Additional operating and performance data is available at www.GreenWatts.com

- 12 -

Renewable Generation Capacity Support Analysis:

Utility control area operation with significant amounts of intermittent generation energy sources such as solar or wind provide challenges to stable utility system operation. The following discussion demonstrates some general system operating results of energy and effective capacity based on actual hourly data from Springerville and Tucson based PV generating resources extrapolated to a size appropriate for meeting a 10% national renewable portfolio standard with Arizonas most abundant renewable resource, the sun, applied to hourly native load data in the TEP service territory. The location and grid node interconnection scheme allow for future testing and tuning of the interaction of the boiler, turbine, generator (BTG) controls with the intermittency of solar generation as the PV array approaches its planned size of 10,000 kW ACp. TEP has analyzed a number of possible options of renewable generation resources available to meet the implementation of a 10% renewable energy portfolio standard. The scenarios assume that all new renewable generation would be pure, that is not a mix of different resources. The scenarios are based on the actual 2002 hourly retail loads in the TEP service territory, actual 2002 hourly wholesale electric prices at Palo Verde, actual hourly solar electric generation at Springerville and Tucson sites and hourly wind resources at an Apache County, Arizona monitoring site applied to a Vestas wind turbine. For comparison, the average wholesale electric price at Palo Verde in 2002 was $26.42 per MWh. The results of the pure Wind and pure Solar PV cases are summarized in the table on the next page below:

- 13 -

Hypothetical Renewable Resource Generation Scenarios

All Fueled Generation Installed Renewable Energy Capacity in MW Installed Renewable Cost at 2002 Prices in $M Maximum Renewable Generation Capacity in AC MW Annual Renewable Energy in MWh Wholesale Energy Value - $ Average Renewable Energy Value in $/MWh Annual TEP System Load Minimum Demand in MW Annual TEP System Load Maximum Demand in MW Effective System Capacity Support from Renewable Generation in MW Percent of Annual System Energy from Renewable Resources Apache County Wind Generation Springerville Solar Generation Tucson Solar Generation

0 $0 0 0 $0 $0 570 1,868 0 0%

509 $509 509 862,414 $24,504,757 $28.41 70 1,859 9 10.01%

495 $2,846 457 861,143 $26,568,065 $30.85 276 1,822 46 10.00%

495 $2,846 441 842,588 $26,348,908 $31.27 269 1,741 127 9.78%

- 14 -

Below is a graph of the TEP 2002 hourly native retail load, the hourly energy produced by 495 MW of hypothetical solar generation located at the Springerville Generating Station and the effect on fueled generation demand reduction 46 MW from the application of 495 MW of solar capacity. The 495 MW of solar capacity was chosen as the level needed to produce 10% of the TEP annual retail energy sold from new renewable generation sources in 2002, the proposed national renewable portfolio standard. The distance the red points are spaced above the yellow points represents the amount of load the renewable resource supports. Capacity support is only provided in hours ending 08:00 through 17:00. At the typical time of peak system loads at hour ending 16:00, the solar generation resource is providing only 46 MW of capacity support.

Apache County 2002 - Sum m er Diurnal Pow er

2000 1800 1600 1400 Power in MW 1200 1000 800 600 400 200 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Hour of Day Solar Pow er Fueled Gen - Solar Retail Load

- 15 -

Below is a graph of the TEP 2002 hourly daily maximum and minimum native load generation demand as if provided: 1. Maximum daily demand met by fueled generation only, in red; 2. Maximum daily demand met by fueled generation as reduced by 495 MW of Springerville Generating Station located solar generation, in pink; and 3. Minimum daily demand met by fueled generation as reduced by 495 MW of SGS located solar generation, in blue. Increasing amounts of red showing behind the pink indicate increasing amounts of fueled generation that could be displaced by solar generation. Increasing amounts of pink showing behind blue would represent reductions in minimum fueled generation requirements possibly requiring taking fueled units out of service when renewable generation was available. This does not appear to be a concern with solar generation.

Fueled Generation Daily Range w ith SGS Solar

2,000 1,800 1,600 1,400 1,200 MW 1,000 800 600 400 200 0 1 361 7211081 1801 2521 3241 3961 4681 5401 6121 6841 7561 8281 1441 2161 2881 3601 4321 5041 5761 6481 7201 7921 8641 Date Fuel Only Max Fuel - Solar Max Fuel - Solar Min

- 16 -

Below is a graph of the TEP 2002 hourly native retail load, the hourly energy produced by 495 MW of hypothetical solar generation located at TEPs Tucson located Operating Headquarters and the effect on fueled generation demand reduction 127 MW from the application of 495 MW of Tucson located solar capacity. The 495 MW of solar capacity was chosen as the level needed to produce nearly 10% of the TEP annual retail energy sold from new renewable generation sources in 2002, the proposed national renewable portfolio standard. The distance the red points are spaced above the yellow points represents the amount of load the renewable resource supports. Capacity support is only provided in hours ending 08:00 through 17:00. At the typical time of peak system loads at hour ending 16:00, the solar generation resource is providing 127 MW of capacity support.

Tucson 2002 - Sum m er Diurnal Pow er

2,000 1,800 1,600 1,400 Power in MW 1,200 1,000 800 600 400 200 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Hour of Day Solar Pow er Fueled Generation - Solar Retail Load

- 17 -

Below is a graph of the TEP 2002 hourly daily maximum and minimum native load generation demand as if provided: 1. Maximum daily demand met by fueled generation only, in red; 2. Maximum daily demand met by fueled generation as reduced by 495 MW of Tucson located solar generation, in pink; and 3. Minimum daily demand met by fueled generation as reduced by 495 MW of Tucson located solar generation, in blue. Increasing amounts of red showing behind the pink indicate increasing amounts of fueled generation that could be displaced by solar generation. Increasing amounts of pink showing behind blue would represent reductions in minimum fueled generation requirements possibly requiring taking fueled units out of service when renewable generation was available. This does not appear to be a concern with solar generation.

Fueled Generation Daily Range w ith Tucson Solar

2,000 1,800 1,600 1,400 1,200 MW 1,000 800 600 400 200 0 1 505 1009 1513 2017 2521 3025 3529 4033 4537 5041 5545 6049 6553 7057 7561 8065 8569 Date Fuel Only Max Fuel - Solar Max Fuel - Solar Min

- 18 -

Below is a graph of the TEP 2002 hourly native retail load, the hourly energy produced by 509 MW of hypothetical wind generation located at the area of one of the TEP monitor stations in Apache County and the effect on fueled generation demand reduction 9 MW from the application of 509 MW of wind capacity. The 509 MW of wind capacity was chosen as the level needed to produce 10% of the TEP annual retail energy sold from new renewable generation sources in 2002, the proposed national renewable portfolio standard. The distance the red points are spaced above the yellow points represents the amount of load the renewable resource supports. Capacity support from wind in Arizona is not coincident with loads at any great degree of confidence, although a significant amount of the energy provided does occur during peak load hours.

Apache County Wind 2002 - Sum m er Diurnal Pow er

2000 1800 1600 1400 Power in MW 1200 1000 800 600 400 200 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Hour of Day Wind Pow er Fueled Gen -Wind Retail Load

- 19 -

Below is a graph of the TEP 2002 hourly daily maximum and minimum native load generation demand as if provided: 1. Maximum daily demand met by fueled generation only, in red; 2. Maximum daily demand met by fueled generation as reduced by 509 MW of Apache County located wind generation, in pink; and 3. Minimum daily demand met by fueled generation as reduced by 509 MW of Apache County located wind generation, in blue. Minimum daily loads are much more difficult to predict with a significant amount of wind generation as part of the generation resource base. Increasing amounts of red showing behind the pink indicate increasing amounts of fueled generation that could be displaced by wind generation. Increasing amounts of pink showing behind blue would represent reductions in minimum fueled generation requirements possibly requiring taking fueled units out of service when renewable generation was available. This does appear to be a concern with wind generation.

Fueled Generation Daily Range w ith Wind

2000 1800 1600 1400 1200 MW 1000 800 600 400 200 0 1 1 1 2 2 3 3 3 4 4 4 5 5 6 6 6 7 7 8 8 8 9 9 10 10 10 11 11 12 12 12 Date Fuel Only Max Fuel - Wind Max Fuel - Wind Min

- 20 -

Applicability of Utility Scale PV:

The SGS Solar System can be replicated outside Arizona. Care must be taken to identify a site with at least a square mile of relatively flat land that has a cool climate with high average annual solar insolation, moderate winds while the sun is shining, easy access to transmission with sufficient capacity and load to support the addition of the PV generation and relatively low property tax rates. An existing power plant, old landfill site or an area that is used as a shallow storm runoff retention basin is an ideal location for a PV system improving the use of the land. It is recommended to obtain at least two years of weather data prior to committing to a site. Even then, a comparison to 20 years of historic values of a reference site in the area would be beneficial in performing a comprehensive site resource evaluation. The site should be free of bushes and trees, rocks and any archeological findings. Do not place the PV system over pipelines that use impressed current cathodic protection as the PV field will adversely affect the cathodic protection field. Do not site a PV system in an area known for strong hail storms or tornadoes. Permitting a solar generating site is not a simple task and can take up to two years if near populated areas. Concerns primarily focus on glare, vegetation removal and storm water runoff/erosion. However, inverters do produce some noise and access for service personnel is necessary which produces increased traffic in a residential area. Construction activities will significantly increase traffic for short periods of time and may need to be addressed during permitting. Some locales require a rezoning to use the land for electrical generation purposes. This may result in imposition of traditional power plant infrastructure requirements such as water and sewer lines, which are not needed at a solar generating station. Always check with the local zoning authorities to determine the rules and be prepared to work with them for a variance to remove those features not needed for solar generation. Take care to design the PV system to be installed by the type and quality of labor available in the area. A high tech tracking system that requires laser alignment skills can generally not be supported by local labor in a rural setting. Likewise, even the cost of general assembly labor in a large metropolitan area will be nearly as expensive as highly skilled labor. Match the design sophistication to the expected skills of the area. Once installed, the system must be monitored for proper performance and maintained in a safe and efficient operating condition. While PV modules are inherently simple, experience has demonstrated they have many possible failure modes. Some of which are not readily apparent. Likewise, inverters are highly sophisticated microprocessor controlled devices which have the ability to mask a flaw in another piece of interconnected equipment. Ensure the availability of the necessary test equipment and continuity of the trained personnel to use and interpret readings from the tests, as well as continued support from the vendors of the major PV system components. Test equipment should include a clamp on ammeter for DC and AC with a maximum range of 0 to 40 amps and a separate clamp on ammeter for DC and AC with a range of 0 to 600 amps. At least one, preferably two, voltmeter with a DC and AC range to 600 volts and an integral ohmmeter is essential. A frequency counter or frequency indicator and an - 21 -

available dual trace oscilloscope with a range to 100 kHz is needed. A harmonic meter and a three phase power meter are helpful. In addition it will be beneficial to build a module continuity tester that will test power output across a wide range of loads and solar insolation to build a module IV curve. A thermometer and a calibrated solar insolation meter are recommended tools for evaluating performance. A PC with Excel capability to monitor trends of data is highly recommended.

Watts Next??:
Implementation of large utility scale, distributed PV solar generation systems is developing a positive trend around the world. With the 2003 German installation of 4.0 MW of PV near Hemau and the announced start in July 2003 of a 5.0 MW PV system in Germany, the installation of 2.0 MW of tracking and concentrating PV by Arizona Public Service near Prescott, Arizona in 2003 and the continuing expansion of the Springerville Generating Station Solar System, there is developing a wealth of data on the design criteria, installation practices, operational experience and production results of large PV installations and their accompanying costs. Total installed cost is less than $6.00 per DC watt. By 2007 that is expected to be less than $5.00 per DC watt. The experience gained from these large solar PV systems will provide data needed for improving prediction of supply from intermittent generation resources and support development of the tools needed to mitigate the effects of that intermittency on grid regulation, as well as hour ahead and day ahead energy requirement forecasting. While customer located PV systems are still needed to fully take advantage of the potential of solar energy, large utility scale PV systems are starting to take their rightful place under the sun. For utilities, the time is now right to harness the power of the sun for the long term benefit of our customers. The promise of utility scale solar photovoltaic distributed generation is within our reach today.

- 22 -