TEP will likely need new natural gas plant to serve 2nd Project Blue complex

Tucson Electric Power will likely need to build a new natural gas plant to serve the second big data center complex planned for Project Blue, a spokesman said this week.

But if that does happen — and TEP says it hasn’t decided yet if it will serve that complex — the utility will build the new gas plant outside Pima County, said Joe Salkowski, TEP’s senior director for communications and public affairs.

New “natural gas resources” would likely be needed to serve the second Project Blue complex, but “it’s far too early to say” whether that would mean one or more gas plants, he said.

Asked whether Project Blue would foot the whole cost of building and operating a new plant, or whether TEP would allocate some of those costs to residential customers, Salkowski answered, “TEP is willing to negotiate an energy supply agreement to serve Project Blue’s future phases in a way that provides sufficient protections for our company and our current customers. The details you’re asking about would be subject to those negotiations and addressed in that agreement, which would be subject to review and approval by the Arizona Corporation Commission.”

Salkowski’s comments came in the face of strongly worded concerns from a Pima County environmental official about the data center project’s impacts on climate change and air quality in general.

Natalie Shepp of the Pima County Department of Environmental Quality said the construction of new gas plants in the county to serve Project Blue would make it impossible for the city of Tucson and the county government to achieve their climate goals of achieving “net zero” greenhouse gas emissions by 2045 to 2050. Shepp is a climate manager and a community engagement manager for PDEQ.The burning of natural gas releases the greenhouse gas carbon dioxide into the atmosphere which is linked to the warming of the planet from climate change, but not as many greenhouse gas emissions than occur from the burning of coal. Utilities in Arizona have in recent years been turning toward building gas plants — along with new solar and wind generating plants — to replace coal-fired plants that are generally considered dirtier electricity overall than gas.

Achieving “net zero” would require that all new emission sources somehow be offset, perhaps through the use of planting new trees or having more soil available to uptake any new emissions, Shepp said.

Asked if the county official’s concerns triggered TEP’s commitment to not build new gas facilities in Pima County, Salkowski replied only, “TEP considers many factors when developing new energy resources, including cost, the availability of fuel and electric grid infrastructure, environmental factors, and regulatory considerations.”

But Ed Hendel, a local Project Blue opponent, said that moving a gas plant to another county wouldn’t make much of a difference as far as climate change is considered.

“The mayor of Tucson has done a fantastic job and built a legacy with the Tucson Resilient Together Climate Action Plan. If we are building non-renewable energy plants to power Project Blue, it undermines that,” said Hendel. He runs a local business, Sky Island AI, that has published a dashboard on Project Blue analyzing its energy and water use, based on TEP energy use data on file with the Securities and Exchange Commission, information from Tucson’s Project Blue website and published energy use data from other data centers nationally.

“Each community has their responsibility to reduce their own emissions as much as they can control. If we are creating non-renewable power plants in other places, that’s just as bad as building them here from a climate change perspective,” Hendel said.

Pima County DEQ Director Scott DiBiase said the question of whether a gas plant would be more acceptable in another county is complicated, “but for local air quality it’s better not to have that local generation, from an ozone generation perspective.”

The methane from a natural gas plant generates nitrogen oxide, a key ingredient in ozone, he said.

“I wouldn’t say it’s more acceptable” from a climate change perspective to have a gas plant serving Project Blue from a different county, DiBiase said. “It’s not as impactful from a local air quality perspective. It matters how far away it is. Right now, I don’t think we have any clue as to where they are looking to put it.”

Project Blue officials have said they plan to build two large data center complexes in Tucson. The first, which could begin construction next year if approved by the Tucson City Council, would lie near the Pima County Fairgrounds, at the intersection of Houghton and Brekke roads on the far southeast side.

The second complex’s location hasn’t been announced but it’s expected to be planned for a site near the first.

Although Project Blue’s expected annual electricity use hasn’t been disclosed, local officials have said it will be the largest electricity user in TEP’s service area. A fact sheet on the project released by city of Tucson officials said the two data center projects together will require total electric generating capacity from 900 to 1,300 megawatts.

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TEP will have enough electrical generating capacity to serve the first data center, Salkowski said. It’s scheduled to go online in 2027 and gradually ramp up to full operations by 2029.

That capacity is getting a boost from four new solar and battery storage plants TEP plans to have online in Pima and Cochise counties in 2026 and 2027. One of them, the first phase of a 400-megawatt-generating battery storage project in Pima County, is already online.

TEP is not yet committed to serving potential future phases of Project Blue, Salkowski said, adding, “We are willing to negotiate an energy supply agreement to serve those future phases in a way that provides sufficient protections for our company and our current customers.”

But the utility would need to develop new generating resources to serve future phases of the data center project, he said.

“We would expect to develop a mix of resources that includes clean energy resources and at least some new natural gas generation,” Salkowski said. “Clean energy resources alone cannot cost-effectively and reliably serve the around-the-clock energy needs of a large data center.”

The utility anticipates choosing what kind of power sources to build through what it calls “competitive all-source requests” for proposals that compare the costs, benefits and performance of different resource types, he said. That’s the process it used to select the four renewable plants it’s building now.

“Projects could include conventional and renewable resources that satisfy the identified energy need. Preference can be given for technologies that achieve certain targeted objectives, including carbon emission reductions. The goal is to identify reliable, cost-effective resources that provide the greatest value to TEP’s customers,” Salkowski said.

The county’s Shepp acknowledged before Salkowski released his comments to the Star that solar and wind facilities alone wouldn’t be adequate to serve a second Project Blue complex. While battery storage can give a utility some extra ability to serve customers during times when no sun or wind energy is available, many experts agree that today, it’s still not enough.

Generally, many experts agree that solar and wind energy can’t by themselves supply enough power on a 24/7 basis for large-scale energy generation because those sources drop off when the sun sets and the wind stops blowing. Battery storage of renewable energy typically lasts about four hours, which also isn’t enough. While some battery storage technology can last longer, it isn’t widely used.

That was one reason Shepp is concerned about the possibility of a new gas plant here for Project Blue.

Plus, TEP’s own integrated resource plan, drawn up in 2023, calls on the utility to achieve net zero greenhouse gas emissions in its operations by 2050.

Asked how TEP can still meet that goal if it builds new gas generating plants, Salkowski replied that it’s too soon to speculate about that.

TEP doesn’t yet have a complete picture of the energy needs that will emerge in coming years or the resource mix it will develop to serve them, he said. The utility will be developing updated forecasts for its next integrated resource plan, due out in 2026, he said.

“We’ll be looking closely at new carbon-free energy alternatives like hydrogen generation, long-term energy storage and other emerging options to complement our continuing investments in wind, solar and battery energy storage systems, supported by natural gas,” he said.

“TEP remains committed to working toward our net zero by 2050 goal without compromising on reliability or affordability,” he said.