Searching for Sustainable Solar Policies Far from being anti-solar, Arizona Public Service has pioneered with its customers and suppliers to bring the benefits of this clean, renewable energy source to all our customers in the fairest ways possible. By Barbara Lockwood

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Searching for Sustainable Solar Policies Far from being anti-solar, Arizona Public Service has pioneered with its customers and suppliers to bring the benefits of this clean, renewable energy source to all our customers in the fairest ways possible. By Barbara Lockwood

A

s the very first person to hold the title of Renewable Energy Manager

passing a Renewable Energy Standard (RES) that set a target of 15 percent renewables

for Arizona Public Service (APS), I

by 2025 and required 30 percent of the

can attest to how far APS and

total be derived from distributed

Arizona have come in facilitating solar energy over the past decade. In 2005, Arizona was in the process of reexamining its renewable portfolio standard and looking hard at how to make more progress on solar energy. At the time, we at APS had about 5 megawatts of solar generation on our system and just a handful of rooftop solar customers. In 2006, the Arizona Corporation Commission (ACC) took bold action by

generation. In 2008, I had the opportunity

Barbara Lockwood Barbara Lockwood is vice president of regulation

for Arizona Public Service, Arizona’s largest electric company. Previously she served as APS’s general manager of energy innovation, where she managed technology and renewable energy programs, including operation and maintenance of the utility’s solar generation fleet. Lockwood served on the Western Governors’ Association Solar Task Force and the Arizona State Renewable Energy Task Force. She has also served on the Solar Technical Advisory Board for the National Renewable Energy Laboratory, the Research Advisory Committee for the Electric Power Research Institute and the Board of Directors of GridWise Alliance. She holds a Bachelor of Science in chemical engineering from Clemson University and a Master of Science in environmental engineering from Georgia Institute of Technology. She is a registered professional chemical engineer in Arizona.

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to testify (twice) before the United States

among leaders in solar research and

Congress in support of extending the

development. Our record speaks for itself.

Investment Tax Credit (ITC) for solar investments. Also that year, the ACC adopted a new set of rules implementing a

But this is no longer the early days of solar energy. The policies adopted a decade ago

net metering program.

are no longer the right policies to facilitate solar energy for the future. We want more

Fast forward 11 years to see a completely

solar for as many customers as possible without unfairly driving up rates for all

different picture and realize how far Arizona and APS have come. With more than 1 gigawatt of solar on our system and over 50,000 rooftop solar customers, we can definitely say that our early efforts paid off. We’ve invested more than $2 billion in solar deployment and research to provide a cleaner energy future for Arizona. Because of our leadership, solar power is thriving here. Statewide, Arizona claimed the No. 2 spot for overall annual solar growth in 2014, behind only California; and APS consistently ranks in the top 10 in the Smart Electric Power Alliance’s rankings for solar energy adoption. Our story is one of deep commitment to advancing solar energy in Arizona. With more than 300 days of sunshine per year, we know how important solar is to our customers and to our state. It’s hard to believe that with everything APS has done and continues doing to advance solar energy, some in the industry insist on pushing the false narrative that APS is “antisolar.” That’s not who we are. For more than six decades, APS has been a leader

customers. That’s why change is not only necessary but imperative for real progress to continue.

It didn’t happen overnight While we’re proud of our contribution to the state’s solar growth, it didn’t happen overnight. It’s been a long time in the making – over 60 years in fact – and that’s where our solar story really begins.1 In 1955, APS hosted the first-ever world solar conference. We recently came across an article that was published in the APS employee newsletter at the time. The headline was “Solar Meeting Seeks Use of Sun Energy.” The meeting featured “the most complete exhibit ever assembled of machines that harness energy from the sun to do their tasks.” The author speculated that “the multitude of displays include solar devices that may someday become commonplace.” The author was prescient, and the company’s leadership in solar power has been, and continues to be, visionary. Since then, APS has

1

A more detailed look at APS’s solar history and leadership can be found in the Appendix at the conclusion of this article.

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implemented groundbreaking grid-scale

In addition to investing in universal solar

and residential programs focused on harnessing the sun to help meet Arizona’s

projects like AZ Sun, over the years, APS has created several programs for customers

energy needs. One such example is our AZ Sun Program. For the past five years, APS has been overseeing the construction, maintenance and delivery of solar energy from nine solar plants around the state. Through this program, more than 1 million photovoltaic panels are hard at work in the Arizona desert producing 170

who want their own systems but can’t afford to purchase a system or would prefer to

megawatts of clean power for our customers. APS owns and operates the

partner with their long-term and trusted energy provider.

facilities, which were designed and constructed by third-party solar developers,

In 2010, APS installed solar panels on 125

contractors and equipment providers, who created nearly 2,000 jobs during construction. So far, these nine plants have produced more than 1 billion kilowatt hours since the first came on line in 2011. Images of the nine APS AZ Sun Plants appear on this and the following pages. And a timeline of APS’s activity in pursuit of solar energy for our customers appears at the end of this article.

residential rooftops in Flagstaff, Arizona, as part of the Flagstaff Community Power Project (CPP). This pilot program was launched in partnership with the U.S. Department of Energy to test the impacts of high penetration of solar energy on the distribution system. APS was one of the first utilities in the country to study different solar power scenarios as they happened in real time and tested different ways to manage these challenges on the grid. At the time, it was the largest utility-owned distributed generation program in the country.

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Programs like AZ Sun and the CPP have helped APS move rapidly toward the RES set by the ACC in 2006. Ten years ago, the ACC established that regulated electric utilities must generate 15 percent of their energy from renewable resources by 2025. The project focused on developing modeling tools that could be used to understand the effects of distributed solar. These tools were used to improve distribution analysis tasks to help maintain reliability and safety during common operational events, to understand where

Renewable energy currently makes up 11 percent of APS’s diverse portfolio, and we’re poised to meet the standard years ahead of the target date.

Why the contention?

large amounts of photovoltaic energy can cause operational issues to proactively

Despite our success in growing solar in Arizona, some in the solar leasing industry

mitigate any potential problems, and to inform and better customize customer

continue to attack the company with politically charged rhetoric. These attacks

programs by having more information on how solar may change normal operations

distract the ACC, utilities, other stakeholders and customers from the

and load shifting.

serious energy policy discussions that will

APS has been recognized internationally for its grid technology and energy innovation efforts with the CPP. In 2012, APS was ranked fourth nationally by Intelligent Utility magazine and IDC Energy Insights and listed among the Top 10 “smart grid” deployments in North America by Greentech Media. Because of the program’s success, APS expanded the concept to what is now our Solar Partner Program.

affect Arizona’s future. Arguably, the most important policy issue facing not only Arizona but several states across the country is net metering. In 2013, the ACC was the first public utilities commission in the nation to recognize the need to update the way utility rates are set, to reflect the declining cost of solar and the changing way customers use electricity. A handful of companies that lease rooftop solar systems to residential customers are

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customers will pay $1 billion more than they otherwise should over the next 20 years. If we don’t fix it now, that number will only grow.

Net Metering Costs Are Shifted to APS’s Residential Customers The cost shift to nonvehemently opposed to such discussions and insist on preserving their taxpayer and regulatory subsidies for as long as possible, even if it causes long-term harm to utility customers in general and the responsible growth of solar energy. So they’ve unfairly attacked Arizona's regulators and APS with claims that, for the most part, are not based on verifiable facts. All this has occurred simply because we are trying to take responsible action to ensure a sustainable future for solar energy in Arizona. The effect of net metering on customer bills is evident and growing. Today, more than 50,000 APS customers have installed rooftop solar. Because of the net metering subsidy, non-solar customers will collectively pay $51 million per year more than they should for energy. At the current rate of solar adoption, non-rooftop solar

solar customers as a result of net metering is well-established. A number of experts and studies have shown that while net metering may have been needed to jump-start solar adoption, it has now become an obstacle to delivering affordable energy to customers. MIT’s Future of Solar study concluded that “owners of distributed PV generation shift some network costs, including the added costs to accommodate significant PV penetration, to other network users.” It also states that “pricing systems need to be developed and deployed that allocate distribution network costs to those that cause them, and that are widely viewed as fair.”2 Energy + Environmental Economics, Inc. stated in its Nevada Net Energy Metering Impacts Evaluation 2016 Update that “there

2

“The Future of Solar Energy”, Massachusetts Institute of Technology, May 2015,

http://energy.mit.edu/publication/future-solarenergy/

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is a cost-shift from NEM customers to non-

rooftop solar customers are no longer

participating customers for both existing installations and future installations. In total,

paying what is needed to support necessary grid maintenance and updates,

existing installations shift approximately $36 million per year while an equivalent

and APS is working to tackle the issue now before it’s too late.

amount of hypothetical future installations would shift an additional $15 million per

What’s next for APS and solar?

year.”3

Grid modernization

But, an opinion piece in the Wall Street Journal summed it up best: “In short, net

Our mission today, just like it was back in 1955, is to provide great service for our

metering is regressive political income redistribution in support of a putatively progressive cause. Several states including Hawaii, Arizona and California have recently proposed changing their net-metering policies to reduce the cost shift. In October, the Hawaii Public Utilities Commission cut by roughly half the rate paid to new solar customers after

customers while always keeping our eye on the horizon for the changes that will shape our industry in the future. We are currently working on a number of innovative projects that provide options for customers who want advanced technologies like rooftop solar, help us study the way these technologies interact with each other and

finding that the subsidy was unnecessary to encourage solar adoption.”4 The net metering subsidy has served its purpose – witness the growth of solar in Arizona. But 3

E3, Nevada Net Energy Metering Impacts Evaluation 2016 Update, http://puc.nv.gov/uploadedFiles/pucnvgov/Content/ About/Media_Outreach/Announcements/Announce ments/NetMeteringStudy2016.pdf

4

“Nevada’s Solar Flare,” Wall Street Journal, December 28, 2015, http://www.wsj.com/articles/nevadas-solar-flare1451346423

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the grid, and provide ways to help our customers meet their clean energy goals. For starters, APS is collaborating with the Arizona Solar Deployment Alliance and other Arizona-based businesses for the groundbreaking Solar Innovation Study and Solar Partner Program. The Solar Innovation Study is a technology-based, field-research initiative that will help APS better understand the integration of advanced technologies with demand-based rate design. We are installing distributed energy resources – including solar, battery storage, advanced thermostats, load controllers and a high-efficiency HVAC system – on 75 homes across the Valley of the Sun to test how this equipment interacts with the grid and how it can be used to help our customers take control of their energy use. Customers will have a mobile app to control these products and their home’s energy use from a smartphone or tablet. The Solar Innovation Study will also expand industry-wide knowledge about these technologies and help us integrate them on the grid to maintain safe, reliable energy service for all customers. This type of forward thinking will help build a sustainable market for solar and other technologies, and the most reliable and efficient grid for APS and our customers. APS’s Solar Partner Program is the next generation of the Flagstaff Community Power Project. This initiative will see solar panels installed on 1,500 homes across the Valley of the Sun at no cost to the host

customer. APS began implementation of the residential rooftop solar program in January 2016. The program will generate up to 10 megawatts of electricity through APS-owned systems. APS will operate and maintain the equipment while crediting selected customers $30 per month through the life of the 20-year program. APS is also partnering with Arizona State University and PayPal on a 40-megawatt solar plant to help them reduce their carbon footprint. The Red Rock solar plant, located between Phoenix and Tucson, will be one of the state’s largest solar plants. The construction of Red Rock is a great example of how we partner with our commercial customers to find innovative and sustainable solutions that can help them realize their energy goals. In addition to helping customers go solar, we have developed continuing education

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opportunities for local solar installers through our Qualified Solar Sales & Installation (QSSI) Certification Program. The program is part of an annual accreditation process that makes it easier for customers to choose a qualified installer who has had exposure to the best cutting-edge technologies in the emerging distributed energy resources market. Eleven Arizona-based solar installers will receive training to learn how to assess a customer’s home performance, help customers better control their peak usage and align distributed energy resources with modernized rates. We all share a common goal of making solar energy sustainable for the long term in Arizona, and we want to help our local installers be as successful as possible. Programs like the Solar Innovation Study and Solar Partner Program are helping APS transition to a smarter grid and expand industry-wide knowledge, all while enabling the company to partner with customers and the state’s local solar installers to create a brighter, cleaner energy future for Arizona.

APS’s solar leadership will continue APS is widely recognized as one of the most technologically advanced utilities in

the country, paving the way for the integration of more distributed energy resources across the entire electric utility industry. With 1.2 million customers, APS is not at the top of list for largest investorowned utilities, yet we are leading the way in solar energy capacity. This has been accomplished using a diverse portfolio of solar applications (rooftop and grid-scale), technologies (photovoltaics and solar thermal) and financing models (utility, thirdparty and customer). That statistic speaks volumes to the emphasis we’ve placed on advancing solar power. Figuring out the most beneficial way to capture the sun’s rays and turn it into clean energy for customers – particularly at the time of day when customers need it most – is a goal APS has pursued for decades. And as long as the sun shines, we will continue our efforts to advance solar energy and its role in our clean energy future. A time line of APS’ solar history follows on the next page. <



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A snapshot of APS’s solar history 1954

APS President Henry Sargent leads efforts to form the Association For Applied Solar Energy.

1955

APS helps bring the first-ever world solar conference to Phoenix.

1977

APS installs monitoring stations to study solar radiation in Gila Bend and Phoenix.

1978

APS uses solar panels to power repeaters so that crews can talk to each other via radios.

1979

APS sponsors what was then one of the largest solar shows held in Arizona. Customers learn about how to use solar technologies such as solar water heaters and cookers.

1981

APS and its partners install the first photovoltaic system on a previously occupied home in the continental United States, a 4-kW system on a home in Yuma.

1982

APS sets the stage for Phoenix to be known for solar energy by completing what was then the world’s largest utility operated, grid-connected PV plant at Sky Harbor Airport.

1985

APS opens the APS Solar Test and Research (STAR) Center in Tempe, a place where APS can work with manufacturers, universities and government labs to find technological advancements in converting solar energy into electricity.

1996

APS starts an initiative that will eventually result in 30 photovoltaic plants located across Arizona, with a combined capacity of 5-MW.

1999

APS completes the first commercial installation of a large two-axis tracking, high-concentration PV system, the172-kW Glendale Airport solar facility.

2001

APS creates program to provide financial incentives to customers who install solar on their homes.

2002

APS begins construction on the Prescott Airport Solar Plant. The 3.5-MW plant is at one point the second-largest solar PV plant in the United States.

2006

APS completes the Saguaro Solar Power Plant, the first solar trough plant in Arizona and the first in the United States in almost 20 years.

2009

Solar Electric Power Association names Don Brandt Utility CEO of the Year.

2010

APS launches program to help low-income customers install solar energy on their homes.

2011

APS completes the first two APS-owned utility-scale solar projects, as part of the AZ Sun Program

2012

APS adds a record 148-MW of solar energy to its system, ranking the utility 4th among U.S. utilities for solar development.

2013

APS starts purchasing solar energy from the Solana Generating Station, which at the time is the world’s largest concentrating solar power plant. Solana elevates APS to No. 3 among U.S. utilities for solar installed in 2012.

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2015

APS begins the Solar Innovation Study, a 75-home high-tech initiative to examine the integration of advanced technologies with demand-based rates on the customer side of the meter. The study is the first in the country to enable customers to control their energy demands by simultaneously employing distributed energy resources.

July 2015

Installers completed the first installation of the APS Solar Partner Program, the nation’s first and only utility-owned residential rooftop solar program dedicated to studying the capability of advanced inverters, operating in real-time, within an electric utility’s system.

Septembe r 2015

APS completes construction on the final two of nine solar plants throughout Arizona under the AZ Sun program with a cumulative program investment of $675 million.

May 2016

APS passes 1 gigawatt of cumulative solar on its system, becoming the only utility outside of California with more than 1GWac of solar – achieved through a balanced portfolio that includes grid-scale, residential and commercial PV distributed generation.

August 2016

APS receives more than 2,400 solar applications during August, which represents the highest number of applications for interconnection received for any month in the company’s history.





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