Arizona and California Race Toward Renewables

by Sheryl Hamlin

History and Background

Per a 2020 press release, Arizona announced its official transition from fossil fuels to green energy. The clean energy goals include 100% renewable energy by 2050, 50% by 2035 and 10% distributed energy resource (DER) such as rooftop solar by 2030.

According to the staff legislative liaison, Mr. Debus, the current energy rules are in the Arizona Administrative Code as REST rules, EE rules, IRP rules etc. We are proposing a new article in the AAC that combines/repeals/supersedes several other articles. The new proposed rules are in docket 18-0284 in a decision dated June 16, 2021..

To this effect, the Arizona Corporation Commission (AZCC) hired Ascend Analytics, a Colorado company, to prepare a report for the commission. The consultants worked directly with the major Arizona utilities to produce demand requirements and then translate these requirements into green energy production. To download the original revised report, click here. To download the redacted, revised UNSE report, click here. There are two dockets associated with this project. The links are E-00000V-19-0034 and RU-00000A-18-0284.

Ascend Presentation September 28, 2021

Three prior public workshops were held to discuss the potential rulemaking changes. On September 28, 2021, the Arizona Corporation Commission (AZCC) held an open meeting to present the Ascend Analytics (Boulder Colorado) report and hear Commission comments, as well as comments from the public. The videos are found in the video archive as well as a list of upcoming events.

Commission Opening Remarks

.
Added:9/30/2021. Chair Márquez thanked the staff and Ascend for their work. She said she supports 100% by 2050 but they should not impose mandates without a cost analysis. She noted that Ascend praised the utility companies (LSEs) for maintaing costs while transitioning to clean energy. The report, she noted, said there was low impact on rape payers but that costs beyond 2035 were “speculative.”. It is important for readers of the report to understand that the report did not include water or air quality by design.

Commissioner Kennedy thanked the Chair for the opportunity to understand the implications of renewables and she too noted that decades out are “speculative” but she maintained faith in the American entrepreneur. For example, she said there was effort in long duration battery storage underway. Recent history, she said shows a decline in the costs of solar equipment which is a function of good government.

Commissioner Olson said the $44/month increase was not insignificant. He said that the AZCC is not charged with regulating the environment. However, he said that if the AZCC puts in place policies that drive down costs, that would be good, but policies the AZCC is considering will drive up rates, some as high as $70/month. He said his previous amendment which failed to pass should be reconsidered. Note that the Ascend cost increase scenarios are shown on pages 6-7 in the report. These are nominal costs not upwardly adjusted for inflation, a fact not discussed in the meeting.

Commissioner Tovar asked why the 2035 costs were considered speculative? Commissioner O’Connor questioned if another $1 million and 9 more months would give a clearer view of the future. Power companies are trying to keep rates affordable. And he knows no one who doesn’t want to rid the air of pollution, but he heard few discuss in the open meeting how much more they would pay for renewables.

David Millar of Ascend Presented the Report

Mr Millar introduced the IRP Review Study (Integrated Resource Planning) which included data from utilities APS, TEP and UNSE. He asked rhetorically how much more modeling is valuable to achieve 80% carbon reduction by 2050, 100% carbon reduction by 2050 and the “least cost” solution. He indicated that the three utility companies (LSE’s) also developed their paths to these goals. Ascend compared both results.

His presentation, which staff will post in the docket, included a slide with another somewhat rhetorical view of the process of moving toward renewables:

Source: Millar presentation, Ascend

Other challenges, he said, are how to save seasonal overgeneration for other seasons and how to ride through the wind and solar droughts? His “duck curve” showed the problem of maintaining power distribution throughout a 24-hour period. As the day progresses, demand increases but renewable power decreases forming the head of a duck.

Duck Curve, source: Millar presentation, Ascend

On page 11 of the report, Ascend states: Achieving at least 80% clean energy can be reliable and cost effective with today’s technology costs and capabilities. Cost effectively achieving higher than 80% clean energy while maintaining reliability requires innovation in clean energy technologies, such as green hydrogen, long-duration storage, or advanced nuclear. Note, link added for background and was not in the report.

The Ascend report and the solutions rely heavily on battery storage, but there was no mention of safety issues and disposal issues of batteries. The report did mention microgrids, but did not develop the issue of a unidirectional grid, as exists today, versus a multi-directional peer-to-peer grid which includes microgrids and smart technology. This article describes such a future grid topology not considered in the report.

The future according to Ascend also relies heavily on solar, but there was little differentiation between rooftop solar and massive, desert solar farms which destroy ecosystems and plants which consume CO2.

A controversial part of the report was the lack of consideration for the shutdown of the Four Corners coal plant, even though the Ascend slide shown above says “Conversion or retirement of legacy emitting resources” (Last box). Nor was there any discussion about the use of hydro-electric power and its potential demise during the current drought conditions, recently declared seriously impaired by the federal Bureau of Reclamations. Nor was there discussion about the Palo Verde Nuclear plant. Any legacy energy suppliers must have offsetting renewables, but this was not included in the report. Has the consultant considered all power sources?

U.S. States Renewable Energy

The US EIA (US Energy Information Agency)maintains a scorecard of energy supply in a convenient infographic. See what states have here.

Commission Comments

Chair Márquez asked the reason for the confidential redaction in the data. Mr. Millar said it was a utility request. Ascend does not do its own modeling, she said, and depends on the utilities. Correct, said Mr. Millar, Ascend gives the utilities the portfolios to model. Why does the least cost portfolio use natural gas? Mr. Millar said the LCP has gas but only runs a few hours to provide “critical reliability”. Why was EV adoption not studied robustly. Mr. Millar said a high level forecast was provided but drill down needed. Why is Four Corners not retiring before 2031? Mr. Millar said it wasn’t necessary. Why didn’t the report consider rolling blackouts or worse, she asked? Mr. Millar replied that this is complex and they tried to address but there was not enough time. She ended asking about the negative comments on the report by some members of the team. Mr. Millar said the headlines were misleading.

Commissioner Kennedy asked about the assumptions to calculate the storage prices. Mr. Millar said they used the Energy Lab long term forecast which is publicly available. Why does Arizona not ramp up until 2028? Mr. Millar said that storage is capable of carrying the loads through the end of the decade.

Commissioner Olsen asked if the “least cost” solution was really the least cost? Mr. Millar said there is no such thing as an absolutely modeled portfolio. Mr. Olson then asked about the “stranded assets”, which are those assets of the utility companies which will be written off when renewables are mandated. Mr. Millar said that more optimization techniques should be used in the future.

Commissioner Tovar asked about a cost breakdown by residential and non-residential. Mr. Millar said they did not break out by customer class. Rate making, he said, is a complicated process his firm does not do. He then added that utilities can do this. She asked about the cost benefits to the grid? Mr. Millar said that more reliance on digital will mean less water and improved air quality, but this was a complicated question. How will this benefit the community, she asked. He said that this could take another nine months to model. Why are green hydrogen and nuclear highlighted in today’s presentation? Mr. Millar said that these technologies are not yet cost effective but there are startups and mentioned “iron air”. Although not mentioned in the meeting, here is an article on this technology. She also asked about Four Corners. Mr. Millar said it was not part of the scope but should be considered in a reliability model. She asked about natural gas in the model. Mr. Millar said that gas prices are volatile but did not mention the current power crisis in Europe and Asia.

Commissioner O’Connor asked a profound question: “If you were an elected official like us, do we have enough information to make a wise decision for seven million Arizonans? Mr. Millar said this is a heavy question, but yes there is enough information to make rules. Understand the near term is important, said Mr. Millar, and the future can be changed.

Public Comments

Many spoke on the proposed energy regulation changes. None opposed them. The AZCC had a hard break at noon, so the overflow will be on Wednesday 9/29/2021. The staff urged presenters to submit their comments to the docket.

On Wednesday another six people spoke in favor of the proposed regulations, most of which representing a non-profit. One stated her organization will be filing a memo enumerating the deficiencies in the Ascend report. Several mentioned water savings as a result of renewables. Presumably this refers to the steam turbines used to generate electricity. No one asked if the consultant factored in the cost of converting the steam engines or the cost of replacing them completely. The alternatives to steam are coal, natural gas or biogas from wastewater plants or landfills, none of which was mentioned in the report.

Staff Closing Remarks

Staff reported that the final recommendation must be posted by the end of October for voting purposes. Chair Márquez said there is an open meeting planned for Oct 26, 2021.

Commission Closing Remarks

Commissioner Kennedy harkened back to JFK’s 1961 declaration that the US will go to the moon within a decade. That was leadership, she said. Renewable energy, she said, will tap in to America’s unrivaled position of innovation.

Commissioner Olson thanked all of the participants. He asked rhetorically how do we create a mandate that does not raise rates reminding the audience of California’s ban on nuclear plants and gas fired plants yielding the highest energy costs in the nation, as well as rolling blackouts. He reiterated that the AZCC does not have constitutional authority to regulate the environment.

Commissioner Tovar thanked all participants and said it was a learning experience.

Commissioner O’Connor thanked the citizens for the public comments. We still for the moment, he said, have a representative government, so must look out for all those represented by the AZCC. He compared the vote in the fall on the Ascend report to looking through a crystal ball, but with prayerful thought and consideration.

The Chair thanked the Commission. She was appreciative of the report without with they would make a decision in a vacuum. She felt the report was the best available in a short time and thanked Ascend Analytics.

California Plans 100% by 2045

California has released a plan to be 100% clean energy by 2045. Read the summary here. It would be noteworthy to watch the progress of the efforts of both states.

To watch the video, click Special Open Meeting

For more information about the author, click sherylhamlin dot com

PLEASE TELL YOUR FRIENDS ABOUT CITIZENS JOURNAL  Keep us publishing – Please DONATE