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Renewable Energy & Distributed Generation

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Renewable Energy & Distributed Generation Renewable Energy & Distributed Generation Renewable Energy & Distributed Generation Key Definitions from the Arizona Corporation Commission Renewable Energy: An energy resource that is replaced rapidly by a natural, ongoing process and that is not nuclear or fossil fuel. Distributed Generation: Electric generation cited at a customer premises, providing electric energy to the customer load on that site or providing wholesale capacity and energy to the local Utility Distribution Company for use by multiple customers. Includes rooftop solar systems. Key Arizona Statistics Arizona Energy Mix, 2018 from Energy Information Administration (EIA): ● 0.2% Biomass ● 0.5% Wind ● 4.6% Solar ● 6.2% Hydroelectric ● 27.4% Coal ● 27.7% Nuclear ● 33.4% Natural Gas Numbers on Arizona Solar from the Solar Energy Industries Association (SEIA): ● 3rd in U.S. for installed solar capacity - 4,645 MW ● 6th in U.S. for solar jobs - 7,777 jobs ● 10th in U.S. for number of solar companies - 473 ● $12.5 billion invested all-time ● $1.1 billion invested in 2019 ● 150,000+ Arizona homes with solar installed Significant Policies & Opportunities Under Consideration in Arizona ● Renewable Energy Standard & Tariff (REST). Adopted by the Arizona Corporation Commission (ACC) in 2006; requires regulated utilities to meet a 15% renewable energy standard by 2025. The REST includes a standard for 4.5% of sales to come from distributed generation, like rooftop solar. A very successful policy that has driven renewable energy development statewide while benefitting Arizona’s economy and environment. The ACC is now considering a significant expansion of the REST to put Arizona in line with the current energy market and the policies of neighboring states. ● Net Metering and Rooftop Solar Credits. For years, net metering allowed customers to receive 1-to-1 credits for excess solar energy produced by their home solar array. In recent years, the Arizona Corporation Commission and Salt River Project eliminated net metering and added fees for new solar customers. This led to fewer solar installations and longer payback periods for those investing in solar. The solar export credits for regulated utility customers with APS, TEP and UNS are declining each year and are good for only 10 years. The SRP solar rates have the worst payback periods in the state because of their high fixed fees and low solar credits. Without policy action, Arizonans will find it harder to go solar as time goes on. ● Community Solar. Many Arizonans currently do not have the option to lower their energy bills with solar, because they rent, live in an apartment complex, or don’t have access to capital or financing. Community Solar is a tool being used in many states to allow third parties to develop mid-sized solar arrays and offer subscriptions to customers. Credits are then applied to the customer’s utility bill, which can more than offset the cost of the subscription. Right now, some utilities offer “Community Solar” programs but charge a premium rather than offer a credit. ● Distributed Battery Storage. Many Arizona households that install solar are also considering a battery storage system. Battery storage can be charged by solar during the day and provide home backup power if the grid goes down. Battery storage can also provide a service to the power grid, by providing energy to the utility during times of high demand. In other states, utilities and third parties have begun aggregating distributed battery storage units and crediting customers for allowing the utility to use stored energy during times of need, such as on the hottest days of the year. Pairing distributed storage with other Demand Side Management resources can limit the need for utilities to buy expensive power on the market during times of high demand, or the need to invest in costly peaker gas power plants that only get used a few times of year. Prepared By: Bret Fanshaw, [email protected], 480-269-2589 Arizona Renewable Energy Standard and Tariff: 2020 Progress Report Prepared for: February 20, 2020 Arizona Renewable Energy Standard and Tariff: 2020 Progress Report © 2020 by Strategen A Arizona Renewable Energy Standard and Tariff: 2020 Progress Report Prepared for: Prepared by: Ceres Strategen Consulting, LLC 2150 Allston Way, Suite 400 Berkeley, California 94704 www.strategen.com Edward Burgess Maria Roumpani Melanie Davidson Santiago Latapí Jennifer Gorman Disclaimers Client Disclaimer This report does not necessarily represent the views of Ceres or its employees. Ceres, its employees, contractors, and subcontractors make no warranty, express or implied, and assume no legal liability for the information in this report; nor does any party represent that the uses of this information will not infringe upon privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring by Ceres. Stakeholders and subject-matter experts consulted during this study did not necessarily review the final report before its publication. Their acknowledgment does not indicate endorsement or agreement with the report’s content or conclusions. Strategen Disclaimer Strategen Consulting LLC developed this report based on information received by Ceres. The information and findings contained herein are provided as-is, without regard to the applicability of the information and findings for a particular purpose. References herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring by Strategen Consulting LLC. Arizona Renewable Energy Standard and Tariff: 2020 Progress Report © 2020 by Strategen A Table of Contents Executive Summary ......................................................................................................................................................................... 4 1. Introduction .................................................................................................................................................................................... 6 2. Background .............................................................................................................................................................................. 7 2.1. Overview of the Arizona Electricity System ......................................................................................................... 7 2.2 Renewable Energy Standard & Tariff (REST) Overview .................................................................................... 9 2.3 Comparison to Other States ................................................................................................................................... 10 2.4 REST Benefits and Costs .......................................................................................................................................... 12 3. Arizona REST Benefits ......................................................................................................................................................... 14 3.1 Total Renewable Energy Production ..................................................................................................................... 14 3.2 Cumulative Overall Benefits ..................................................................................................................................... 15 3.3 Avoided Conventional Energy Costs .................................................................................................................... 18 3.4 Avoided Conventional Generation Capacity Costs ..........................................................................................19 3.5 CO2 Emissions Reductions ....................................................................................................................................... 21 3.6 Criteria Pollution Emissions Reductions (NOx/SOx/PM2.5) ............................................................................ 22 3.7 Water Savings ............................................................................................................................................................ 23 3.8 Renewable Energy Technology Costs Reductions ........................................................................................ 25 3.9 Local Investment and Jobs .................................................................................................................................... 26 3.9.1 Benefits in Rural Arizona ..................................................................................................................................... 27 4. Arizona REST Costs ............................................................................................................................................................ 28 4.1 Cost of REST Over Time ......................................................................................................................................... 28 4.1.1 APS ........................................................................................................................................................................... 28 4.1.2 TEP ...........................................................................................................................................................................
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