Solar energy used to be a backyard hobby. Because of high costs, the emerging technology was a pipe dream for most, but as the green movement gained traction and the price decreased, solar has become a viable energy source of the future.
In 2008, President Barack Obama’s economic recovery included the Solar Investment Tax Credit, which poured more money into the solar industry than anything that came before it.
Annual solar installations have grown 76 percent since the incentives were implemented, while employment related to the solar industry has grown 86 percent, effectively lowering the cost of solar, according to the Solar Energy Industries Association.
The incentives were supposed to expire at the end of 2016, but have been extended to 2022. Under the new extension, the Solar Energy Industries Association expects solar to account for 3.5 percent of U.S. electricity generation, up from .1 percent in 2010.
Phoenix boasts 300 days of sunshine a year, which would make many folks believe Arizona would be the capital of solar in the country. But it’s not. California is.
California has consistently beat the state in solar installations, topping out at 3,549 megawatts installed in 2014, with only a slight decline to 3,266 in 2015, according to the U.S. Solar Market Insight.
In 2013, Arizona ranked second across the nation for photovoltaic solar installations, with 421 megawatts installed, but has since dropped to sixth nationally, with 234 megawatts installed across the state in 2015, according to the Market Insight report.
Policy climate
Nasty public battles between the solar industry, utilities and the state’s government over net metering have been ongoing for years, which is what some experts cite as the cause for the drop in solar installations in the state.
Dan Whitten, vice president of communications at the Solar Energy Industries Association, says Arizona’s policy environment has not been as welcoming as it should be. It relates back to extra charges that have been placed on customers who are producing their own solar, he explains.
Solar consumers ought to be able to sell extra energy they produce to their neighbor at the same price the neighbor would pay for other electricity, he says. There has to be a path forward on how to allocate the funds in a reasonable way, but utilities have been unfailingly unbalanced in how to do that, Whitten claims.
Industry experts, like Jim Arwood, who has been working in the solar industry since the 1970s, says the Environmental Protection Agency’s Clean Power Plan will usher a green revolution throughout the country and in Arizona.
“If the Clean Power Plan goes into place, it will build upon (the Solar Investment Tax Credit),” Arwood says. “Between the two of them, between 2009 to 2020 we will have re-invented the century-old energy infrastructure and our dependence on fossil fuels.”
The Clean Power Plan would create the final emission guidelines for states to follow in order to reduce greenhouse gas emissions from fossil fuels. States will make up their own plans with help from the guidelines.
But the Supreme Court stayed the Clean Power Plan in early February. Some states have continued to work with the EPA in implementing the Clean Power Plan, despite the stay.
Before the stay was announced, Arizona led the charge, along with 26 other states, in filing a suit against the Clean Power Plan after a federal appeals court declined to block a rule that limits carbon emissions from plants.
In a statement released early this year, the Arizona Corporation Commission — the Arizona regulatory agency in charge of protecting rate payers from large utility increases — said “the plan will devastate the coal industry, resulting in job losses and skyrocketing electricity bills for customers.”
The plan would cost more than $25 billion annually, and consumers would see a 10 percent or more increase in energy bills, according to the Corporation Commission’s January statement.
In an email statement from Gov. Doug Ducey’s office, Daniel Ruiz says energy policy that has an impact on Arizona shouldn’t be coming from Washington D.C., but from the state itself.
The Clean Power Plan and blackouts
Under the initial proposal of the Clean Power Plan, Arizona would have had blackouts, says Arizona Corporation Commission Chairman Doug Little. The original ruling called for all coal production to be eliminated by 2020, Little says.
Currently, nearly 40 percent of Arizona’s energy is generated by coal, according to the U.S. Energy Information Administration. Little says the original requirements were impossible to meet and replacing the state’s coal portfolio would have put the reliability of Arizona energy at risk.
States and utilities are encouraged to develop more renewable energy, and are discouraged from implementing more coal through the Clean Power Plan, Little says. Even without the Clean Power Plan, utilities are starting to focus on natural gas generation because of its low prices, and due to the expectation the price will stay low for some time, Little says.
The Corporation Commission worked successfully with the EPA in changing the original rules, creating a glide path for Arizona, Little says.
“The glide path allows us to use the coal plants until the end of their life cycle and replace them at an appropriate time at the end of their cycle, instead of an unnatural time point,” he says.
Arizona will purchase emission reduction credits to stay within the emission targets the Clean Power Plan will set up, Little says. And for now, the state plans to replace its coal fleet with natural gas, he says, changing the state’s energy portfolio from around 30 percent gas to 40 percent.
Thanks to the glide path and changes that have been made to the Clean Power Plan, Little says the plan is now achievable for Arizona. But the state still opposes the rules.
The chairman warns rates will increase if the Clean Power Plan is implemented. There will be expenses to implement more pollution controls on the power plants and it will cost the state money to eventually replace those coal plants, he says.
But when it comes to rate increases and extra expenses being forced upon businesses and the rate payer via the Clean Power Plan, Arwood says that’s short-sighted.
Arwood believes the Clean Power Plan is all about combating climate change and how it will effect businesses and consumers.
“If you want to talk about hurting business and stuff like that, the impact of climate change will do more harm, in greater numbers, than the Clean Power Plan will impact jobs, costs, industries and commerce in Arizona,” Arwood says.
Despite all of this, the Corporation Commission is not trying to kill solar, Little says. And he, along with the governor, believe that solar has a bright future amongst the state’s energy mix.
In the coming years, Arizona will see an increase of renewables to the current energy portfolio and solar will play a big role in that, Little says.
Rising tides don’t raise all ships
Chris Davey moved from Australia to Arizona eight years ago. He’s the president of EnviroMission, the developers of Solar Tower technology, and he believes the solar industry has sort of shot its own foot.
“The solar industry out here is incredibly fragmented, and that’s evidenced by a continual lack of messaging around the solar space,” Davey says.
Many of the sectors in the solar industry, whether it’s installers, or manufacturers, have an “us vs. them” mentality, which really hurts the industry, he explains.
It’s all about the messaging, Davey believes.
A vocal minority has been boasting solar’s cost effectiveness, Davey says. If that’s true, then Clean Power Plan or no Clean Power Plan, solar would be a logical choice.
But it doesn’t seem solar is the logical choice, because utilities across the country are starting to focus more on gas power because of low prices and the advent of fracking, a controversial drilling technique that has opened up access to many natural gas reserves that were previously inaccessible.
When the Salt River Project plans for its future energy portfolio, it makes sure to use the least expensive resources, says Tom Cooper, SRP’s director of resource planning and development. And right now, prices have been especially low, but solar prices are dropping too, he added.
The energy portfolio’s future depends on many factors and SRP will go the most cost effective way, Cooper explains.
The story the energy industry should be selling, Davey says, is the one about jobs.
Solar can create green jobs, further diversifying Arizona’s economy and helping the state become a regional player that delivers power without wasting water, he explains. “
It’s not about climate change or the feel good that comes with solar, it’s about why (solar) makes sense,” Davey says.
Lost opportunities
As utilities, regulators and the solar industry battle it out, solar’s future in Arizona remains uncertain.
And that uncertainty can cost the state. Michelle De Blasi, co-chair of the Arizona Energy Consortium and a director at Fennemore Craig, says we’re not just losing solar installations, but also businesses.
Over the years, businesses have been relocating headquarters and planning major manufacturing projects, with Arizona being a possible home to those economic developments.
Arizona has been business-tax friendly for years, but that’s not the only factor businesses consider when making major moves. What’s the energy policy like? What’s the education policy like?
De Blasi says as the future of solar remains uncertain, Arizona is losing business opportunities and the state should be looking at the whole economic picture, not just solar.
Stakeholders need certainty in the solar policy in order to move forward, she says.
The best way for solar to move forward is for folks to start compromising and it will hopefully come in the future, she says.
“What is certain is that if we don’t have a meeting of the minds, it’s going to be a challenge to be effective in this state,” De Blasi says. “And (solar) may continue to dwindle.”
Arizona solar facts:
In 2006, the Arizona Corporation Commission approved the Renewable Energy Standard and Tariff, which requires the regulated electric utilities in the state to have 15 percent of their energy produced by renewable resources by 2025.
- Each regulated utility has to file annual reports about how they implement the newest requirements, and the rules have led the way to Arizona’s renewable future.
- The first solar photovoltaic commercial facility opened in Arizona in 1997. More recently, one of the world’s largest solar projects — the $1.8 billion Agua Caliente Solar Project — came online in 2014.
- The Agua Caliente project produces 250 megawatts, which is enough to power 35,500 homes.
- Arizona Public Service’s solar capacity sits at 875 megawatts, which produces enough energy for 220,000 homes.
- The Salt River Project set a renewable energy goal to have 20 percent of its retail energy requirements filled with sustainable resources by 2020, a benchmark the utility says it will meet at its current pace.
- According to the U.S. Energy Information Association, solar energy contributed less than three percent to Arizona’s net electricity generation, but that number is a 50 percent increase from the previous year.
Want to hear about what’s going on in Arizona’s energy industry? A panel of experts will be talking aerospace and more on Oct. 5 at the HEAT Forum.
