The Battle for Solar Energy in the Country's Sunniest State
Joshua Lott / Bloomberg
A worker installs First Solar Inc. photovoltaic solar panels at the Agua Caliente Solar Project in Arizona
Despite the rapid decline in the cost of solar-energy technology and battery storage,
Arizona gets only six per cent of its electricity from solar.
In late September, the Heartland Institute, a libertarian think tank that receives donations from fossil-fuel companies, published a blog post titled “California Billionaire's Renewable Energy Initiative Makes Arizona Ballot.” The billionaire in question was Tom Steyer, whose year-long effort to pass Proposition 127, an amendment to Arizona's constitution that would require power companies to generate fifty per cent of their electricity from renewable sources by 2030, has faced aggressive opposition from the state's largest utility, Arizona Public Service, or A.P.S. The blog post lamented a failed lawsuit filed by Arizonans for Affordable Energy, a political-action committee funded by A.P.S.'s parent company, to keep Prop 127 off the ballot, and quoted several opponents who believed the measure, now up for a vote in November, would be a costly mistake. “Prop 127 would tie Arizona's future to technologies that do not deliver baseload electricity,” Mark Finchem, a Republican state representative, said, “and are arguably worse for the environment as a whole than the dependable technologies we already have.” The photograph accompanying the post depicted a wind-turbine farm, and, in the foreground, a dead bald eagle.
Arizona is the sunniest state in the country, with more than three hundred bluebird days per year. It is also projected to endure an additional month of hundred-degree days in the coming decades owing to climate change. Yet, despite the rapid decline in the cost of solar-energy technology and battery storage—to the point that, as an A.P.S. director told me, it now frequently outbids fossil fuels, even natural gas—in 2017, Arizona generated only six per cent of its electricity from solar, according to the ballot initiative's advocates. The state currently requires utilities to generate eight per cent of their power from sources like solar and wind, scaling up to fifteen per cent by 2025. Natural gas, the largest source of Arizona's net electricity generation, is imported from out of state. “Our most abundant resource in Arizona is our sunshine,” D. J. Quinlan, a spokesman for Clean Energy for a Healthy Arizona, the Phoenix-based political-action committee that Steyer is funding, said. “We need a nationwide transition to renewables. One of the first places we should be doing it is where it's most efficient and cost-effective, and that's here.”
Renewable-energy portfolio standards—known as R.P.S.s—rate among the country's most powerful policy tools to slash greenhouse-gas emissions. One recent analysis found that between 2007 and 2013, renewable-power generation was responsible for nearly a third of reductions in U.S. energy-related carbon emissions. By 2025, the R.P.S.s that are currently in effect in twenty-nine states (plus Washington, D.C., Puerto Rico, the U.S. Virgin Islands, and the Northern Mariana Islands) will spur enough renewable-energy generation to power nearly fifty-six million homes a year. Establishing more ambitious R.P.S.s in every state, largely through measures like Prop 127, while accelerating the retirement of coal-fired power plants, could account for nearly six hundred and twenty million metric tons of avoided carbon emissions, or more than half of the amount needed to meet our commitments under the Paris Climate Agreement.
Last year, Steyer's advocacy group, NextGen America, began campaigns for ambitious R.P.S. ballot initiatives in three states—Michigan, Nevada, and Arizona—that allow citizens to propose and vote on constitutional amendments. Michigan, Steyer said, seemed fertile ground in part because it is home to the Big Three automobile companies. “To the extent that they're gonna be leaders in electric cars—which I think they all, at some level, want to be—this made sense,” Steyer told me recently at NextGen's office in San Francisco. “You cannot plug an electric car into a coal-fired power plant and think that somehow you're doing anything environmental.” Ultimately, two utilities in Michigan announced plans to impose a similar standard themselves. Nevada's utilities have been relatively neutral on Steyer's ballot initiative (known as Question Six) because they are fighting an even more ambitious measure that would eliminate electric-grid monopolies, and allow citizens to choose their energy provider.
In Arizona, however, where a recent poll found that three-fourths of the electorate wanted more solar energy, A.P.S. has spent close to twenty-two million dollars campaigning against Prop 127. “You'd think we were proposing something truly harmful and dangerous,” Steyer told me. He hasn't been shy in returning the blows, spending nearly eighteen million dollars supporting Prop 127 through Clean Energy for a Healthy Arizona. Their biggest expense was a paid force of petitioners who spread out across the state to collect four hundred and eighty thousand signatures to get the initiative on the ballot, nearly twice the amount required by law. “We're on the side of the angels,” Steyer said. “This is a black-hat, white-hat fight.”
Steyer and his coalition say that the problem is simple: A.P.S. is an investor-owned company, motivated primarily by its responsibility to protect profits for its shareholders, many of whom reside out of state. In 2017, the company made four hundred and eighty-eight million dollars, an increase of forty-six million from the previous year. The Arizona Corporation Commission (A.C.C.), a five-member elected “fourth branch” of state government, is supposed to keep the utility's monopoly in check—setting limits on capital investments and pricing, while guaranteeing a certain margin of profit. But critics have long argued that the arrangement incentivizes utilities to “gold-plate,” or make inessential investments. (The phenomenon even has a name: the Averch-Johnson effect.) For A.P.S., a two-hundred-million-dollar gas-fuel plant would be more lucrative than a twenty-million-dollar solar array because the utility can charge higher rates to recoup its investment costs. Kris Mayes, a former Republican A.C.C. commissioner, who helped write the language of Prop 127, told me the Averch-Johnson effect explains why, in 2017, A.P.S. called for more than five thousand megawatts of new natural-gas additions, and almost no utility-scale renewables. “If they were truly acting in public interest,” Mayes said, “they would not be proposing fifty-four hundred megawatts of new natural-gas plants.”
Once Proposition 127 got on the ballot, Arizona's attorney general, Mark Brnovich, had to sign off on its language. A.P.S. donated four hundred and twenty-five thousand dollars to Brnovich's last campaign , and a hundred and fifty thousand dollars to the current effort to get him reëlected. (Steyer, through Clean Energy for a Healthy Arizona, has spent at least $3.6 million on an effort to unseat him this year.) In a move that the state's elections director called “eyebrow-raising,” Brnovich added a clause to the ballot language—what voters will actually read before checking yes or no—saying that utilities must meet the new renewable-energy standard “irrespective of cost to consumers.” One of A.P.S.'s central claims—based on an economic analysis it funded, using data it provided—is that Proposition 127 would cause Arizonans' annual utility bills to rise an average of a thousand dollars each year. But if that were the case, A.P.S., whose primary concern is shareholder value, should be all for it. “They are fighting this so hard because they know they will make more money off of natural gas than they will off of renewables,” Mayes said. “That's my viewpoint as a former regulator.”
Within days, the “irrespective of cost” language was front and center in Arizonans for Affordable Energy's television advertisements, which emphasized that any increase would be based on an initiative championed by a billionaire from California with larger political ambitions. (Steyer has hinted that he might run for President in 2020; he told me to call him on December 7th.) “You can't go out and say everybody is the same across the U.S.,” Jeff Burke, the director of resource management at A.P.S., told me. “That's what's missing here, and that's what the outside groups supporting the proposition don't understand.”
Robin Reed, the president and C.E.O. of the Black Chamber of Arizona, which opposes Proposition 127, owns a sustainability consulting business, and a company that manufactures and distributes solar technology. “If 127 passed, it would actually be profitable for me individually, but I still don't think we're ready,” he said. He believed the initiative would hurt small businesses, cause huge job losses, and increase customers' rates. “We support renewable energy—it will be a reliable resource at some point—but the timeline presents a challenge,” he said. “It's as if someone said, ‘You need to make a dramatic life-style change by a certain date,' but without giving you the alternatives for how to make that change away from what you've been doing your entire life. . . . The end cannot justify the means.”
Reed has a point. Renewable-portfolio standards do not automatically equate to reductions in greenhouse-gas emissions, but must be implemented with a raft of other emission-reducing policies, like tax incentives, net metering, and improved transmission corridors to move renewable energy from where its created to where it's needed. As for rate increases, the Natural Resources Defense Council published a report that found they would actually decrease slightly. Similarly, Wesley Herche, an energy-security expert at Arizona State University, authored a peer-reviewed report last year that found no correlation between clean-energy generation and higher utility rates in states that have ratcheted up renewable targets. In fact, A.P.S. has raised power rates on its customers by an average of 2.7 per cent per year, which is more than a number of states with much more aggressive renewable-energy standards. “Everyone, all over the planet, has to go to zero emissions by 2050,” Herche told me. “So, look, we can talk about whether we should we go to fifty per cent, or forty, but let's make sure we are talking about the same big picture. Until you adopt that reality, and let it sink in, you're stuck talking about the fact that solar might cost two cents more.”
Perhaps the loudest argument against Proposition 127 is that it would force the Palo Verde nuclear plant, the largest in the country, to shut down. Unlike natural-gas systems, which can be quickly ramped up or down depending on customers' energy demands, nuclear generates “baseload” power at a steady, unvarying rate. Burke, at A.P.S., told me that an increase in utility-scale solar power, especially when the sun is shining, on top of the current flow of nuclear power, would create an oversupply of energy. It will eventually become too expensive to continue to run the nuclear plant; in order to meet periods of high demand, like summer evenings, A.P.S. would have to build more natural-gas quickstart plants. Since Palo Verde accounts for half of the clean energy that A.P.S. generates, Burke said, Prop 127, by forcing the plant to close, would cause the state's greenhouse-gas emissions to rise.
Mayes, the former A.C.C. commissioner, disagreed. A.P.S., she said, owns only a quarter of Palo Verde; six other entities co-own the rest, and would still be able to distribute energy at a workable cost to other areas across the Southwest. The idea that a greater reliance on renewable energy would put the nuclear plant out of business, she said, “is utterly ridiculous and perhaps the greatest of all the lies that A.P.S. has told during this process.” The utility's arguments, she went on, “are not supported by anything that is actually going on in the marketplace.”
Last month, Governor Jerry Brown of California signed legislation mandating a hundred-per-cent renewable-energy program be implemented statewide by 2045. Nevada is likely to pass its own Steyer-initiated ballot measure this fall. In Colorado, the utility Xcel is leading the effort to reach a fifty-five-per-cent renewable-energy target by 2026. In much of the Southwest, Mayes said, solar and wind proposals now routinely outbid fossil fuels for utility contracts. “We're so wildly out of step with what all of our surrounding states are doing,” she said. “Unfortunately, there's a clear connection between A.P.S.'s unprecedented decision to spend millions of dark money to get regulators elected, and the failure of those regulators to make progress on renewables. I think there is just great frustration with that in Arizona, and it's time for the people of our state to decide.”
Carolyn Kormann has been a contributor to the The New Yorker since 2012, and became a staff writer in 2018, covering energy, the environment, and climate change. She has received an Abe Fellowship from the Social Science Research Council, a Middlebury Fellowship in Environmental Journalism, and a fellowship from New York University's Center for Latin American and Caribbean Studies. Petroleumworld does not necessarily share these views.
Editor's Note: This commentary was originally published by The New Yorker on Oct. 24, 2018. Petroleumworld reprint this article in the interest of our readers and does not necessarily reflect the opinion of Petroleumworld and its owners.
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