The solar panel industry in Arizona has taken a few hits over the past few years, from a decision by state regulators to decrease the amount solar panel owners are reimbursed for energy they send back to the grid, to a new more complicated and generally more expensive rate structure Salt River Project implemented for its rooftop solar customers.
Now, a rate proposal by Arizona Public Service awaiting approval by the Arizona Corporation Commission would charge new solar customers either a grid access fee or an additional charge based on their highest hour of energy usage, which can be hard to reduce, even with panels.
Despite it all, though, a report from the Solar Energy Industries Association expects Arizona to more than double its solar capacity in the next five years. It’s an estimate that roughly aligns with projections by Arizona Public Service, the state’s largest electric company.
The added capacity however, is largely coming from utility-scale solar installations rather than rooftop ones, said Sean Gallagher, the Solar Energy Industry Association’s vice president of state affairs. In just the first quarter of 2017, developers added 122 megawatts of utility scale solar compared to 44 megawatts of residential solar, according to the association’s data.
As the industry becomes more developed, utility scale solar projects are shifting as well. Many now include storage technologies like giant lithium ion batteries that allow a utility to even out the variable power generation from renewables like solar and wind.
Gallagher said he has heard many of his members say they don’t allow “standalone solar” projects anymore, especially in states that already have a lot of solar generation.
APS is also looking primarily at batteries for energy storage, said Jeff Burke, the company’s director of resource planning. The utility is currently testing two battery systems in areas with high concentrations of residential solar panels to see how they can balance out power production and consumption, improve the quality of power and enable energy to be used later, Burke said.
While the technology is still somewhat expensive, the utility is looking for costs to come down, he said.
One case study suggests they already are.
Last month, Tucson Electric Power announced a power purchase agreement for a new solar array with energy storage that will be large enough to power 21,000 homes. The price was “historically low” in the company’s words. According to the industry website Utility Dive, the cost to Tucson Electric was less than 4.5 cents per kilowatt hour — far below the 11 cents per kilowatt hour paid by a utility in Hawaii in a similar solar-plus-storage power purchase agreement in January.
Salt River Project also recently signed a power purchase agreement for a solar array and lithium ion storage setup.
When it comes to getting their power to customers, solar developers are seeing opportunities for transmission line capacity to open up as coal plants shut down or reduce generation, Gallagher said. That was the case with the Moapa Southern Paiute Solar Project, the first-ever solar project built on tribal land northeast of Las Vegas. The project uses transmission lines originally connected to a nearby coal plant that shut down just as the solar project was launching, Gallagher said.
Closer to home, some companies are eyeing the Navajo Generating Station near Page as a location for solar or wind projects that could tap into the plant’s existing transmission lines.
APS is one of the owners of the Navajo Generating Station that will be ending its stake in the plant in 2019. While the utility will likely be looking to natural gas plants to fill the gap left by the coal-fired power plant, it would be open to solar battery systems as well, as long as they can meet peak energy demands, Burke said. The utility is also increasingly looking to places like California with high amounts of solar power that overproduces during certain days and times of the year, he said. The need to find buyers of that energy means it is often negatively priced, so a company like APS would be paid to take it.
“In the middle of the day we plan to take as much negatively priced energy as we can,” Burke said. Those savings are then passed along to customers.
When it comes to residential solar in Arizona, growth is picking up right now as customers race to install panels before state regulators make the final decision on APS’s rate case, Gallagher said. The proposed settlement agreement between the utility and dozens of parties in the case would require new solar customers to pay a new grid access charge or sign onto a demand-based plan that charges customers a per-kilowatt hour rate as well as an additional fee related to their highest hour of energy use.
Solar companies were lukewarm about the deal, but Gallagher said some good came out of it, including the fact that solar companies and APS were able to work together collaboratively and reach a deal, which is a change from years past.
“It’s about as good a deal as solar companies and customers could expect,” Gallagher said. “I think our (member) companies do think they can do business under that rate structure, but there is a little bit of diversity of opinion as to how much business.”
For its part, APS’s latest Integrated Resource Plan hardly gave distributed solar glowing reviews, though it did note it as a key factor in the current energy picture.
“By displacing other resources, even other renewable energy resources such as grid-scale solar, creating volatility in wholesale power prices and increasing the need for natural gas generation and local resources, non-curtailable rooftop solar resources have become one of the single most defining factors in western energy markets today,” the report said.