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Policymakers haven’t gotten the message

Solar panels and wind turbine against blue sky

Perhaps lost a bit in the all too familiar headlines about high energy prices, is the fact that when it comes the energy market, we are living in a brave new world.

Old assumptions about which sources of energy are the cheapest and most reliable no longer hold. Advances in solar and battery storage have turned those notions on their head — especially here in the sunny Southwest.

David Jenkins

Take electricity generation for example. Power from solar plus storage projects is selling for between $15 and $25 per megawatt hour (MWh) — and guaranteed for 20 years via power purchase agreements. That’s less than half the price of the electricity being produced by natural gas-fired generating plants.

Prior to the current natural gas price spike, electricity produced by natural gas generating plants was selling for between $45 and $65 per MWh — more than double the price of solar generation. That disparity grows wider by the day.

The growing demand for U.S. liquefied natural gas shipments as European countries work to wean themselves off Russian energy means that the price of natural gas here — which is already at a 14-year high — will continue to rise.

By contrast, non-exportable energy sources such as wind, solar, geothermal, hydropower, and nuclear are largely immune from price spikes stemming from conflicts overseas.

Fossil fuel generation faces another huge disadvantage. Most coal and gas-fired power plants in existence today are 20-30 years old. As these plants age, their operating cost increases. So, even when the cost of fuel is low, the cost of the electricity produced is still high.

For example, utility filings show that electricity from the Four Corners coal-fired power plant costing as much as $85 per MWh. Fortunately for ratepayers here, Arizona Public Service plans to shutter that plant by 2031.

This dramatic change in energy economics is great news for Arizona, a state geologically bereft of fossil fuels but a national leader in solar intensity.

No state is better suited to take advantage of the solar energy boom — and reap the incumbent economic benefits — than Arizona. Still, policymakers seem determined to hold this state back.

Despite APS pledging a shift to 65% clean energy by 2030, and Tucson Electric Power planning to provide more than 70% of its power from renewables by 2035, state utility regulators and the Legislature have yet to see the light.

Earlier this year, the Arizona Corporation Commission reversed course and voted down a previously approved plan for the state to get 100% of its power from clean energy (which includes nuclear) by 2070.

This change of heart was likely due to pressure from the Legislature. Last year, in response to the ACC moving its clean energy plan forward, Rep. Gail Griffin and Sen. Sine Kerr both introduced bills to strip the commission of its authority to regulate electricity generation.

This ill-advised legislation died in the Senate. Nevertheless, it succeeded in cowering ACC commissioners Lea Marquez Peterson and Jim O’Connor into reversing their vote.

So instead of setting long-term goals that drive Arizona’s energy investments toward cheaper, home-grown, sources of energy, the ACC has left the state’s energy future — and your utility bill — more to chance.

Contrast that with neighboring Nevada. Two years ago, that state unanimously passed legislation requiring its utility to get 50% of its electricity from renewables by 2030. Every Republican voted for it. Why? Because it makes economic sense and protects ratepayers from price spikes.

One big problem in Arizona is the outsized influence of groups like the so-called Arizona Free Enterprise Club, which carries water for out-of-state fossil fuel interests by peddling market-defying fiction to Arizona lawmakers.

The club’s ludicrous contention that more natural gas and coal generation will somehow lower folks’ utility bills ignores literally every signal the market has been sending for the past five years.

There is no left or right energy. It is all just energy. Cheap is better than expensive, in-state is better than out, abundant is better than scarce, and clean is better than dirty.

For Arizonans, solar paired with storage checks all of those boxes. Anyone who tells you otherwise is just making stuff up.

David Jenkins is president of Conservatives for Responsible Stewardship, a national organization with more than 800 members in Arizona.

 

 

 

 

 

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