Arizona is about to begin an important discussion on the cost benefits of solar energy. The discussion is scheduled for May 7 as part of a series of workshops the Arizona Corporation Commission has scheduled to examine the impacts of innovation on the utility business model.
This workshop comes on the heels of last year’s acrimonious debate on net metering. That dispute focused on whether rooftop solar owners place an unfair burden on non-solar customers through a “cost shift” that left “traditional” customers holding the bag for the majority of costs to maintain and operate the utility infrastructure. Absent from those deliberations, however, were any consideration for the value of solar.
Up until now, all the fuss has been about determining the value of the green electron to the utility and comparing it to the cost of the cheapest alternative. Attempts to expand the dialogue have largely failed to include the environmental attributes of solar and other non-energy benefits.
Witness the wisdom of 18 Arizona state senators who earlier this year voted for Senate Resolution 1003, which calls for the nullification of all rules, including clean air and water requirements, imposed by the EPA.
Yet the continued burning of fossil fuels is feeding such societal and climatic disruptions as the bark beetle infestation in old-growth pine forests in northern Arizona, the decreasing water flowing through our rivers, dams, canals and into our cities, a record drought that is devastating farmers’ crops, incomes and livelihoods and resulting in wildfires that destroy property and claim lives.
Recent events clearly illustrate that the impact of climate change isn’t limited to wild animals or the polar ice. The impacts are being felt everywhere — food and water supplies, the economy and our health. It’s a threat to our way of life.
The U.N. Intergovernmental Panel on Climate Change released its latest report (Climate Change 2014: Impacts, Adaptation, and Vulnerability) last week. The report was written by 300 experts from 70 countries and based on 12,000 peer-reviewed scientific papers. The report reveals in no uncertain terms that the continued burning of fossil fuels at present rates will cause more floods, droughts and violent storms as CO2 emissions drive up global temperatures and feed climatic changes.
In the face of the overwhelming evidence, the discussion in the Arizona Legislature actually included the purported positive impacts of carbon dioxide from fossil fuel consumption. That “debate” ignores the evidence that the amount of CO2 produced by fossil fuel consumption exceeds the ability of living organisms and other natural processes to remove it and store it in other forms.
Now, the conversation shifts from the myopic Legislature back to the hearing rooms of the Corporation Commission, where the cost benefits of solar energy is on the agenda.
Minnesota is just concluding a similar process and have come up with a formula to establish a value for solar electrons. The Minnesota formula includes several actors, including avoided costs of fuel purchases, new power plant construction and avoided transmission capacity.
More importantly, though, Minnesota assigns a methodology and cost to environmental impacts. This process for the first time will put a utility on the hook for the environmental harm it causes. In other words, instead of shifting the costs of environmental damage caused by their operations onto society those environmental damages now come with a price tag to the utilities.
The Minnesota formula may end up requiring utilities to pay more for a net-metered solar electron than the current retail cost of electricity. While that may sound like a bad deal for utilities, it could prove to be the incentive utilities need to reduce the carbon intensity of their delivered electricity, which in turn would reduce the value of solar.
It is hard to image Arizona following suit – after all it is pretty clear that science and politics don’t mix well at the Legislature. But any discussion that doesn’t place a value on our environment is promoting a cost-shift of massive portion. And it is society and the planet – not fossil-fueled utilities – that will bear the crushing burden.
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 and serves as Director of Communications for the Arizona Solar Center.