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How Should AZ Add More Renewables? Utilities, Solar Advocates Disagree

By Mark Brodie, Will Stone
Published: Friday, December 2, 2016 - 5:48pm
Updated: Friday, December 2, 2016 - 5:59pm
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Solar panels .

Arizona’s top utility regulator wants to up the state’s renewable energy target to 30 percent by 2030, but not everyone agrees on how to get there, let alone whether a new goal is necessary. 

This week, power companies, clean-energy advocates and others weighed in on the proposal coming from Doug Little, chair of the Arizona Corporation Commission, to revise the current goal of 15 percent by 2025.

The state’s largest utility, Arizona Public Service, contends that a new renewable portfolio standard isn’t necessary, given the cost of clean energy like solar has dropped so significantly in recent years.

“Mandates are not driving more implementation. It’s pricing, efficiency and the opportunities that exist in the market,” Greg Bernosky of APS told KJZZ.

He said setting these targets limits the utility’s flexibility and can end up being less cost-effective. Instead, APS would prefer to develop its renewable-energy targets as part of its integrated resource planning process. The utility is required to submit that plan and work with stakeholders, but does not ultimately need approval from commissioners.

When the Renewable Energy Standard and Tariff rules do get revised, though, Bernosky said the commission should end the requirement, known as a “carve out," that 30 percent of the clean energy added each year comes from distributed generation like rooftop solar.

“We don’t think we should be in the business of picking winners and losers,” Bernosky said. “We talk a lot about rooftop solar, but there are excellent solar projects out there that we don’t talk about or can’t invest in as much.”

APS proposes that nuclear energy count as part of its renewable energy portfolio, as well.

Rooftop solar presents a unique challenge for APS. The utility has more than 40,000 solar customers and enough coming online to exceed its requirement of 30 percent each year. But APS hasn’t actually received renewable-energy credits for that clean power since it stopped paying incentives to solar customers several years ago.

That forced the utility to request a waiver from the commission this year.

Clean energy advocates are welcoming the chance to increase the state’s commitment to renewables.

“If the market would get us to that carve-out anyways, then it should be easy to comply,” Briana Kobor of Vote Solar said in response to APS's comments.

She said the requirement is critical because utilities are trying to phase out pro-rooftop solar policies like net-metering, which reimburses customers at retail rates for their excess power. Any changes to the rules will need to address APS’s inability to gain credits for new rooftop solar systems, Kobor said, but added that's primarily an accounting issue.

Ideally, there will be different targets for “utility scale, community scale and distributed scale solar,” she said.

Twenty-nine states have renewable portfolio standards. For example, Nevada aims to be 25 percent clean energy by 2020, while California has set an ambitious goal of 50 percent by 2030.

Noah Long with the Natural Resources Defense Council agrees that distributed generation should play a big role in Arizona’s clean energy mix, but “whether it’s through a carve-out, or through effective rate policy, or a separate mechanism, we are open to looking at all of those.”

Long said renewable-portfolio standards have been a highly effective policy tool and lead to lower rates for customers.

“It makes it clear that utilities can’t just sit on their existing resources, even when there are these cheaper and cleaner resources available,” Long said.

“We are in a different paradigm than when we started the renewable energy standard,” Lon Huber with Arizona's Residential Utility Consumer Office said.  

Energy coming from utility-scale solar farms is very cost-competitive with traditional fossil fuel sources. Huber said it’s too early in this process to say definitively whether the higher goal of 30 percent by 2030 is even necessary, but the existing rules are outdated.

“The current structure only values the solar technology that produces the most amount for the cheapest, that doesn’t necessarily align with when we need those electrons,” Huber said.  

Utilities and the solar industry are often at odds about the value of rooftop solar. APS reports the current amount of rooftop solar has already caused a $1 billion cost shift. However, the rooftop solar industry and its customers say those numbers are overblown and don’t account for all the benefits of the technology.

In the next decade, Huber said the cost of power won’t be driving customers’ bills. Instead, it will be the infrastructure and fixed costs for when demand spikes. In light of that, Huber is proposing a separate renewable energy standard for meeting peak demand

While some rooftop solar systems may not supply power during that window of time, Huber said there are many forms of solar that can.

“Developing a renewable energy goal that targets system peak demand merges the environmental benefits of clean energy with cost savings that come from lower system peak,” Huber said.

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