energy supply - AZ Business Magazine May/June 2012

Arizona needs clear message to capitalize on energy

States with the most successful industry clusters have a common characteristic — unwavering support from government, industry and the public. The oil and gas industry in Texas was built with support for the industry from all levels. Such support is not garnered unless the industry has a common voice in articulating its needs.

To some extent, Arizona has a robust energy industry. With the largest nuclear power plant in the nation, as well as hydropower and coal resources, our state wields considerable strength in contributing to the region’s power generation. However, as our current energy resources inevitably age and require upgrades or replacements, it is critical that Arizona is strategic about its future resources. It is for that reason that the Arizona Energy Consortium (AEC) recently released the Arizona Energy Roadmap, as a methodology for creating a strategic focus for the growth and further development of the energy industry.

As an environmental and energy attorney working heavily in the energy sector, I have experienced first-hand where the issues lie in the development of energy projects. Whether representing a manufacturer, developer, utility, investor or energy off taker, I have witnessed that any unnecessary barriers to getting projects to market limit Arizona’s ability to grow its industry. It is with this focus in mind that I helped establish and co-chair the AEC. Not only to remove the unnecessary barriers, but also to help create a common voice for our energy industry.

Creating a long-term plan for a state with such a diverse energy mix does not come without its challenges. For instance, sometimes the more established sectors such as coal and natural gas do not necessarily support or understand the need for an emerging renewable energy industry. In fact, in many cases the fossil fuel and renewable energy sectors are at odds because they feel they are in direct competition with each other. However, the AEC is working to educate both sectors on how they can support one another. A “winner take all” approach is not the desired outcome since a diverse energy mix creates a more stable, secure and reliable industry. By working together to find ways traditional fossil fuels can firm intermittent renewable power, as well as utilize common infrastructure, the sectors are beginning to speak, although slowly, with a common message.

Another barrier to development is inefficient permitting processes. Regardless of the technology, permitting delays cost time and money and in many instances can delay a project indefinitely. Since the creation of energy generation projects drives the need for manufacturing, permitting delays also create issues for the growth of the industry cluster. If there are fewer projects coming online, then there are fewer manufacturers who will be attracted to the state to site their facilities. Some of Arizona’s jurisdictions have had success reducing permitting timeframes to better support industry. The AEC is working to continue this process statewide for utility-scale projects, as well as support other entities working to improve the process for distributed generation.

Arizona has the opportunity to benefit from a robust energy economy if it can only address the redundancy in permitting and the confusing messaging. The AEC is focusing these efforts in an attempt to drive economic development, a diversified energy mix and higher paying jobs.

Michelle De Blasi, co-chair of the Arizona Energy Consortium, is a shareholder in the Phoenix office of international law firm Greenberg Traurig. De Blasi focuses her practice on environmental law, with an emphasis on natural resources matters. She advises clients on energy and environmental sustainability, including traditional and renewable energy project permitting, climate change, and greenhouse gas emissions.