APS, SRP, and TEP look to build second nuclear plant to meet Arizona’s rising energy demand

PHOENIX (AZFamily) — Arizona’s three largest utility providers are eying ways to help meet the state’s growing energy needs, and nuclear power appears to be their top choice.

In a written statement Wednesday, Arizona Public Service (APS), Salt River Project (SRP) and Tucson Electric Power (TEP) would work together in seeking out a range of locations, including past sites of coal plants, to potentially build a new nuclear power plant to meet Arizona’s fast-growing demand for electricity.

“Energy demand in Arizona is increasing rapidly,” said APS president Ted Geisler. “To ensure a reliable and affordable electric supply for our customers, we are committed to maintaining a diverse energy mix. While new nuclear generation would take more than a decade to develop, the planning and exploration of options must begin now. We are partnering with neighboring utilities to assess the feasibility of new nuclear generation, alongside other resources, to meet the state’s growing energy needs.”

It’s no surprise that nuclear power is being considered as a potential solution. Arizona’s population growth shows no signs of slowing down, and new tech-centric businesses with high energy demands continue to flock to the state. As summer temperatures rise and last longer, the grid is frequently strained by increased air conditioning use and the growing demand for electric vehicles.

The Largest Nuclear Power Plant In The West

Located west of the Metro Phoenix near the remote town of Arlington, Arizona, is the largest nuclear power facility in the western United States.

The Palo Verde Generating Station began operations in June 1985 and provides electricity to nearly four million homes and businesses across Arizona, California, New Mexico, and Texas.

It remains the only nuclear facility in the world not located near a body of water. Instead, Palo Verde utilizes reclaimed wastewater from nearby cities to cool its reactors, thereby eliminating its dependence on freshwater.

While APS is the primary operator of Palo Verde, the plant is partially owned by seven different power utilities, including SRP, TEP, San Diego Gas & Electric (SDG&E), and the Los Angeles Department of Water and Power (LADWP).

Like many other nuclear power facilities in the United States, Palo Verde is approaching its life expectancy.

Reactor 1 was originally scheduled for decommissioning this year. However, in 2008, the Nuclear Regulatory Commission (NRC) granted an extension for all three reactor units at Palo Verde, with the first reactor now scheduled to be decommissioned in 2045.

Energy demand continues to climb in the wake of recent hotter-than-usual summers

In August 2024, the Arizona Corporation Commission reported that both APS and SRP set new records for peak electricity demand. On Aug. 4, the high temperature in Phoenix was 116 degrees.

How It Works

Small modular reactors (SMRs) and large reactor projects are part of the equation for nuclear power.

SMRs are significantly smaller and less expensive than traditional reactions. Unlike conventional reactors, they can be built in a factory and then transported.

According to the U.S. Department of Energy, they often range in size from tens of megawatts to hundreds of megawatts and can use light water or other coolants to operate. For reference, experts say one megawatt can power about 160 Arizona homes.

The first SMRs were used for the military in the 1950s but are still a relatively new energy source. Most SMR projects are still being planned, but in early 2024, China became the first to power up an SMR for commercial purposes.

Right now, Palo Verde generates about 14,000 megawatts.

Is It Worth The Cost?

“New nuclear generation could provide Arizona with reliable, around-the-clock carbon-free energy to power economic growth while helping us make progress toward a clean energy future,” said TEP President and CEO Susan Gray in a news release announcing the exploration. “We know the development timeline would be long, so it makes sense for our state’s energy providers to begin this preliminary evaluation as soon as possible.”

But that economic growth could also come at a price.

The Associated Press reported that an Idaho-based project aimed to deliver 40 years of electricity at $55 per megawatt-hour. Still, project costs climbed to $89 per MWh, according to a report by The Institute for Energy Economics and Financial Analysis.

Not only could the project take up to a decade or longer, but concerns about cost have made critics wonder if it’s worth using in the transition to a clean, carbon-free future.

More recently, the AP reported that the first American nuclear reactor to be built from scratch in decades came in seven years behind schedule and was $17 billion over budget.

The outlet reported: “The Vogtle reactors cost Georgia Power and three other owners $31 billion [...] Add in $3.7 billion that original contractor Westinghouse paid Vogtle owners to walk away from construction, and the total nears $35 billion.”

What’s Next?

APS, SRP, and TEP have filed a joint application for a federal grant that, if approved, would support a three-year site selection process and a possible early site permit application to federal regulators.

In a news release, the utility providers said they expect to have a preferred nuclear site by the late 2020s, with the added nuclear operation ready to go in the early 2040s. APS says they’re committed to 100% clean power by 2050, up from their current 54% clean energy mix.

In late 2024, the Energy Department released a document saying that U.S. nuclear capacity has the potential to triple by 2050. The U.S. had made such a pledge a year prior during the United Nations Climate Change Conference.

Last year, Amazon announced a deal with Energy Northwest and X-Energy to fund the construction of four new nuclear reactors on the Columbia River in Washington.

Closer to home, Texas A&M recently unveiled four developers with plans of building SMRs at its College Station campus, calling the project the “Energy Proving Grounds.”

See a spelling or grammatical error in our story? Please click here to report it.

Do you have a photo or video of a breaking news story? Send it to us here with a brief description.

Copyright 2025 KTVK/KPHO. All rights reserved.