Arizona and the Rooftop Revolution

The Arizona Corporation Commission (ACC) -- the body responsible for rate adjustments for utility companies in Arizona -- was presented a report by its staff last month that recommended a paradigm shift in how it meets its renewable energy goal of 15% by 2025.  The ACC staff report recommends that Arizona meet its renewable energy needs with stepped-up investment in rooftop solar, which the ACC staff judges to be the lowest cost renewable energy option because distributed generation does not require expensive new transmission lines and centralized power plants.  The recognition of rooftop solar's value is a positive sign for our southwestern deserts, which are threatened by both climate change and industrial sprawl from large-scale solar and wind facilities.

Arizonans have an appetite for local clean energy, and the ACC staff recommendation would ensure that ratepayers' money goes back to the community in the form of incentives for customers to install solar panels.  Arizona has seen rooftop solar grow at a quick pace, in part because of its solar ambassador programs. The town of Buckeye, Arizona was one of several cities in the state to be named an "Arizona Solar Community" a status granted to a municipality when over 5% of owner occupied homes install solar panels.  Three years ahead of the 2015 deadline, nearly 8.9% of Buckeye homes have rooftop solar, not to mention businesses and schools.

(click on image to expand)  A Google Earth image shows a school in Buckeye, Arizona taking full advantage of the sun, in addition to over 1,150 rooftop solar installations on area homes, according to the Arizona Smart Power website.
The ACC commissioners still need to deliberate over the staff recommendations when it reviews its renewable energy implementation plans for 2013. Under the proposal, overall allocation of funds to residential photovoltaic solar installations would increase,  although the incentive rate would drop from $0.20 per kWh to $0.10 per kWh  As rooftop solar begins to equal or best the cost of grid energy in Arizona, the ACC anticipates that demand for rooftop solar will remain strong even as the overall incentive rate declines. Most rooftop solar installations are the result of third-party solar leasing companies, such as Sungevity.

Utilities vs. Rooftop Solar
The ACC recommendations are not without controversy, however, since the report also backs a utility company suggestion that would allow utilities to count rooftop solar generation toward renewable energy goals even as incentive rates drop to zero.  So the utility companies could meet the renewable energy goals without purchasing "renewable energy certificates" that are currently part of the Arizona renewable energy system.  A host of industry and conservation groups argue that this would essentially rob ratepayers with rooftop solar installations of the "inherent value" of the renewable energy certificate, which could be sold elsewhere by the ratepayer as incentive for the rooftop solar installation.

One Arizona utility company argues that rooftop solar customers already receive an incentive, insisting that the fixed costs of providing net metering cannot be recovered by the utility, setting up the same argument that San Diego Gas & Electric (unsuccessfully) brought forward in California.   But energy experts contend that the value of distributed generation to the utility company is already higher than the fixed costs, since rooftop solar means the utility company spends less money on big infrastructure.  

Despite this benefit, some utility companies seem intent on protecting their centralized business model from the threat of rooftop solar. One Arizona utility suggested prematurely relaxing efforts to bring rooftop solar online.  The ACC's renewable energy standard and tariff system requires that a minimum of 30% of the renewable energy supplied in Arizona originate from distributed generation (such as rooftop solar), and Arizona's largest utility company argues that it can reach 30% without additional incentives.  But the ACC staff report reminds the utilities that distributed generation in excess of the 30% minimum still counts toward Arizona's renewable energy goals, and since rooftop solar is the cheapest way to meet that goal, the incentives for rooftop solar should not be abandoned.

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