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Collaborating on Clean Energy

November 07, 2018

APS CEO Says the Best Way to Build a Sustainable Energy Future Is Through Working Together and Innovation

By Don Brandt
Chairman, President and CEO, Pinnacle West and Arizona Public Service

This article originally appeared in the September/October 2018 issue of Electric Perspectives, published by the Edison Electric Institute.

Driving south on State Route 85 out of Phoenix, the first thing you see when you reach the small town of Gila Bend is a large wooden sign hand-painted by a local artist. In bright red letters the sign says, “Gila Bend Welcomes You. Home of 1,917 Friendly People and 5 Old Crabs.”

Every summer, thousands of Arizonans pass through Gila Bend as they make the trek to Southern California for cooler temperatures and ocean breezes. The town is known locally for its iconic Space Age Lodge and Restaurant, which, like so much else in Gila Bend, harkens back to a mid-century, Route 66 setting.

A new, modern distinction prompted the town to update its welcome sign in 2015. The addition reads: “Where Solar Panels Outnumber People.”

When my company launched an initiative called AZ Sun in 2011 to build nine grid-scale solar power plants across Arizona, community leaders in Gila Bend moved quickly to seize the opportunity. With the town’s economy still reeling from the impact of the Great Recession, local leaders saw a chance to create jobs and tax revenue to revive Gila Bend. The town council worked to dramatically expedite the permitting process for solar projects. Their solution? A solar investment zone, which reduced the time needed to permit a solar plant from as long as two years down to five weeks.

The town now is home to four grid-scale solar plants, including the 250-megawatt (MW) Solana Generating Station, which was the largest concentrated thermal solar plant in the United States when it began producing power in 2013.

The Gila Bend story is a triumph of collaboration and innovative thinking. It demonstrates the potential that can be realized when people work together to achieve a shared goal.

Coupled with rooftop solar throughout the state and other AZ Sun plants, our Gila Bend installations have helped APS stay well ahead of the renewable portfolio standard Arizona established in 2006. Under that standard, 15 percent of the energy we deliver to customers must come from renewable resources by 2025. Today, we already are at 14 percent and will far surpass the target over the next seven years.

“We Need to Articulate A Positive Vision, One That Includes Saying Yes to the Best Solutions for Tomorrow.”

In 2005, we were a leader in solar technology – with five MW of solar deployed. Only 13 years later, our solar deployment has increased to more than 1,300 MW, including large solar farms, small rooftop installations, and everything in between. We are taking full advantage of the abundant Arizona sunshine.

Today, the challenge is not that we have too little solar generation on our system; it’s that we often have too much. Visit our energy trading floor on a typical spring or fall day when the sun is high in the sky and temperatures are moderate. Look over the shoulder of our energy managers and you’ll see their screens alight with a story hardly anyone envisioned when renewable portfolio standards first were being considered. On those days – and there were 115 of them in 2017 – power producers in California pay us to take their excess power.

The phenomenon is known as negative pricing, and it occurs when there is a surplus of electricity on the energy grid. Solar production causes the supply of power in California to be greater at certain times of the day than customer demand.

Later in the day, when the sun sets and all that solar generation goes away, we sell reliable conventional generation to California, mostly from natural gas. This increasingly frequent two-way energy trading is great for Arizona customers, because 100 percent of the proceeds from those transactions is passed along to them in the form of lower rates. But it's not sustainable.

These developments speak to mission-critical, larger questions: How do we as a company and as an industry lead the way toward a cleaner energy future that carefully balances costs for customers, responsible environmental stewardship, and reliable service? How do we demonstrate to the public our clean energy leadership and commitment?

I have some personal experience here. When APS was an early leader in grid-scale solar and was the driving force behind the creation of the Solana Generating Station, I was named Solar CEO of the Year by the Solar Electric Power Association. Four years later, when my company began to point out publicly that generous solar subsidies needed to ramp down as the technology advanced and costs dropped, I was accused of trying to kill solar and “tax the sun.”

Truth be told, our approach to solar leadership didn’t change, even if our critics spun it that way. We always have argued for balance. Clean energy is vital, but reliability and affordability matter in equal measure.

Our experience underscores with clarity the need for our industry to find ways to collaborate with diverse stakeholders to deliver the clean, reliable, affordable energy future our customers want. We need to articulate a positive vision, one that includes saying yes to the best solutions for tomorrow.

One place to start would be to work in meaningful ways toward a true clean energy standard – one that sets ambitious goals, takes an inclusive approach to diverse clean-generation technologies, acknowledges the essential role of complementary technologies like advanced batteries, and puts customers first.

The Customer Should Be at the Center of Our Clean Energy Strategies

The city of Yuma has a long and interesting military history. In 1876, it was the site of a territorial prison, famous for housing the likes of gunfighter “Buckskin Frank” Leslie, stagecoach robber Pearl Heart, and many other notorious outlaws of the Old West. In the 1940s, General George Patton spent months there testing military equipment for his desert campaigns. Today, Marine Corps Air Station (MCAS) Yuma serves as the Marine Corps equivalent of the Navy's Top Gun fighter school. It's not unusual to see F-35s, the future of U.S. air power, circling the skies.

MCAS Yuma also is the home of an energy innovation that Lieutenant General John J. Broadmeadow describes as an example of an effort that will “ensure our bases remain at the forefront of the defense of the country.” The project is a microgrid, designed and built by APS engineers in partnership with base leadership. The microgrid, one of two on the APS system, equips the base with 100 percent backup power within 12 seconds of any kind of power interruption. The installation also enhances grid stability and generates additional power at times of peak need for other APS customers in Yuma.

The same principle – putting customers at the center of our clean energy strategy – also has given rise to initiatives like the APS Solar Communities program. Developed in collaboration with the Arizona Community Action Alliance and the Arizona Solar Deployment Alliance, this program makes solar power available to limited and moderate-income customers.

“The Lessons are Clear. To Build A Better, Cleaner, and Sustainable Energy Future for Arizona and the Nation, We Cannot Follow the Policies of the Past.”

Participating customers pay nothing for the rooftop solar installation, receive a $360 annual bill credit, and can have the solar panels removed at any time with no penalty or cost. Credit checks or lease payments are not required. APS Solar Communities projects are installed primarily on single-family homes with west-facing roofs, enabling us to generate more clean energy during the late afternoon when demand is high. Customers and the environment are the winners.

Our customer-centric approach is leading to multiple new opportunities for real progress toward a cleaner energy mix. Last August, in response to the U.S. withdrawal from the Paris Climate Accord, city leaders in Tempe convened a working group to explore alternatives for local action on climate change. We now are partnering with Mayor Mark Mitchell and forward-thinking leadership on the Tempe council to help the community develop a plan and achieve its goals in a smart and cost-effective way. The city could be a participant in our next grid-scale solar plant, and together we are exploring other clean energy initiatives.

We also have learned how clean energy programs can be used to enhance economic development. When PayPal opened a major operations center in Arizona, the online money transfer company wanted a carbon-neutral presence. At the same time, Arizona Stat eUniversity was looking to reduce its carbon footprint further. We collaborated with the two of them to build the 40-MW Red Rock Solar Plant 30 miles south of Casa Grande. APS owns and operates the plant, and PayPal and ASU take the entire output.

At the residential level, we are partnering with local solar installers on our Solar Innovation Study, which brings together rooftop solar, battery storage, smart thermostats, and home energy management systems, and pairs them with demand-based electricity rates. The study, with 75 residential customers in metro Phoenix, will provide us and Arizona’s solar installers with valuable insights into how these emerging technologies can be used in combination with modernized electricity rates to create value for our shared customers.

vlean_energy

APS has formed a partnership with Tempe to help the city increase its commitment to clean energy while maintaining the economic growth that has resulted in the construction of modern, energy-efficient developments like these commercial centers on the southern bank of Tempe Town Lake.

Advanced Clean Energy Technologies

When we built our first grid-scale solar plants as part of the AZ Sun initiative, solar leadership almost exclusively was measured in megawatts. Today that yardstick is not only outdated, but often illusory. Remember that on a growing number of days each year, solar production causes there to be more electricity supply on the system than there is customer demand. Adding even more solar in the middle of the day doesn’t make the energy grid any greener in the long run.

It’s time for a more modern definition of what it means to be a solar leader. Real innovation comes from finding ways to drive more energy use to the middle of the day, when solar is plentiful. It means finding ways to harness the power of the sun and to deliver it to customers after traditional solar generation is waning.

That’s why we recently issued a request for proposals seeking partners to retrofit our AZ Sun plants, like those in Gila Bend, with battery storage. It’s also why we are partnering with our Arizona neighbors at First Solar to build a 65-MW solar-plus-storage power plant. When completed in 2021, the plant will give us the ability to store 50 MW of solar energy during the day and then send it to our customers in the late afternoon and early evening when they need it most.

The project will make Arizona home to one of the largest battery storage systems in the country, adding to a fleet of renewable resources that today includes more than one million solar panels and three grid-scale batteries. Over the next 15 years, we plan to install more than 500 MW of battery storage.

An example of that future is already in operation in Punkin Center, a tiny town located in the rugged Tonto Basin about 90 miles northeast of Phoenix. Nearly 1,500 residents live in the basin’s string of communities scattered through the Tonto National Forest. It’s an unlikely place for one of the nation’s top energy storage innovations.

When we ran the numbers on how to meet the community’s growing energy needs, we discovered that it made more economic sense to place a battery in Punkin Center than to rebuild the20-mile distribution line that carries electricity to customers over rough, isolated terrain. The battery, housed in two climate-controlled structures tucked behind the local Post Office, charges in the late morning, then provides power from 3 p.m. to 8 p.m., when customer energy needs peak. The battery will maintain reliability for the area’s residents, deliver cleaner energy, and produce cost savings.

Like many of our peers in the industry, we also are planning to make the broad transition to electric vehicles (EVs) easier. The centerpieces of the plan are a proposal to offer incentives for homebuilders to prewire garages for EV chargers, and the installation of EV chargers in the workplace (where cars can be charged during the day), at home (when most of the charging would occur overnight), and for vehicle fleets (which can be charged throughout the day) – all at no upfront cost to customers.

On top of this, we have introduced pricing plans that reward customers for shifting their power use to mid-day when solar production is high. From November through April, residential customers can take advantage of a super off-peak rate that, among many things, allows them to pre-cool their homes or to charge their EVs at the equivalent of 30-cent per gallon gasoline.

An Ambitious and Inclusive Clean Energy Standard

Simply put, any standard that purports to value clean energy but excludes nuclear energy is no standard at all.

That’s one of the fundamental flaws of a 2018 Arizona ballot measure funded by political activist Tom Steyer. The measure actually would embed a renewable portfolio standard into our state’s Constitution, driving up customer bills, circumventing local policymakers, and forcing the early closure of Palo Verde Generating Station, the largest clean-air energy producer in America.

Palo Verde has produced more carbon-free electricity than all the solar power plants ever built in California, and it does so reliably at all hours. Palo Verde supplies 70 percent of Arizona’s clean-air energy, and it even uses recycled wastewater for cooling.

Many environmentalists who once opposed nuclear energy have become advocates precisely because it is an anchor of any serious attempt to reduce carbon emissions. Any clean energy standard meant to succeed in the real world should leverage the value of nuclear energy – as our industry has for decades, safely and in support of the environment and our customers.

Nuclear energy works in concert with renewable generation. Without nuclear, carbon emissions would increase because of greater reliance on natural gas to fill the inevitable void.

Moving Forward

The lessons are clear. To build a better, cleaner, and sustainable energy future for Arizona and the nation, we cannot follow the policies of the past. Too often they result in costs that are too high for customers, and in too much power in the wrong places at the wrong times, with no more than cosmetic benefit for the environment. Instead, we must consider three things:

  • Which resources have the best potential to lead us to a greatly reduced carbon future?
  • What is the best mix of energy resources and technology to maintain and improve reliability?
  • What is the best course to follow to provide cleaner energy at a fair cost to customers?

The best way to address these questions is through collaboration and innovative thinking. We know the way there: inclusive public dialogue in the venues designed for that purpose – such as regulatory forums, state legislative proceedings, industry councils, and town-hall style meetings. That will provide the best path to workable solutions and, just as important, will allow us as an industry to demonstrate our clean energy leadership and commitment. It can be done, as we have learned here in Arizona.

collaborating_on_vlean_energy

Gila Bend, home of four grid-scale solar plants, worked with APS to update this sign, which deservedly describes the town as Arizona’s Solar Capital.

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