U.S. Energy Department Announces $1.8 Billion Conditional Commitment to Arizona Electric Utility Projects

The U.S. Energy Department on Jan.7 announced a conditional commitment for a loan guarantee of up to $1.81 billion to Arizona Public Service Company (APS) to finance electric utility projects in Arizona. APS, the largest utility company in the state, will use the loan to invest in clean energy, transmission, and grid resilience projects in the state.

The Agave Battery Energy Storage System Phase 1 is one of the major energy projects that APS plans to invest in. The energy storage system has a 150-megawatt capacity with a four-hour duration and will support the adjacent solar photovoltaic site. Energy storage projects are a crucial part of a successful energy transition and grid resilience since they provide a stable power supply from intermittent renewable energy sources.

In the future, APS may use the financing to invest in additional energy storage projects, renewable energy, and transmission upgrade projects. These energy projects would improve system reliability, grid resilience and reduce future transmission costs. Over the duration of the loan, APS anticipates $250 million in energy cost savings for its 1.4 million customers.

The funding would help APS achieve its climate goals of providing Arizona residents with 100 percent clean, emissions-free electricity by 2050 and 65 percent clean energy by 2030. The utility also intends to retire all coal-fired power generation in 2031.

The loan is possible through the Title 17 Clean Energy Financing Program of the 2022 Inflation Reduction Act, which supports projects that upgrade energy infrastructure and reduce carbon emissions. In the last year, the department has made significant efforts to ensure that these energy projects have access to financing through the loan program. Last year, the department announced a $4.9 billion conditional loan guarantee for the Grain Belt Express interregional transmission project in the Midwest.