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Ariz. regulator pitches 80% clean power by 2050 as 'singular unifying goal'

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Ariz. regulator pitches 80% clean power by 2050 as 'singular unifying goal'

Arizona should seek at least 80% zero-emission power by midcentury, including renewables and nuclear energy, while deploying 3,000 MW of energy storage by 2030, setting a "clean peak target," investing in electric vehicle charging infrastructure and improving its long-term power planning, a top state energy regulator proposed Jan. 30.

"The singular unifying goal is to have Arizona's economy powered by clean energy sources that make up at least 80% of the state's electricity generating portfolio by 2050, with the ultimate goal being 100%," Arizona Corporation Commissioner Andy Tobin said in his sweeping "energy modernization plan."

Toward that end, Tobin, a Republican, called for Arizona to expand its renewable energy standard and tariff policy to reflect a broader focus on clean energy, energy storage and efficiency policies, "not just those related to renewable energy." The expanded initiative, called the clean resource energy standard and tariff, or CREST, would incorporate the current policy's targets for eligible renewables. Utilities would also propose electric vehicle infrastructure projects through their CREST plans.

If approved, Tobin's proposal could fundamentally alter Arizona's energy landscape, which remains heavily focused on fossil fuels. Natural gas and nuclear energy each supplied roughly one-third of Arizona's net generation in 2016, while coal provided just over a quarter, according to a December 2017 analysis by the U.S. Energy Information Administration. Renewables, mostly hydroelectric and solar, provided the rest.

'I don't see any better options'

"I am pretty much a Chamber of Commerce, economic guy, and I don't see any better options," Tobin said in an interview. "We think we've been shifting all along. Now's the time to reach the next step." The regulator is eyeing a commission vote as early as Feb. 6. "There's nothing in this we haven't been working on ... I want to vote on it."

Tobin criticized the state's current integrated resource planning process as an obstacle to Arizona's clean energy future. In his view, a 2017 debacle over the closure of the 2,250-MW coal-fired Navajo Generating Station illustrates the problem. Utilities Salt River Project, Arizona Public Service Co. and Tucson Electric Power Co. argued it would cost their ratepayers more to continue operating the plant than to replace their shares in the facility with cleaner natural gas-fired generation. The regulator, however, was opposed to swapping an older "stranded asset" built in the 1970s with newer fossil fuel plans that could become stranded amid a stronger push toward clean energy.

"It was horrible business policy," Tobin said. "I am very nervous about the peaks and valleys in energy markets, in the natural gas market." Instead of allowing utilities to assert their own strategies as the "guiding principles" of integrated resource plans, Tobin proposes to amend the process to assure "the slow rollout" of clean energy assets as the primary focus. "Any future IRP filings should be placed on hold with the expectation of it being rescheduled, following the completion of the rulemaking process," the proposal said.

Ultimately, the Navajo plant was extended a lease to operate through 2019 while utilities continue to plan for additional natural gas resources. Pinnacle West Capital Corp. subsidiary APS, for instance, envisions adding 1,300 MW of gas-fired peaking generation by 2025, while Fortis Inc.'s Tucson Electric Power is planning more gas to help balance its solar expansion. Salt River, which does not fall under commission regulation, is the Navajo plant's operator and largest single owner.

Harnessing 'sometimes free electricity'

Tobin sees his proposed 3,000 MW of energy storage and related "clean peak standard" as alternative solutions to the challenges associated with rising volumes of intermittent renewables and increasing demand for peak power. With more energy storage, Arizona could potentially store the excess midday solar that neighboring California has been curtailing or exporting, he said. By harnessing such "low-priced, and sometimes free electricity," the regulator believes that Arizona can rein in "new expensive investments."

"The foundation of Arizona's future is going to be flexible ... but we don't want to run into a situation where there are stranded assets," Lon Huber, a vice president at clean energy firm Stategen Consulting, said in an interview. Huber, who works with the Arizona Residential Utility Consumer Office, contributed to Tobin's proposed clean peak standard. Targets would be set by quantifying utilities' existing clean peak resources, including nuclear power, to establish a baseline and then increase that baseline by 1.5% per year until 2030.

"The beauty of this proposal is its comprehensive vision," Huber said. "This is a great chance to start fresh."

APS, in an emailed statement, called the proposal "a bold, challenging vision," while praising Tobin's focus on "smart energy infrastructure" and his recognition of nuclear energy's role "in any serious plan for clean Arizona energy."