Pinnacle West Plans 1.88 GW Supply for TSMC Under 25-Year Contract

Table of Contents

• You might want to know
• Main Topic
• Key Insights Table
• Afterwards...

You might want to know

• How will the proposed 25-year electricity agreement support TSMC’s Arizona chip manufacturing campus?
• Why does meeting the campus’s demand involve expanding transmission infrastructure as well as power generation?

Main Topic

November 04, 2026 — U.S. utility Pinnacle West Capital (PNW-US) said it signed a 25-year, directly priced electricity supply agreement with Taiwan Semiconductor Manufacturing Company (台積電, 2330-TW) in October. Under the proposed arrangement, Pinnacle West would supply electricity for the Arizona chip manufacturing campus once it is fully built out. The campus is expected to require approximately 1.88 GW of power. Pinnacle West expects to submit the agreement to regulators for review soon, and the contract remains subject to approval.

Pinnacle West is headquartered in Phoenix, Arizona, and supplies electricity within the state through a subsidiary. Its business includes power generation, transmission, and distribution. The company’s energy and grid assets include nuclear, natural gas, coal, and solar generation facilities, alongside transmission and distribution lines, substations, and energy storage equipment. The breadth of these operations reflects the different elements involved in serving a large new customer: utilities must plan for the supply of electricity and the infrastructure required to deliver it reliably.

The TSMC agreement is Pinnacle West’s first directly priced contract. Under this kind of arrangement, the customer’s electricity terms are addressed directly rather than relying solely on the utility’s general rate structure. TSMC is expected to provide funding in advance and offer credit assurances. These commitments would help Pinnacle West plan power resources and grid construction around the campus’s projected needs. The company emphasized that TSMC will bear the costs of the investments associated with serving its demand, rather than shifting them to residential customers.

This allocation of costs is central to the utility’s account of the agreement. A major industrial project can require substantial advance planning, including the procurement or development of generation resources and the construction or reinforcement of transmission facilities. By providing funding and credit support before all infrastructure is in place, a large customer can give the utility a basis for making those plans. The contract is intended to connect those investments to the needs and commitments of the customer that prompts them.

Chief Executive Officer Theodore Geisler said TSMC’s projected 1.88 GW requirement is already included in Pinnacle West’s total of 5.8 GW in committed electricity demand. It is also incorporated into the company’s long-term resource planning. The figures describe the scale of expected commitments and planning, rather than a statement that all the associated power is already being generated or delivered. If TSMC expands the Arizona campus further in the future, the two companies would discuss arrangements for supplying the additional electricity.

Geisler said growth in electricity demand is coming from several industries. According to the company, manufacturing is contributing more to new demand than data centers. That manufacturing demand includes semiconductor production as well as other types of manufacturing. The distinction offers context for Pinnacle West’s planning: although data centers are often discussed in connection with rising electricity needs, the utility says its own demand growth is broader and that manufacturing currently represents the larger contribution.

Pinnacle West views the TSMC contract as a possible reference point for serving other large customers. The company is in discussions with other customers that are waiting for electricity service, but it has not said that those negotiations will necessarily result in agreements. The outcome of those talks remains uncertain. For each prospective customer, the utility would need to consider the size and timing of demand, the resources required to serve it, and whether the customer’s commitments adequately support the associated planning and investment.

Contracts of this type commonly include several protections and obligations. Customers may be required to make advance payments and provide guarantees. Agreements can also specify minimum electricity consumption, reserved capacity, and responsibility if the customer terminates the contract early. These provisions are designed to give the utility a long-term commitment before it invests in facilities that may be intended to serve a particular customer. They can also clarify how the customer and utility share responsibilities if demand changes or a project does not proceed as planned.

Meeting the projected demand will require attention to transmission as well as generation. Pinnacle West said its existing transmission system in the service area has no surplus available capacity. That means additional generation resources alone would not be enough: new transmission facilities would also be needed to connect new power sources to the grid reliably. Transmission availability can therefore affect where and when new resources can serve customers, and it must be considered alongside the expected timing and scale of electricity demand.

In its latest plan, Pinnacle West projects that annual customer electricity use will rise to approximately 80,600 GWh by 2041, more than twice the current level. To support projected growth, the company plans to add nearly 15 GW of power resources and approximately 2.6 GW of transmission capacity over the next 15 years. These are planning projections, not a guarantee that every resource or facility has already been built. Their scale illustrates why the company is treating new industrial demand, generation planning, and grid expansion as connected issues.

The proposed agreement consequently has two dimensions. For TSMC, it is a long-term supply arrangement intended to support the electricity needs of a developing Arizona manufacturing campus. For Pinnacle West, it is both a customer commitment and a planning input, with the customer expected to support investments associated with its demand. Regulatory review remains an important next step, and the agreement’s approval, implementation, and any future expansion discussions will determine how the plan develops in practice.

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Key Insights Table

Afterwards...

The next stages are regulatory review and the practical planning needed to match new resources with the campus’s expected demand. The agreement also provides a potential framework for Pinnacle West’s discussions with other large customers, although those negotiations may or may not lead to contracts. More broadly, the company’s projections show that future service will depend not only on adding electricity generation but also on expanding transmission capacity. How these plans proceed will depend on approvals, customer commitments, infrastructure development, and the evolution of demand across manufacturing and other industries.