Distributed Energy Resources

Ariz. regulator unveils ambitious storage, zero-carbon plan

An Arizona utility regulator is proposing to revamp the state’s power sector by requiring utilities to get at least 80 percent of their power from zero-carbon resources by 2050 while deploying 3,000 megawatts of energy storage by 2030.

The proposal by Arizona Corporation Commission member Andy Tobin calls for broadening the state’s renewable portfolio standard, which climbs to 15 percent by 2025 and would be renamed the Clean Resource Energy Standard and Tariff.

“This name change will allow for the development of broader diversified energy policies relating to clean energy resources, energy storage, and energy efficiency, not just those related to renewable energy,” the proposal said. “The focus of the CREST is to advance responsible clean energy policies in the state.”

Under the CREST framework, utilities would be required to acquire large amounts of energy storage resources.

“Low priced, and sometimes free electricity, is being exported from surrounding states; at the same time, increasing peak demand in Arizona is causing new expensive investments for ratepayers,” the proposal said. “Energy storage can leverage low priced energy during the day and reinject it at peak times to reduce the long-term costs of these projected investments for consumers.”

If adopted, utilities would be required to consider adding storage capability to their existing renewable resources.

The proposal doesn’t mandate specific targets utilities must meet in moving towards the overall 80 percent goal. “The process to achieve this ambitious goal will be slow and steady,” the plan said.

The proposal includes a “clean peak standard” that aims to increase the amount of zero-carbon resources that are used to meet peak demand.

Under the proposal, utilities would establish a baseline for how much zero-emission resources are meeting peak demand and then increase that amount by 1.5 percent a year on average through 2030.

“This shall ensure that Arizona continues to expand its use of clean energy resources, while also considering the overall impact that deployment of various resources will have on the grid’s most expensive critical peak hours,” the plan said. “Retrofitting existing renewable resources to maximize effectiveness during peak windows is permitted.”

The clean peak proposal was first floated by the Arizona Residential Utility Consumer Office  two years ago.

Arizona would extend its energy efficiency requirements, which expire in 2020, under the proposal.

The proposal also requires utilities to develop plans to expand electric vehicle charging infrastructure while regulated utilities would be required to jointly buy the output from 60 MW of biomass. 

The proposed 3,000-MW storage target eclipses California’s 1,325-MW storage mandate and New York’s 1,500-MW target, despite Arizona having a much lower peak load than the two larger states.

“The scope of this target is indeed eye-catching, but Arizona is in many respects a uniquely fertile energy storage market, and the number was likely proposed because of a confluence of multiple beneficial factors,” GTM Research Senior Energy Storage Analyst Dan Finn-Foley said Thursday.

Tobin’s energy modernization plan consists of several priorities that are difficult to realize without using energy storage, including the clean peak standard, which effectively requires shifting the output from intermittent renewable resources to peak periods, Finn-Foley said. 

Also, the proposal comes as energy storage deployment has been growing, reflecting price declines that makes storage competitive with other technologies, according to Finn-Foley. “So as regulators, legislators, utilities, and system operators recognize storage's value they can point to a myriad of success stories at scale, meaning markets adopting storage targets now will almost certainly set a higher bar than those that examined the issue even one year ago,” he said. 

Perhaps most importantly, Arizona has exceptional solar resources, which the state would have to capture to meet the 80 percent clean energy standard, according to Finn-Foley. “Solar and storage are a match made in heaven, and as Arizona adds further solar resources over the coming years bulk time shifting and smoothing will be key to integrating this clean energy into the 80 percent range,” he said.

New report says state-level action on storage ramped up in 2017

At least 31 states took actions related to energy storage during 2017, a new report on grid modernization activities issued by the N.C. Clean Energy Technology Center said.

The report also noted a growing trend among states is consideration of the way in which energy storage is evaluated within the integrated resource planning process.