If you talk with energy experts in Arizona and across the world, they’ll tell you it’s an exciting time to be in energy. Advancements in solar, storage, smart grid technologies and beyond are making renewable energy cheaper and more innovative. And then there are the increasing renewable energy standards set in California, which is creating huge opportunities for Arizona.
In 2015, California’s governor signed a bill which will require energy sellers and publicly owned utilities to get 50 percent of their electricity from renewable energy sources by 2030.
According to a progress report by the California Energy Commission, California draws 27 percent of its energy from renewables, with plans to reach 50 percent by 2030.
That 27 percent translates to 26,300 Megawatts of renewable energy as of Halloween 2016, according to the report by the California Energy Commission.
California’s legislature has even talked about increasing its renewable energy standard to 100 percent.
This leaves Arizona in an interesting position. With Arizona’s ample supply of sun, favorable business climate and close proximity to the Golden State, there’s an opportunity for Arizona to become an exporter of energy, helping California reach its lofty renewable energy goals.
Why stop with California? With Arizona’s large amount of available land, there’s opportunity for the state to export beyond California.
As a result, Arizona could become an energy hub, referenced in the same breath as Texas. And that means high-paying jobs, a wider tax base from which the state can draw funds (can you say hello property tax income?) and a more attractive environment to attract new businesses.
Look back to move forward
Arizona has already dabbled in the energy export business. Several out-of-state utilities (from both California and Nevada) have a stake in the Palo Verde Nuclear Generating Station, which has been the largest energy producer in the nation since 1992.
And in the early 2000s, investors built large natural gas plants across Arizona, which can export electrons to California when needed, says Brad Albert, general manager of resource management at Arizona Public Service.
More recently, there has been an influx of photovoltaic solar developments popping up in Western Arizona, Albert says. Some of the developments were undertaken by APS to serve its own customers, but there are facilities built here that are currently serving California’s needs, he says.
Tom Maples, advanced tech project executive at DPR Construction, says Arizona is well positioned to export energy with current utility lines running between Arizona and California.
The land around these transmission lines is valuable too, Maples adds, which has developers looking to position renewable energy facilities near these areas to more easily export energy to California.
One challenge, Albert says, lies with the amount of available transmission lines to transport this power from Arizona to customers across state lines, because we will eventually run out of capacity. Transmission lines — or power lines — are what guide the electrons from the generation source to its end user.
Maples and Chris Davey, one of the executive directors at the Arizona Energy Consortium, see the current talk in Washington D.C. about infrastructure translating into more transmission lines in Arizona leading out of the state.
“(New transmission lines) would support a tremendous opportunity to be able to export and be a regional hub for not only nuclear power, but renewables that could come online and solar projects that could be delivered,” Davey says.
“Depending on where we position the assets, there’s definitely an opportunity,” he predicts of Arizona’s chances of becoming a regional energy hub.
Talking about infrastructure
California-based utility California Independent System Operator is already footing the bill for the Ten West Link, a 114-mile transmission line stretching between Arizona and California from the Delaney and Colorado River substations.
The 500-kilovolt transmission line will move electrons from Arizona and California, and is expected to be complete and online by 2020.
“California saw the advantage of tapping into Arizona’s power supply,” Albert says about the construction of the line.
More transmission lines seem to be in high demand.
Blair Loftis, vice president and national director of the power generation and transmission sector at Terracon, a siting and design consultancy firm for renewable energy installations, says states like California and Texas that have over-built renewables are experiencing negative pricing.
Negative pricing is when renewable plants such as PV solar generating stations and wind farms are generating enough energy to meet demand, but coal plants are still online, which creates an oversupply.
It’s much cheaper for utilities to pay customers to get energy they don’t need than to shut down an entire coal plant, which takes lots of time and money to ramp down and ramp back up once the energy is needed again.
Loftis says more transmission lines will help move this excess power to other markets and avoid negative pricing.
“If you have a broader market, then you don’t have these isolated markets that are sensitive to these interactions like an influx of renewable energy,” Loftis says.
Arizona could be an energy generation hub, Loftis explains, if the market is expanded to California and to other neighboring states.
There needs to be more infrastructure investment in transmission lines in Arizona, Loftis says, to make Arizona more capable of moving electrons to its neighbors. The solution to this is the Energy Imbalance Market.
Shady day? No wind moving the turbines? That could cause some reliability issues when you rely on solar and wind generation, hence the need for other energy resources in your portfolio.
Removing the obstacles
An Energy Imbalance Market (EIM) would open up access to many different service territories and regions, Loftis says. An EIM pools electricity generation within a region and dispatches resources. An EIM could moderate the variability of renewable generation resources and electricity demand on a least-cost basis. This could make dependability a non-issue, as well as reducing the possibility of negative pricing.
Michelle De Blasi, co-executive director of the Arizona Energy Consortium, says there are already states in the Pacific Northwest talking about joining the EIM, and that’s a big deal.
“I think if (Arizona) can get on the same page and open up the markets, we can generate electricity a lot cheaper here,” De Blasi says.
And in turn, this would further drive Arizona’s capability of becoming an energy hub. The hope lies with more infrastructure. Otherwise Arizona will be missing out on further energy exporting opportunities.