The Arizona Energy Consortium (AEC) is a business consortium that promotes the growth and development of Arizona’s energy industry. Since 2011, the AEC has worked to strengthen the energy industry by providing a forum for its diverse base of members to increase business opportunities, while reducing barriers to development by supporting certainty and consistency of policy. Our members include a broad range of energy industry experts – from developers to technical consultants, construction companies, mining companies, financial institutions, manufacturers, utilities and service providers. The AEC serves as a place for new businesses to integrate into the community, opportunities are created to increase retention of the businesses we attract to the state.
The AEC utilizes a proactive approach in its initiatives. In May, the AEC will release an update to the 2012 Arizona Energy Roadmap – a plan for Arizona’s energy industry – with an emphasis on policy certainty, continued innovation and the potential expansion of regional Southwest energy markets. In September 2018, the AEC will host the Southwest Energy Conference, a gathering of significant energy industry experts discussing the continued expansion of the regional markets, how innovation plays a role and the potential impediments. Through these collaborations with key stakeholders in Arizona and the region’s energy industry, the AEC helps shape the initiatives that promote innovation and strengthen the diversity of our energy industry while continuing to ensure secure and stable electricity pricing.
The AEC is also a robust place for energy industry members to network and grow their businesses. At the bimonthly Energy Drinks networking events, a member company is provided the opportunity to host the event and speak about their company. Many business deals and relationships are formed at these events. At the AEC’s Monthly Forum meetings, member companies are periodically invited to speak about their projects, services or technology to showcase their company’s expertise to an audience of potential customers. Additionally, our Member Resource Guide provides member companies the ability to provide detailed company-specific information to initiate business development.
What’s new in Arizona’s energy industry?
With the fast-changing landscape of the energy industry, the AEC provides a collective voice for industry stakeholders and the ability to share ideas to move the industry forward. One of the many services the AEC provides to its members is to continuously monitor changing policies and provide opportunities to share this knowledge, as well as provide opportunities to interact with influential speakers and stakeholders from the private and public sectors.
Arizona has a diverse energy portfolio comprised primarily of natural gas, coal, hydroelectric power and nuclear energy. Arizona’s Renewable Energy Standard and Tariff (REST) requires regulated utilities to provide 15 percent renewable energy by 2025. Although hydroelectric power has been the dominant source of renewable generation capacity, the utilization of other renewable resources, such as solar, continues to grow; Arizona is now ranked third in the nation for installed solar capacity. As many tech companies and data centers are demanding renewable energy to power their facilities, Arizona must consider the environmental and health benefits of renewable energy, while also considering it as an economic development driver for the industries the state wishes to attract.
Arizona’s Energy Standard Modernization Plan, recent proposal being considered by the Arizona Corporation Commission, would change the REST to a Clean Resource Energy Standard and Tariff (CREST). The Modernization Plan provides that “Arizona’s economy become powered by clean energy sources that make up at least 80 percent of the state’s electricity generating portfolio, by 2050, with the ultimate goal being 100 percent.” The plan would require that “Each year, affected utilities will file a CREST Implementation Plan describing their strategy to achieve their goal of reaching 80 percent use of clean energy sources and a Compliance Report detailing their progress.” Clean energy sources would include generation resources that operate with zero net emissions beyond that of steam, including nuclear, hydroelectricity and energy efficiency.
The Modernization Plan seeks to provide updates to such areas as Arizona’s policy framework, clean energy, energy storage, forest health/biomass, dispatchable clean energy, energy efficiency, electric vehicles and energy planning. It has yet to be determined how much of the Modernization Plan will be adopted or implemented; however it is a positive first step in the state adopting an energy policy, something it has not had in many decades.
While Arizona’s utilities provide a strong diverse portfolio of reliable, inexpensive power, there remain many opportunities for growth. Some of the key areas of advancement opportunities in Arizona’s energy industry include energy storage, development of regional markets and electrification of vehicles.
The inherent lack of capacity and intermittent nature of the available renewable technologies, coupled with federal and state support, are the primary drivers for the organic and mandated growth in storage technologies. That said, energy storage allows utilities to maximize the benefit of all generation resources, while at the same time providing the ability to better manage supply and demand during times needed most by the market. Electricity from intermittent resources, such as solar PV and wind that only produce power during certain times of the day, can be stored at peak generation and utilized during peak demand. As energy storage technologies continue to improve and become more cost effective, both the customer and the utility will benefit through a more efficient and cost-effective utilization of grid resources.
Although Arizona does not currently impose a mandated procurement requirement for energy storage, Arizona’s utilities are actively developing energy storage in an attempt to better understand the advantages and drawbacks. However, if implemented, the modernization plan would require a target of 3,000 MW of deployed energy storage by 2030.
Arizona has many opportunities to take advantage of its vast lands, lower electricity rates and less expensive permitting processes to further develop as a regional energy hub. While traditionally Arizona utilities have focused on providing power within the state, a strengthened system may in turn provide greater energy security and continued reliability for the broader region. Arizona needs to determine how it wants to participate in and contribute to the regional framework.
A program that is currently in development to strengthen the western states’ transmission system and improve reliability cost-effectively is the Western Energy Imbalance Market (EIM). The EIM “is a real-time energy-only market offered by the California Independent System Operator (CAISO) to any balancing authority area in the western United States.” Its promoted goals are to provide “a low-cost, low-risk option that balances load and resources automatically and economically.” The CAISO and PacifiCorp initiated the EIM on November 1, 2014 to balance energy supply and demand in real-time over six states. Since the EIM was implemented on an existing platform, the result, according to the CAISO, is a reliable, flexible, and scalable system. The EIM is anticipated to expand – Arizona Public Service entered the EIM in October 2016, and the Salt River Project is expected to join the EIM by 2020. It is important for Arizona to maintain a seat at the table where regional issues are being discussed; Arizona stakeholders must provide input so that decisions impacting Arizona and its ratepayers are not being made by those outside of the state. The AEC will continue to monitor the development of the EIM and its impacts on Arizona’s energy industry, and where appropriate provide a forum for affected stakeholders to have a constructive conversation.
Electric vehicle innovations
As more electric vehicles (EVs) are produced by manufacturers to meet the demand of consumers, the generation profile will need to adjust to those demands. The widespread adoption of EVs will not be effective if the infrastructure and electricity rates are not in place to support the adoption. Arizona policies have encouraged charging infrastructure and technology innovations; however, there are policy opportunities to further encourage and prepare for increased market penetration of EVs. Although Arizona’s utilities are working diligently to plan for increased electricity demand, it is not yet known how this increased infrastructure would be funded by the regulated utilities.
The AEC recognizes that the energy industry is much broader than just power generators, so a strong and diverse energy portfolio will be attractive to retaining our current industries, as well as attracting other industries. The AEC will continue to work with all stakeholders to provide a reasonable voice in reducing barriers to development by supporting certainty and consistency of policy.
Chris Davey and Michelle De Blasi are co-executive directors of the Arizona Energy Consortium.