State Regulator Eyes Increase to Renewable Energy Standards

By DAVID LOUIS TODAY’S NEWS-HERALD|havasunews.com| September 21, 2016

Arizona’s top regulator thinks it’s time to reevaluate the state’s renewable energy portfolio standards and simplify the rules to ensure utilities comply.

Corporation Commission Chairman Doug Little recently proposed increasing the standards so that utilities would be required to get 30 percent of their power from renewable sources by 2030. The current standard is 15 percent by 2025. Additionally, electric utilities are required to meet 30 percent of the annual standard through rooftop solar instillations.

“Each year the utilities have to make incremental progress on installing renewable energy generation,” Little said. “Obviously here in Arizona because we have over 300 days of sunshine a year the 800 pound gorilla of renewable resources here is going to be solar.”

The Renewable Energy Standard and Tariff rules were put in place by the commission in 2007.

At that time, renewable sources of energy such as solar and wind were just coming into existence and beginning to display signs of future potential. Their costs were very high and their level of deployment was miniscule.

During the past nine years the situation has changed “considerably.”

According to Little, utility scale photovoltaic (PV) solar plants have increased from 16,000 megawatt hours in 2007 to 23.2 million megawatt hours in 2015, an increase of more than 145,000 percent.

The economics of both residential PV and utility-scale solar projects have also changed.

The median installed price for residential PV in 2007 was a little more than $12 per installed watt. In 2015, those prices had dropped to around $4 per watt.

The number of rooftop systems installed nationally has grown from an estimated 13,800 systems installed during 2007 to over 257,000 installed during 2015 alone, and the pace of adoption is accelerating rapidly.

In the same time period, utility-scale projects in excess of the 500 kilowatt range have dropped from $8 per installed watt to slightly more than $2 per watt.

According to the Solar Energy Industry Association, there were over 7,260 megawatts of solar PV installed in 2015, the largest annual total ever and 16 percent more than 2014.

Residential PV installations increased 66 percent in 2015 compared to 2014 and for the first time surpassed 2,000 megawatts in 2015. Utility-scale PV had a record year in 2015 with more than 4,000 megawatts installed with nearly 20 gigawatt still in development.

“The number of solar installations in the U.S. has changed literally thousands of percent,” Little said. “There might have been 13,000 residential rooftop solar instillations in 2007 and now it’s more than 1 million.”

Any new rules should emphasize “least cost” principles to allow market forces and cost efficiencies to be the primary driver on the renewable energy technology selected to meet the standard. At the same time, Little believes the current rules are overly complex and can be dramatically simplified so that compliance will become more straightforward.

“If you don’t make the standard aggressive what will happen is … people will do exactly what incentives you provide them with. If you don’t provide them with an incentive they will do what makes the most sense economically,” Little said.

“By leaving the standard where it is you are essentially not providing the utilities with any meaningful reason to increase their rate of renewable adoption. Based on what I’ve been told by most of the investor owned utilities they can easily meet the 15 percent standard. It’s not going to be a major challenge to meet this standard. At 15 percent we were not pushing ourselves very hard at all.”

Although a decision by the five-member commission could be more than one year away, Little is steadfast to Arizona becoming more aggressive with its renewable standards.

“First of all it’s the right thing to do. We need to make some headway on climate change issues,” Little said. “The other thing I wanted to do was look at other technologies that maybe were left out of the original standards that could be folded back in.”

In a letter to his colleagues, Little noted, “As the modern electric grid continues to evolve and newer technologies including battery storage and smart inverters become more pervasive, newer models for compensation of excess distributed energy generation should evolve.”

Having the ability to store solar power, and reduce peak hour consumption, could be a game changer to the electrical industry.

“Having the ability to shift solar production has a lot of value,” Little said. “It can actually provide a significant amount of peak demand reduction which has larger implications in terms of not having to fire up natural gas or coal fired plants.”