solar

Why isn’t there more solar in Arizona?

Eleven years ago, I wrote a guest editorial for the Arizona Daily Sun newspaper in Flagstaff in which I put forward a question that was quite popular at the time: “Why isn’t there more solar in Arizona?”

It was in the aftermath of the California energy crisis.  New incentive programs adopted by Arizona utilities were just starting to kick in, and the popularity of solar energy was beginning to emerge from a decade of stagnation; but still, Arizona’s most abundant natural resource had barely been tapped.

In 2002, the solar industry in Arizona was at the beginning of a boom-cycle that continues to this day.

What we were seeing in the way of solar installations back then was just the first flicker of what was possible.  “The technology is on track to become a permanent part of Arizona’s landscape,” I wrote on October 2, 2002.

That comment may be just as appropriate today in 2013 as it was more than a decade ago.

But there may be ominous new storm clouds ahead for the current boom-cycle.  Solar advocates believe that proposed regulatory changes pose a threat to the continued good times for solar businesses and those working in the industry.

The modern solar industry, founded in 1974 following the Arab oil embargo of the previous year, has endured one boom/bust cycle before. From the end of the 1970s through the late 1980s the industry experienced tremendous growth. But as conventional energy became cheaper and incentives disappeared, the solar industry suffered through a down-cycle in the 1990s. That cycle began to reverse itself in the late 1990s and has been on an upward trajectory ever since.

This new boom era was boosted in the beginning by technological advancements, tax credits and utility rebates. But it was net metering policies that substantially increased demand, and dramatic cost reductions followed, pushing the industry to today’s apex.

From its original niche of remote homes and summer cabins to homes in neighborhoods in every city and town throughout the state, the market exploded. The 1,200 off-grid remote rooftop solar PV systems in 1987 have grown to more than 25,000 grid-tied residential rooftop solar electric systems today.

But is history about to repeat itself?

The mainstay of the solar industry during the 1970s and 80s, the solar water heating industry, suffered tremendously when incentives ended and boom turned to bust. A majority of companies went out of business, leaving a number of orphan systems in their wake.

The favorable incentives and policies that have fueled today’s boom have come under increased scrutiny ever since a utility industry study identified solar energy/distributed energy resources as a potential “game changer” and a disruptive challenge with financial implications for the electric utility business model.

If fundamental changes to regulatory rules and financial incentives come about, the solar electric industry will have to borrow a page from the solar water heating industry and reinvent itself to survive.

But what about the utility business model? While the report warns of the disruptive challenge of solar, it also states that Kodak and the U.S. Postal Service are examples of what happens when industry leaders fail to adapt to innovation.

What is preventing utility companies from reinventing themselves and getting in front of the trend toward solar?  The electric utility industry could learn a lesson from AT&T, which successfully made the transition from the old telephone business model to the wireless telephone business.

In 2025 when I look back on this column, I hope that the question will no longer be, “Why isn’t there more solar in Arizona?,” but rather, “Which innovators embraced this unique opportunity and grew with it?”

Today’s answer to the question of eleven years ago is: There is more solar in Arizona than there used to be, and all indications are there’s more to come as long as utility companies continue to be on board with innovation as they have been in the past and embrace the inevitable future of solar energy rather than impede it.
Jim Arwood served six Arizona governors in various capacities managing federal energy programs, culminating in his appointment by then Governor Janet Napolitano, as Director of the State Energy Office in 2006. After nearly 25 years serving the state of Arizona, Mr. Arwood retired from government service in 2010 and today consults for a variety of energy related organizations. He also serves as Director of Communications for the Arizona Solar Center.

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