Arizona and Solar Power: The Time is

NOW!

Arizona Corporation

Commissioner Paul Newman

September 2012

What Is AZ’s Electricity Mix?

• Total in-state generation: 27,000 MW

• Total in-state consumption: 16,000 MW– 40-50% coal– ~30% natural gas– ~22% nuclear– ~4% hydro

–Less than 2% solar…?!• Total in-state solar: ~450 MW as of 06/12

AZ Imports 90% of Fossil Fuels

• AZ imports all Nat Gas and 2/3 of coal

• AZ spent a total of $2.5-3 BILLION on coal, natural gas and uranium in 2010.– AZ spent $1.5 billion importing Natural Gas

(NG) for electricity– $800 million spent on NG for heating– AZ spent $500 million in 2007 importing

coal, and $280 million on coal from in-state

AZ: Only 1-2% of Non-hydro Generation is Renewable in 2011

17 states wereless than 1% RE in 2001, including AZ

Only 4 states less than 1% RE in 2011,

including AZ!

RPS Policies

Renewable portfolio standard

Renewable portfolio goal

www.dsireusa.org / February 2012

Solar water heating eligible *† Extra credit for solar or customer-sited renewables

Includes non-renewable alternative resources

WA: 15% x 2020*

CA: 33% x 2020

NV: 25% x 2025*

AZ: 15% x 2025

NM: 20% x 2020 (IOUs) 10% x 2020 (co-ops)

HI: 40% x 2030

Minimum solar or customer-sited requirement

TX: 5,880 MW x 2015

UT: 20% by 2025*

CO: 30% by 2020 (IOUs)10% by 2020 (co-ops & large

munis)*

MT: 15% x 2015 ND: 10% x

2015

SD: 10% x 2015

IA: 105 MW

MN: 25% x 2025

(Xcel: 30% x 2020)

MO: 15% x 2021

WI: Varies by utility;

~10% x 2015 statewide

MI: 10% & 1,100 MW x 2015*

OH: 25% x 2025†

ME: 30% x 2000New RE: 10% x 2017

NH: 23.8% x 2025

MA: 22.1% x 2020 New RE: 15% x 2020

(+1% annually thereafter)

RI: 16% x 2020

CT: 27% x 2020NY: 29% x

2015

NJ: 20.38% RE x 2021+ 5,316 GWh solar x

2026

PA: ~18% x 2021†

MD: 20% x 2022

DE: 25% x 2026*

DC: 20% x 2020

NC: 12.5% x 2021 (IOUs)10% x 2018 (co-ops & munis)

VT: (1) RE meets any increase in retail sales x

2012; (2) 20% RE & CHP x 2017

KS: 20% x 2020

OR: 25% x 2025 (large utilities)*

5% - 10% x 2025 (smaller utilities)

IL: 25% x 2025

29 states + DC and PR have an RPS

(8 states have goals)

29 states + DC and PR have an RPS

(8 states have goals)

OK: 15% x 2015

PR: 20% x 2035

WV: 25% x 2025*†VA: 15% x 2025*

DC

IN: 15% x 2025†

Renewable Portfolio Standards

AZ Renewable Energy Standard (RES) is 15% by

2025

Year Requirement

2008 1.75 %

2011 3.00 %

2014 4.50 %

2017 7.00 %

2020 10.00 %

2024 14.00 %

After 2024

15.00 %

AZ’s RES means that 15% of the kilowatt-hours generated by regulated utilities come from ‘clean energy’: solar, wind, biomass, solar hot water, concentrating solar etc. by 2025…AZ’s RES is far lower than Colorado (30% by 2020), California (33% by 2020), Nevada (25% by 2025)New Mexico (20% by 2020)

24 States Generate More Clean Electricity Than AZ!

A list of the states/jurisdictions with more clean energy than AZ: Oregon, Wisconsin, Michigan, Rhode Island, Illinois, Washington D.C., Delaware, Maryland, Hawaii, Kansas, New Mexico, Pennsylvania, New Hampshire, Massachusetts, Nevada, Connecticut, California, Maine, Iowa, Colorado, Minnesota, Texas, North Carolina, New York and New Jersey.

Each of these states generates MORE clean energy than Arizona!

See the next slide for details, from www.dsireusa.org/library by Justin Barnes, 3/6/12, RPS Update at Renewable Energy Markets Ass’n webinar

24 States Generate More Clean Electricity Than AZ!

Why do each of these states generate MORE clean energy than Arizona?

Because the U.S. has nearly 10 times more wind than solar – 50 GW (50,000 MW) of wind v. 5.7 GW (5,700 MW of solar PV and CSP or Concentrating Solar Power).

In most other states, solar is far more expensive than in AZ because they don’t generate as much electricity per installed watt of solar.

24 States Generate More Clean Electricity Than AZ at 3.5%!

Oregon 5.0% Wisconsin 5.6% Michigan 5.6% Rhode Island 6.5% Illinois 7.0% Washington D.C. 7.5% Delaware 8.0% Maryland 9.0% Hawaii, Kansas, New Mexico, Pennsylvania and

New Hampshire and New Jersey 10% Massachusetts, Nevada, Connecticut, Colorado

14-16%

California, Iowa, Minnesota 18-20%

State2009 MWh Obligation 2010 MWh Obligation

2009 (% Comp) 2010 (% Comp)

2012 % Obligation 2013 % Obligation

AZ 824,430 1,015,858 90% 93% 3.50% 4.00%CA 29,537,501 34,116,201 89% 86% 20.00% 20.00%CO 1,646,899 1,520,066 100% 99% 15.00% (IOUs) 15.00% (IOUs)CT no data no data no data no data 16.00% 17.00%DC 591,576 699,887 100% 100% 7.50% 9.00%DE 291,451 410,618 100% 99% 8.50% 10.00%HI 0 957,857 n/a 100% 10.00% 10.00%IA 295,800 295,800 100% 100% 105 MW 105 MWIL 2,283,383 2,747,874 100% 100% 7.00% 8.00%KS 0 0 n/a n/a 10.00% 10.00%MA 3,096,274 5,468,563 82% 74% 14.10% 15.10%MD 2,770,353 3,539,778 100% 100% 9.00% 10.70%ME 3,514,043 3,832,365 100% 100% 35.00% 36.00%MI 0 0 n/a n/a 5.60% 6.80%MN 3,860,255 7,093,647 100% 100% 18% (Xcel); 12% 18% (Xcel); 12% MO 0 0 n/a n/a 2.00% 2.00%MT 346,261 692,167 100% 98% 1.00% 1.00%NC 0 24,867 n/a 100% 3.00% (IOUs) 3.00% (IOUs)NH 608,000 830,347 93% 90% 10.65% 11.70%NJ 5,733,633 6,841,213 99% 100% 9.64% (non-solar) 10.48% (non-solar)NM 852,285 858,705 100% 100% 10.00% 10.00%NV 3,551,815 3,493,644 100% 100% 15.00% 18.00%NY 4,868,849 3,061,948 61% 96% 4.54% (new) 5.60% (new)OH 333,809 602,196 100% 100% 1.50% 2.00%OR 0 0 n/a n/a 5.00% 5.00%PA 829,374 no data 100% no data 10.22% 10.72%RI 316,424 no data 100% no data 6.50% 7.50%TX 6,799,347 9,053,544 100% 100% 3,384 MW 3,384 MWWA 0 0 n/a n/a 3.00% 3.00%WI 2,501,915 3,850,101 100% 100% 5.55% 5.55%

Sources: MWh and compliance % data from Lawrence Berkeley National Lab; 2012 and 2013 compliance obligations from DSIRE.

AZ REST is 15% by 2025 – low!

Arizona v. New Jersey:Solar Investment

Arizona • 448 MW total installed solar• $637 million was spent on solar photovoltaic

installations in Arizona in 2011- nearly twice as much as was spent in 2010.

New Jersey• 775 MW total installed solar; 2nd in U.S.   • In 2011, $1.2 billion was invested in New

Jersey to install solar for homes.

http://www.seia.org/policy/state-solar-policy

Solar Module Costs: From $7/watt Down to ~$1.25/watt

Source: Deutsche Bank, January 2011; Systems are global (i.e., blended across geographies)

Installed System Price per Watt, 2008-2011

14

3Q10 Breakout

$3.17

$2.83

$3.72

$5.92

15

APS’ RW Beck Study on the Value Of Distributed Energy

Operating Impacts and Valuation study

RW Beck study says the value of distributed solar is 7.9 to 14.11 cents/kWh in avoided costs for fuel, trans-mission, line losses, etc.

Worldwide PV ShipmentsPV has historically been a marginal power source, but incentives drove steep growth in demand from

’01-’05 Foreign incentives and R&D programs have driven worldwide competition past U.S. producers

U.S. supplied over 30% of

worldwide PV until 1998; now

only 5-7%

Total Installed Solar Power Per MillionPeople Very Low In the U.S. Relative to

Germany, Spain, Czech Republic (what?!) – even Canada!

Germany Has Nearly Half of the World’s Installed Solar PV

Germany has installed 15 times more solar per person than the U.S.!

AZ Wins in Clean Energy Future

• AZ: not living up to clean energy potential• AZ exports about 30% of our electricity: why not

export clean electrons?• AZ’s Renewable Energy Standard and Tariff

(REST) is far behind CA, CO, NM and NV.• Financing mechanisms currently available for

fossil fuels must be extended to clean energy; also developing policies that recognize the true benefits of solar/clean electricity.

• Good financing structures are key!

Solar Has Created

Jobs Almost 10xFaster Than the National Average

Sadly, not many of these projects are in AZ! See this map from SEIA:

http://www.seia.org/research-resources/solar-means-business-top-commercial-solar-customers-us

Global Renewable Energy 2011:$257 billion invested ($147B Solar)

http://newenergynews.blogspot.com/2012/06/solar-leads-world-new-energy-investment.html

Federal Policies That Help Clean Energy

• Level the playing field for subsidies• Reduce/end subsidies for fossil fuels• Extend the Production Tax Credit (wind) and the

Investment Tax Credit (solar, expires 2016).• Allow the use of Master Limited Partnerships for clean

energy – not just oil, gas and biofuels.• Extend Section 1603 cash in lieu of tax credit. Arizona

has benefited enormously from Section 1603! • Allow PACE (Property Assessed Clean Energy) to be

applied to residential as well as commercial solar – especially great for Arizona!

Section 1603: $409 Million Worth of Projects in Arizona To Date

• Section 1603 is a cash grant in lieu of taking a 30% solar tax investment tax credit.

• Section 1603 was extended for ONE year in 12/31/10, but has not been renewed since it expired on 12/31/11.

• AZ has rec’d $409 million in Section 1603 projects, mostly

solar. http://www.treasury.gov/initiatives/recovery/Pages/1603.aspx

• The Solar ITC (Investment Tax Credit) expires in 2016 and should be extended.

http://www.pv-magazine.com/news/details/beitrag/us-congress-pulls-the-plug-on-section-1603-treasury-program_100005372/#ixzz1xWjx07I9

Wind PTC (Production Tax Credit) In Danger; U.S. Wind Market Could Fall 80%

U.S. wind market could fall by 80% without PTC extension.

U.S. has enormous wind and solar potential

Wind has suffered boom and bust cycles; why are we doing this?!

Solar means good jobs!

$72.5 billion for Fossil Fuels

$12.2 billion for Wind and Solar

Cumulative Historical Federal Subsidies Heavily Favor Oil and Gas

29

$446.96

$185.38

$32.34

$5.93

Cumulative Historical Federal Subsidies2010$, billions

O&G

Nuclear

Biofuels

Renewables

1918-2009

1994-2009

1980-2009

1947-1999

Key Finding - Average Annual Subsidies to Each Energy Sector Over

Their Lifetime

30

$4.86

$3.50

$1.08$0.37

0

1

2

3

4

5

6

O&G, 1918-2009 Nuclear, 1947-1999 Biofuels, 1980-2009 Renewables, 1994-2009

2010$,billions

Historical Average of Annual Energy Subsidies:A Century of Federal Support

Coal, Electric Utilities Spend Heavily on Lobbying

http://www.motherjones.com/environment/2012/04/beyond-coal-plant-activism?page=3

Health Effects from Burning Fossil Fuels are Enormous