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Arizona’s Electricity Mix; the Renewable Energy Standard,
and Externalities…
Nancy LaPlaca, J.D.Advisor to AZ Corporation
Commissioner Paul Newman, Esq. Arizona Corporation Commission
June 25, 2011
Agenda – Hour Two
• Where does Arizona’s electricity come from, and how much solar?
• What is the “Renewable Energy Standard,” what is the Energy Efficiency Standard?
• Why don’t we have more solar?
• Value of solar to AZ
• What are ‘externalities’ and why should I care?
Coal, Nuclear, Natural Gas, Solar, Wind, Solar Hot Water….
• Issues are complex and confusing because different types of power plants have pro’s and con’s
• Coal and nuclear plants run 85-93% of the hours in a year
• Solar only makes electricity when the sun shines; however, AZ has the best land in the U.S. for solar because it is very flat and we have consistent sunshine
• KEY: we don’t include all the life-cycle costs of electricity generation, such as pollution, acid rain, health effects from burning coal, possible water pollution from natural gas drilling etc.
• We are at crossroads on energy policy – what do YOU think we should do?
Where does Arizona’s Electricity Come From, and How Much
Solar?
AZ’s Electricity Mix
• Total in-state generation: 25,000 MW
• Total in-state consumption: 16,000 MW– 50% coal– ~28% natural gas– ~22% nuclear
– Less than one-tenth of 1% solar• 54 MW installed in 2010• Total in-state solar: ~100 MW
Total in-state
Electricity use
Is 50% coal,32% NG,
17% nuclear
Coal:49%
Total solar PV capacity: 21 MW installed in 2009, 54 MW installed in 2010; v total in-state capacity of 16,000 MW, it’s a tiny amount…
Source: US Energy Information Agency October 15, 2010
TOTAL AZ generation =
~120,000 GWhs because AZ
exports 25-30% of power
AZ Imports Most Fossil Fuels
• AZ imports all its Natural Gas and 2/3 of coal• AZ spent $1.5 billion importing Natural Gas
(NG) for electricity in 2009– Another $800 million spent on NG for heating– Shale gas has been a game-changer, brought the
price of gas way down, but ultimately depleting– During Katrina, cost of NG doubled; also doubled
from 2007 to 2008 when oil peaked at $147/barrel
• AZ spent $500 million in 2007 importing
coal
Agenda – Hour Two
• Where does Arizona’s electricity come from, and how much solar?
• What is the “Renewable Energy Standard,” what is the Energy Efficiency Standard?
• Why don’t we have more solar?
• Value of solar to AZ
• What are ‘externalities’ and why should I care?
AZ Renewable Energy Standard (RES) is 15% by 2025
Year Requirement
2008 1.75 %
2011 3.00 %
2014 4.50 %
2017 7.00 %
2020 10.00 %
2024 14.00 %
After 2024 15.00 %
AZ’s RES means that 15% of the kilowatt-hours generated by regulated utilities come from ‘clean energy’: solar, wind, biomass, solar hot water, concentrating solar etc. by 2025…
AZ’s RES is far lower than Colorado (30% by 2020), California (33% by 2020), Nevada (25% by 2025).
AZ’s EE Standard: What is it?
• AZ’s Energy Efficiency (EE) standard is 22% by 2020
• EE standard directs regulated utilities (APS, Tucson Electric Power, coops, but not Salt River Project) to save electricity rather than build new power plants;
• Utilities prefer to build power plants because they make more money;
• If the average utility decreases sales by 2%, profits decrease 24%; if sales decrease by 5%, profits decrease a staggering 59%!
The Effect of Much Higher EE Savings
12
37%
33%
24%
6% 0%0%0%
Coal
Natural Gas
Nuclear
Conv. Hydro
Renewables
Energy Eff.
Other
19%
24%
18%
4%
15%
20%0%
AZ 2008 AZ 2020
- Energy Efficiency becomes one-fifth of the energy “pie” in 2020 - Lower total costs, lower utility bills, more jobs, less pollution- Deferral of 3 large baseload plants 2020’s to 2030’s (by then more renewables, storage, electric vehicles)-$9 billion in lower customer bills (2011-2030; APS, TEP, Coops)
Why doesn’t AZ have more clean energy?
Why doesn’t AZ have more clean energy?
• Many reasons, but here are a few:– Monopoly utilities granted geographic territories (APS,
SRP, TEP etc.)
– Large central-station power plants
– Distributed generation is a new player, and solar has only recently come down in price
– Politics and the corrupting influence of fossil fuel $$$– Utilities don’t want to give up sales to ‘disruptive’
technologies.– The more distributed solar, the LESS revenue for
utilities; lost ‘fixed’ costs…
Agenda – Hour Two
• Where does Arizona’s electricity come from, and how much solar?
• What is the “Renewable Energy Standard,” what is the Energy Efficiency Standard?
• Why don’t we have more solar?
• Value of solar to AZ
• What are ‘externalities’ and why should I care?
16
APS’ RW Beck Study on the Value Of Distributed Energy
Operating Impacts and Valuation study
RW Beck study says the value of distributed solar is 7.9 to 14.11 cents/kWh in avoided costs for fuel, trans-mission, line losses, etc.
Kevin Phillips, Bad MoneyFrom ASPO-USA Conference, October 12, 2009
Manufacturing declined from60% to less than 10% of
corporate profits
Financial services increasedfrom less than 10% to nearly
50% of corporate profits
Local v. Out-of-State
Dollars
$73 out of every $100
spenton locally-
owned businessesstays local
Local v. Out-of-State
Dollars
Only $43 out of every $100
spenton non-local businesses stays local
Solar Hot Water (SHW): Huge Potential for AZ!Total
U.S., not just AZ
Concentrating Solar Power
How much does AZ spend on fossil fuels every year?
Cost of Natural Gas - More Volatile Since 2000
U.S. Currently Imports 5-12% of Natural Gas Consumed
Coal Capacity Factor MuchHigher Than Natural Gas:
AZ Can Hybridize NG plants!
U.S. Natural Gas and Coal Fleet Capacity Factors, 1976-2007
What are ‘externalities’ and why should I care?
“Externalities” in electricity• Uncounted costs are called “externalities” and include:
– Subsidies– Air pollution, water use and pollution– Mercury contamination– Lost productivity, morbidity and mortality– Health effects from fossil fuel burning
• 12/08 coal ash spill in TN cost $1.2 billion
• Power plants are big water users: nuclear the most, then coal; solar PV and wind use zero water; Concentrating Solar Power can be wet or dry. Wet CSP that uses a steam turbine uses as much water as a coal plant but does not pollute the water.
Coal’s Externalities / True Costs
Dr. Paul Epstein, Harvard study, Feb. 2011 “Full Cost Accounting for the Life Cycle of Coal”,
Coal-fired power plants produce 50% of U.S. electricity. Coal costs the U.S. $500B annually over its life cycle(extraction, transport, processing, and combustion)
•$74B in public health burdens in Appalachian communities•$187.5B from health costs of cancer, lung disease, and respiratory sickness in other parts of the U.S.•$29.3B from mercury impacts•$205B from carbon emissions’ climate impacts on land use, energy consumption, and food prices•$18B from the costs of cleaning up spills of toxic waste, the impact of coal on crops, property values, and tourism
Externalities would raise costs of electricity from coal-fired plants, from $0.10 / kWh to $0.28 / kWh, shifting it from one of the cheapest sources of electricity to one of the most expensive.
Water Intensity of Electricity Generation
0
500
1,000
1,500
2,000
Coal, s
team
Nucle
ar
Oil/gas
, stea
m
Combu
stion
turb
ine
Combin
ed cy
cle
Coal, I
GCC
Coal, I
GCC, with
carb
on ca
ptur
e
Coal, P
C, with
carb
on ca
pture
NGCC, with
carb
on c
aptur
e
Solar C
SP, wet
coolin
g
Solar C
SP, dry
cool
ing
Solar P
VW
ind
Biomas
s, ste
am pl
ant, w
et co
oled
Impr
oved
biom
ass-b
ased
stea
m pl
ant,
wet co
oled
Geothe
rmal
, bina
ry, d
ry co
oling
Geothe
rmal,
bina
ry, h
ybrid
cooli
ng
Geoth
ermal,
bina
ry, w
et co
oling
gal/M
Wh
Conventional Generation
Emerging Technologies
Renewables
Gas
, Com
bust
ion
Turb
ine
Nuc
lear
Oil/
gas,
st
eam
Coa
l, IG
CC
with
car
bon
capt
ure
Gas
, Com
bine
d
cycl
e
Geo
ther
mal
, bin
ary,
hyb
rid
cool
ing
Coa
l, IG
CC
NG
CC
, with
car
bon
capt
ure S
olar
CS
P, w
et
cooi
ngS
olar
CS
P, d
ry
cool
ing
Bio
mas
s, s
team
pla
nt, w
et
cool
edIm
prov
ed B
iom
ass
stea
m p
lant
, wet
cool
ed
Coa
l, st
eam
Geo
ther
mal
, bin
ary,
wet
cool
ing
Sol
ar P
VW
ind
Geo
ther
mal
, bin
ary,
dry
cool
ing
Source: Western Resource Advocates“The Energy-Water Nexus: A Case Study of the Arkansas River Basin” 2008
Water Intensity of Electricity GenerationWater Intensity of Electricity Generation
Coa
l, P
C w
ith c
arbo
n
capt
ure
$72.5 billion for Fossil Fuels
$12.2 billion for Wind and Solar
35Damages from these plants exceed $500 million a year
NOTE: CLIMATE CHANGE DAMAGES
NOT INCLUDED, ONLY SO2, NOx, PM
2.5 &10
National Academy Estimates Criteria* Pollutants from 406 Coal Plants Cause
$68B/Year $68B/Year Damage
“With public sentiment nothing can fail; without it, nothing can succeed.”
Abraham Lincoln
National Renewable Energy Laboratory Innovation for Our Energy Future
U.S. Coal: Where Does it Comes From, and Go To?
