As the sun reaches its highest point in the sky this week with the passing of summer solstice, I'm amazed that Arizona regulators are retreating from the state's modest commitment to develop a solar energy industry.
It's not as if Arizona is busting its budget on solar. Instead, the state remains firmly committed to continuing its polluting and increasingly expensive reliance on fossil fuels and nuclear energy for decades to come.
This is an archaic policy that consumers should no longer tolerate. It's way past time for consumers to pressure the five members of the Arizona Corporation Commission and demand they greatly increase the state's support for dependable renewable energy sources -- the best of which is solar.
The commissioners are currently debating new regulations that will have a profound impact on the development of the state's solar energy industry, with the commission's next public meeting on renewable energy issues tentatively scheduled for July 13. While a final decision on the rules is months away, it's clear that the majority of the commission members want to reduce state support for solar.
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That would be a serious mistake. And what better time than now -- during the year's longest days -- to shed some light on what's going on?
This year, Arizona utilities will spend about $12 million on solar electric generation. That's chump change, considering that Arizona consumers spend this much money every single day for electricity from nonrenewable and polluting oil, gas and coal plants plus inherently hazardous nuclear power.
The corporation commission currently requires that utilities generate 1.1 percent of their electric power from renewable sources by 2007. Customers pay a small surcharge each month, and that money is turned over to the utilities to find renewable energy sources.
The commission's Environmental Portfolio Standard (EPS) surcharge on residential customers is capped at 35 cents per month, while commercial businesses pay up to $13 monthly. The surcharge raises about $20 million a year -- of which 60 percent, or $12 million, has been dedicated to solar for the past four years.
Most of the EPS surcharge funds have been used by Arizona Public Service Company and Tucson Electric Power Company to construct two of the largest solar electric generating stations in the nation. APS's solar array at the Prescott Airport produces 1.8 megawatts of power. TEP's Springerville Solar Array generates 4.6 megawatts and is the most productive facility of its type in the world.
In the last three years, about $2 million a year of EPS funds has been used to subsidize the installation of solar systems for homes and businesses that are connected directly to the electric grid. I'm one of the handful of Arizonans who have taken advantage of this program; I installed a solar system on my home.
The corporation commission staff now wants utilities to generate 5 percent of their power from renewable sources by 2015 and 15 percent by 2025. The EPS surcharge would be increased to about $60 million a year.
But commissioners Marc Spitzer, Mike Gleason and chairman Jeff Hatch-Miller have all suggested they are in favor of eliminating the staff's proposed requirement that 20 percent of the renewable energy come from solar.
If the 20 percent guarantee is removed, solar industry leaders say utilities will stop building large-scale solar generating plants and investing in solar electric systems on homes and businesses. Instead, Arizona's utilities would simply meet their renewable energy requirements by buying wind and geothermal power from neighboring states -- primarily California and New Mexico.
The three commissioners say they want to remove the guarantee to force solar to compete directly with other forms of renewable energy such as wind, biomass (wood), geothermal and biogas.
"I tend to believe in a level playing field," Hatch-Miller tells me. "Let's bring the best technology to the market and it will take the lion's share."
Gleason is particularly hostile to solar. "Its future does not depend on the extent to which it is subsidized in Arizona," he wrote in a June 1 letter to his fellow commissioners. "It would be unwise business practice to mandate long-term investments in solar electric generation before the efficiencies of emerging solar technologies can be evaluated."
Gleason misses the point. If Arizona wants to take advantage of what will be a huge world market for solar energy, it needs to build the infrastructure and expertise to position the state in order to compete with other regions of the world. Japan and Germany are far ahead of the United States in the use of solar energy.
While I agree with Hatch-Miller that competition certainly makes sense to spur innovation and lower costs, there is no doubt that solar energy remains Arizona's most important, long term renewable energy source. It's just dumb to reduce funding for an industry that is just now finally getting a toehold in the market.
"Our main concern is that any effort to eliminate solar electric at this point in time derails efforts underway . . . to establish an industry base in Arizona to support this technology," says Sean Seitz, president of the Arizona Solar Energy Industries Association.
Rather than reducing the subsidy to the solar industry, the corporation commission should be pushing forward with comprehensive policies that will propel Arizona to the forefront in the research, design, manufacture and installation of solar electric systems.
Even some utility execs understand that.
"We need incentives to help establish solar manufacturing facilities in Arizona," says Tom Hansen, vice president and technical advisor for Tucson Electric Power. Hansen oversees TEP's groundbreaking Springerville Solar Array, one of the world's most productive solar electric generating stations.
Hansen tells me that Arizona has the potential to produce nearly its entire demand for electricity by dedicating 400 square miles of Arizona's 114,000-square-mile land base to solar arrays using today's photovoltaic technology. That's less than one-third of 1 percent of Arizona's land.
While the price of solar is slightly higher than other renewable energy sources and about twice as high as fossil fuels and nuclear, the cost is declining at an average of 5 percent a year. It's not going to be long before solar will be competitive with fossil fuels and there will be a huge demand for solar technology.
Few places in the world have a better opportunity to rapidly expand the use of solar electricity -- not only from large-scale utility plants such as the Springerville facility, but also by installing tens of thousands of photovoltaic systems on the rooftops of homes and businesses.
Maricopa County is growing at an amazing rate of 100,000 new residents a year. The Legislature should consider requiring builders to install solar electric panels on new homes. This would provide a dramatic boost to the solar industry while greatly reducing the need for new fossil fuel and nuclear power plants in the future.
Arizona Public Service and Tucson Electric Power -- along with Salt River Project, which is not regulated by the commission -- already have subsidized programs under which consumers can purchase solar electric systems for their homes and businesses and tie directly into the utility grid.
About 100 homeowners and businesses have installed solar electric systems in the last few years. I put a 1-kilowatt system on my cabin in the Verde Valley last year and it generates all the power used by the house during the day.
At night, I benefit from an APS rate plan in which I only pay 4 cents per kilowatt-hour between 9 p.m. and 9 a.m., less than half the regular rate.
The photovoltaic system cost a little over $10,000, installed. APS paid about $4,000 of that, using funds from the commission's Environmental Portfolio Standard surcharge.
In exchange for the APS subsidy, I signed a contract with the utility as a power provider. This allows APS to count the energy produced by my house in its requirement to produce 1.1 percent of its electricity from renewable sources.
In addition, I received a $1,000 state tax credit. The solar electric system has cut my monthly power bill by $50. I expect to recoup my initial $5,000 out-of-pocket investment in about nine years. The panels should last another 20 years, providing free power in the daytime.
There is enthusiastic demand for the rooftop solar program, even though the utilities have done little promotion. APS has already allocated $1.5 million of the $2 million it has available this year for subsidized residential and commercial solar electric systems.
Together, large-scale solar energy generating stations and rooftop systems are now producing a little more than 10 megawatts of power in Arizona. Granted, the amount of solar power is only a sliver of the 1,270 megawatts produced by each of the three reactors at the Palo Verde Nuclear Generating Station 50 miles west of downtown Phoenix.
But there is no doubt solar will play a major role in providing power in the very near future.
"The only renewable resource in the long run where there is enough to provide the U.S. energy needs is solar," says Hansen.
Corporation commissioner Kris Mayes (a Republican, as are all her colleagues on the commission) is a strong supporter of solar power. Mayes says that if the commission eliminates the 20 percent set aside for solar, it would likely adopt a rule requiring that up to 25 percent of all renewable energy come mostly from homes and businesses with solar electric systems tied into the grid.
While solar electric systems on homes and businesses is a growing and increasingly important part of Arizona's solar industry, it remains small compared to the amount of power being generated at the utility-run plants in Springerville and Prescott.
And it is at these large-scale plants where great strides have been made in lowering the cost of solar electricity production. It is vital that the state greatly expand the deployment of solar electric on homes and businesses, as well as encourage large-scale production facilities.
"My hope is that we can continue to do both," Mayes says.
I hope so, too.
Last month, Mesa voters approved $84 million in tax breaks to lure a Bass Pro Shop to the Riverview on Dobson. Those voters would have been better off investing that money in the solar energy industry.
Helping underwrite the state's solar industry would have attracted worldwide attention and helped spur the creation of possibly thousands of high-tech jobs in Mesa.
Instead, Mesa got a tackle shop.
Developers promised Mesa voters that Bass Pro would attract millions of customers across the Valley and the Southwest to shop at the 200,000-square-foot glorified bait shop. But to land a Bass Pro Shop, taxpayers would have to give up tens of millions of dollars in incentives.
I strongly recommended against voting for the handout ("Charity for the Super-Rich," April 21, 2005), especially since the Riverview on Dobson shopping center is being built on prime land. Instead of making the shopping center the city's desperately needed cash cow, Mesa's naive, misled citizens gave away the key to the city treasury to a privately held company based in Missouri.
If that's not painful enough, just days after the May 17 election, Glendale announced that it landed Bass Pro's main competitor, Cabela's, to set up its own version of the great outdoors.
Cabela's is a publicly owned sporting goods store from Nebraska. The company says it will build a 165,000-square-foot store chock-full of outdoor supplies and gee-whiz attractions, including a fake mountain. Glendale agreed to hand out $16.7 million in incentives to land it.
Cabela's will divert thousands of customers from Bass Pro's doors. This, of course, is more bad news for Mesa taxpayers because it will take far longer for the city to cover the cost of the $84 million in giveaways, since Bass Pro's sales will obviously be far lower than originally projected.
Valley taxpayers have now forfeited $100 million to get two huge outdoor sporting goods stores.
Both of these operations would have eventually come here anyway -- without any incentives -- because of the size and wealth of this market. Valley residents spend more than $1 billion a year on sporting equipment. There was no need to give away a dime with that kind of spending.
The state Legislature needs to immediately pass a law that prevents cities from giving away sales taxes to lure retail businesses. Tax incentives should be used to help expand manufacturing and develop new industries -- such as, dare I say, solar.
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