Arizona solar electric roadmap study

              Prepared by
Navigant Consulting, Inc.
77 South Bedford Street
Burlington, MA 01803
Arizona Solar Electric Roadmap Study
Executive Summary
January 2007
Arizona Solar Electric Roadmap
Prepared by
Navigant Consulting, Inc.
77 South Bedford Street
Burlington, MA 01803
Peer reviewed by the Arizona Department of Commerce Economic Research Advisory Committee:
Dan Anderson
Assistant Executive Director for
Institutional Analysis
Arizona Board of Regents
Brian Cary
Principal Economist
Arizona Joint Legislative Budget
Committee
Lisa Danka
Director of CEDC, Assistant Deputy
Director
Strategic Investment and Research
Arizona Department of Commerce
Kent Ennis, CFA
Senior Director
Strategic Investment and Research
Arizona Department of Commerce
Wayne Fox
Director, Bureau of Business and
Economic Research
Northern Arizona University
James B. Nelson
Economic Development Manager
Salt River Project
William P. Patton, Ph.D.
Director of Economic Development
Tucson Electric Power
Elliott D. Pollack
Elliott D. Pollack & Co.
Mobin Qaheri
Economist
Arizona Department of Housing
Tom Rex
Research Manager
Center for Business Research
Arizona State University
Brad Steen
Chief Economist
Arizona Department of
Transportation
Marshall Vest
Director, Economic and Business
Research
Eller College of Management
University of Arizona
Don Wehbey
Economist
Research Administration
Arizona Department of Economic
Security
Jim Wontor
Advisor, APS Forecasting
Arizona Public Service
© 2007 by the Arizona Department of Commerce.
This report was prepared for the Arizona Department of Commerce with funding from the Commerce and Economic Development
Commission. Elements of this report may be presented independently elsewhere at the author's discretion. This report will be
available on the Internet for an indefinite length of time at http://www.azcommerce.com. Inquiries should be directed to the Office of
Economic Information and Research, Arizona Department of Commerce, (602) 771-1161.
The Arizona Department of Commerce has made every reasonable effort to assure the accuracy of the information contained herein,
including peer and/or technical review. However, the contents and sources upon which it is based are subject to changes, omissions and
errors and the Arizona Department of Commerce accept no responsibility or liability for inaccuracies that may be present. THIS DOCUMENT
IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY. THE ARIZONA DEPARTMENT OF COMMERCE PRESENTS THE MATERIAL IN THIS
REPORT WITHOUT IT OR ANY OF ITS EMPLOYEES MAKING ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF
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ACCURACY AND THE USE OF THIS DOCUMENT AND ANY RELATED OR LINKED DOCUMENTS.
Solar Roadmap Steering and Technical Advisory Committee
Members: Stephen Ahearn, State Residential Utility Consumer Office
Bud Annan, Solar Energy Advisory Council
Chuck Backus, Arizona State University Research Park
Harvey Boyce, Arizona Power Authority
Eric Daniels, BP Solar
Jonathan Fink, Arizona State University
Greg Flynn, The League of AZ Cities and Towns
Ed Fox, Arizona Public Service
Barbara Lockwood, Arizona Public Service
Peter Johnston, Arizona Public Service
Chico Hunter, Salt River Project
Gail Lewis, Governor's Office
Robert Liden, Stirling Energy Systems Inc.
Doug Obal, Stirling Energy Systems Inc.
Larry Lucero, Tucson Electric Power
Todd Madeksza, County Supervisors Association of Arizona
Willis Martin, Pulte Homes
Fred Du Val, Commerce and Economic Development Commission
Leslie Tolbert, University of Arizona
Joe Simmons, University of Arizona
Deb Sydenham, Arizona Department of Commerce
Lisa Danka, Arizona Department of Commerce
Kent Ennis, Arizona Department of Commerce
Lori Sherill, Arizona Department of Commerce
Jim Arwood, Arizona Department of Commerce
Martha Lynch, Arizona Department of Commerce
Deborah Tewa, Arizona Department of Commerce
Page i
Table of Contents
1. Background............................................................................................................................. 3
2. Existing Solar Policies............................................................................................................. 4
3. Likely Market Penetration of Solar in AZ ...........................................................................7
Central Station Solar System Economics ........................................................................................... 7
Customer‐Sited Solar System Economics.......................................................................................... 9
Market Penetration ............................................................................................................................. 10
4. Potential Barriers and Opportunities for AZ....................................................................11
5. AZ Solar Roadmap ...............................................................................................................14
Appendix: Key Contributors to Report .................................................................................18
Page ii
List of Figures
Figure 1. Central Station Solar Power Options Reviewed.................................................................. 4
Figure 2. Customer Sited Solar Power Options Reviewed................................................................. 4
Figure 3. Key Federal, State and Tribe Solar Incentives...................................................................... 5
Figure 4. Key AZ Utility Incentives ....................................................................................................... 5
Figure 5. AZ State Level Incentives Applicable to Solar..................................................................... 6
Figure 6. Solar Set Aside Capacity by 2020........................................................................................... 6
Figure 7. Comparative Economics of Central Solar Power Options ................................................. 7
Figure 8. Peak Load Growth in the Southwest..................................................................................... 8
Figure 9. Solar Trough Economics Relative to Peaking Power Options........................................... 9
Figure 10. Customer‐Sited Solar Economics....................................................................................... 10
Figure 11. AZ Solar Deployment in MWs........................................................................................... 10
Figure 12. Potential Jobs from Solar Development............................................................................ 12
Figure 13. Emission Reduction Potential in Accelerated Scenario in 2020..................................... 12
Figure 14. Opportunities for AZ with Solar Development............................................................... 13
Figure 15. Roadmap Process ................................................................................................................. 14
Figure 16. Five Key Initiatives for Meeting the Solar Vision............................................................ 15
Figure 17. Key Milestones for the Solar Zone and Building Large Central Solar ......................... 15
Figure 18. Key Milestones for Sustainable Partners and Marketing and Outreach...................... 16
Figure 19. Key Milestones for Developing a Center of Excellence for Solar R&D........................ 17
Figure 20. Foundation Elements for Achieving the Solar Roadmap Ambitions ........................... 17
Figure 21. Steering Committee Members............................................................................................ 18
Figure 22. AZ Department of Commerce Contributors .................................................................... 19
Figure 23. Navigant Consulting, Inc. Contributors ........................................................................... 20
Page 3
1. Background
The Arizona Department of Commerce (ADOC) has the legislated responsibility to develop
a 10‐year economic plan for the state of Arizona (AZ). In its role as AZ’s strategic economic
research and initiatives entity, the Commerce and Economic Development Commission
(CEDC) commissioned this project to help inform the strategy for future business
development in the solar industry. Solar (along with water and sustainable manufacturing)
was identified in the 2004 ʺSustainable Systems Prospectusʺ as an ʺeconomy definingʺ
industry opportunity for AZ based on the R&D strengths of its university system and
building on its presence as one of three solar labs in the world.
Several international solar energy companies have recently expressed interest in AZ
due to the number of days of sunshine and the existing solar electric infrastructure.
AZ has the potential to become a world leader in many aspects of solar
development, and is a model location for the evolution of new solar technologies and
applications. The two primary goals of the project were to provide a framework that would:
• Accelerate the use and adoption of solar technologies in the market and applications
to increase energy self‐reliance, enhance energy security and protect the
environment in AZ, and
• Describe the conditions that could enable AZ to move toward a leadership position
in the research, development, manufacturing and deployment of solar technology by
adopting the recommendations and potentially designing a series of demonstration
activities.
The project objectives were to:
1. Describe the necessary conditions for the solar electric industry to make investments
in AZ that will result in widespread solar electric deployment of:
– centralized generation, distributed generation, building practices, local
infrastructure support, workforce development, manufacturing and research
2. Describe and recommend the environmental conditions and policy options that will
assist AZ in choosing the optimal portfolio of solar electric energy options
3. Review the potential to increase jobs in solar energy
Page 4
2. Existing Solar Policies
Solar electric technologies are in various stages of development and require various
incentives levels to be competitive. Navigant Consulting, Inc. (NCI) was hired by the ADOC
to first assess the compositeness of several solar options. NCI reviewed five central station
solar technology options: parabolic trough, solar Dish, power tower, concentrating
photovoltaics (PV) and flat plate PV, Figure 1 and two customer sited technology option:
residential building and commercial building applications, Figure 2.
Parabolic Trough Solar Dish
Power Tower
Flat Plate Photovoltacis
(single‐axis tracking)
Concentrating Photovoltaics
Figure 1. Central Station Solar Power Options Reviewed
Residential Commercial
Figure 2. Customer Sited Solar Power Options Reviewed
The PV options convert sunlight directly into electricity, whereas some of the other central
power options concentrate solar energy onto heat transfer fluids to generate heat for use by
a turbine generator or heat engine.
Page 5
NCI assessed both state and Federal policies that would impact the economic viability of
each of these solar technologies from 2006 through 2025. As shown in Figures 3 and 4, there
are many Federal, state, and utility incentives for solar technologies.
Solar is often provided incentives compared to other renewable options. EPACT 2005
provides a 30% Investment Tax Credit for commercial installations through 2007 that will
revert back to 10% at the end of 2007, unless it is extended.
– There is also a residential tax credit of 30% (with a maximum cap of $2,000)
Key Federal Policy Incentives for Solar
As of May 2006, the Solar America Initiative (SAI) has been funded $148 million at the
President’s request.
Key State and Tribe Policy Incentives for Solar
As of June 2006, 20 states plus DC have renewable portfolio standards (8 with solar or
non‐wind set asides), and two additional states have renewable goals.
For commercial installations, there is also the 5 year accelerated depreciation
Tribes are eligible for incentives from a variety of sources and are trying to leverage
Renewable Energy Certificates (RECS) as well.
CA Million Solar Roofs Bill became law in August 2006 providing significant solar
incentives for solar development in CA.
Figure 3. Key Federal, State and Tribe Solar Incentives
•Incentives available for up to 50 kW
of solar per year
• $2.4/Wpdc for 1 – 5 kW if installed in 2006
for residential UES SunShare PV BuyDown and commercial systems
•10 kW for SRP
•10 kW for TEP (500 kW in aggregate)
Net Metering
• $2/Wpac Option 1 customer purchase
• $2/Wpac Option 2 if purchased from TEP
• $2.4/Wpdc Option 3 if customer purchased
and operational within 180 days after
receipt of agreement
TEP SunShare PV BuyDown
• $3/W for residential and commercial PV up
to 10 kW
•As of July 5, 2006 the incentive level will be
$2.50/W for PV systems >10 kW
• $.50/kWh for SHW
• $3/W for residential and $2.50/W for
commercial grid connected
• $2/W for off‐grid <5 kW
• $.50/kWh for SHW
Incentive Amount
•Maximum size for PV residential is
10 kW
•Maximum amount of credit is
$30,000 for residential and $500,000
for commercial
•Total cap per customer per year is
$500,000
• $8.5 million total available for 2006
Comments
SRP EarthWise Solar Energy
(PV and SHW)
APS Solar Partners Incentive
Program
(PV and SHW)
Utility Incentive
Figure 4. Key AZ Utility Incentives
Page 6
• Program capped at $1 million. Part of
the recent HB2429 bill
• 10% commercial tax credit capped at $25,000
per system and $50,000 per company
annually
Commercial Tax Credit
• An effort to improve economies of
designated areas in AZ by enhancing
opportunities for private investment.
• $3,000 for each net‐new qualified employee
over a 3‐year period for a maximum of 200
employees in any given tax year.
• A reduction of assessment ratio from 25% to
5% of all personal and real property for
primary tax purposes for 5 years
AZ Enterprise Zone
• Part • Full property tax exemption for property of the recent HB2429 bill
Property Tax Exemption owners installing solar energy systems
• Full sales tax exemption for solar energy • Part of the recent HB2429 bill
Sales Tax Exemption systems
• Provides free services to employers who seek access to skilled new hires or existing
worker training resources
AZ Workforce
Connection
• Provides grant money to companies creating full time permanent new jobs or training for
Job Training Program existing worker within AZ
Interconnection • ACC is developing a statewide interconnection standard, but this is still in progress
• 25% up to $1,000
Incentive Amount
• For residential only
• Applies to all solar technologies (PV,
SHW, and CSP)
Comments
State Income Tax Credit
Arizona Incentive
Figure 5. AZ State Level Incentives Applicable to Solar
As shown in Figure 3, there are 20 states that have renewable portfolio standards (RPS) and
eight with solar or non‐wind set asides. These RPS require that a certain percentage of new
or existing generation come from renewable energy resources. NCI estimated the impact of
the eight solar or non‐wind set‐asides could result in between 3,000 – 6,200 MW of new solar
installed capacity by 2020, Figure 6.
Source: Navigant Consulting Analysis, 2006
1. States have either specific solar targets as a % of generation or MW, or solar can be part of a non‐wind set‐aside or a DG set‐aside.
2. Solar assumed to capture the following % of the stateʹs RPS target: 0.2%‐1.0% for NY, 1%‐5% for TX, 3%‐15% for
AZ. For AZ, the 15% RPS target is assumed to have passed. 3.Lower bound for CA assumes installations stall at the 2005
installed capacity level. Upper bound assumes latest CA solar initiative is met.
Estimated Solar Set Aside Capacity Targets by 2020 (MW)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Colorado
District of
Columbia
Nevada
New Jersey
Pennsylvania
New York
Arizona
Texas
Total Non‐
CA
California
Cummulative PV Installed (MWp)
High
Low
States with specific
solar targets1
States with non‐specific
solar targets1,2
Impact of CA3
Figure 6. Solar Set Aside Capacity by 2020
Page 7
3. Likely Market Penetration of Solar in AZ
Central Station Solar System Economics
NCI estimated the likely market penetration of solar for customer and central station
applications. NCI reviewed the economics of each of the technology options from 2006
through 2020. From conversations with experts in the field, NCI and the Steering
Committee1 for the project determined that the Power Tower options were unlikely to be
competitive in the timeframe of interest and that the development risks were currently too
high to be considered for detailed analysis. NCI therefore focused the central station
analysis on the four other central station power options. As shown in Figure 7, central
station power options are not currently competitive with a new gas turbine combined cycle
(GTCC) plant (assuming $5 – 10/MMBtu gas prices) or a new coal plant (assuming $1 –
3/MMBtu coal prices).
0
5
10
15
20
25
30
35
Dish Stirling PV Central Station ‐ 1‐axis tracker Concentrator PV (Amonix) Solar Parabolic Trough
¢/kWh ($2006)
2006
2010
2025
Note: All cost estimates exclude additional revenue from renewable energy certificates. New Coal will generate electricity at 3.7
to 5.6 cents/kWh and new Gas Turbine Combined Cycle (GTCC) at 5.7 to 9.2 cents/kWh. LCOE includes 10% ITC and
accelerated depreciation, and 30% ITC for 2006. NCI analysis using data from NREL in 2006 and Bob Liden, Executive VP
and General Manager, Stirling Energy Systems, for Dish Stirling, September 19, 2006.
New GTCC @ $5‐10/MMBtu
New Coal @ $1‐3/MMBtu
Based on large scale
production installed cost
claims by SES
Figure 7. Comparative Economics of Central Solar Power Options
The levelized cost of electricity2 (LCOE) for many of the central station options ranges today
from about $.14 ‐ .20/kWh with Federal incentives. This compares to the cost of a new GTCC
1 The Steering Committee members are listed in the Appendix of this report
2 The LCOE is the required selling price to cover all project cost over the project life, expressed in constant dollars
(i.e., the revenue requirement). LCOE focuses on costs, not market prices and is the busbar cost of electricity and
does not include transmission or distribution costs.
Page 8
at $.057 – $.092/kWh. By 2010, the costs are shown to increase, as one of the major incentives
for solar, the 30% Investment Tax Credit (ITC) is due to revert back to its previous 10% level
at the end of 2007. Dish Stirling technology is the only central station application noted to
reduce in price, as there have been significant claims about increases in production volumes
that could help to provide economies of scale. Stirling Energy Systems (SES), a leading
manufacturer of the technology has Power Purchase Agreements (PPAs) with two leading
utility companies in California. One is with Southern California Edison (Edison
International) for 500 MW with a 350 MW option and the other is with San Diego Gas &
Electric (Sempra) for 300 MW with a 600 MW option. Using installed cost estimates
provided by SES for 2010, NCI calculated the LCOE for the Dish Stirling technology at $.13 ‐
.14/kWh in 2010.
Peak loads in the desert southwest states and California are forecasted to grow by nearly
2,000 MW per year for the next 15 years. As shown in Figure 8, there is significant peak load
growth. Electric transmission is a critical link, however and under the current infrastructure,
potential exports of solar to other markets are limited.
Peak Load Growth (MW)
0
5
10
15
20
25
30
MW (Thousands)
AZ, NM, & So NV 0 4,652 9,000 13,925
California 0 4,661 9,707 15,169
2005 2010 2015 2020
Source: WECC, CA Energy Commission, NCI Analysis
Peak growth in the desert southwest is
forecasted to be nearly the same as CA.
Expected Peak Load (MW)
2005‐2020
CA 57,324 61,985 67,031 72,492
AZ, NM, 26,972 31,624 35,972 40,897
South NV
Total 84,296 93,609 103,003 113,389
NERC Sub‐ 2005 2010 2015 2020
Region
Figure 8. Peak Load Growth in the Southwest
One of the main advantages of solar technologies is that they often generate power that is
coincident with utility peak loads that are more costly. As shown in Figure 9, the cost of
parabolic trough solar technology (as shown in the yellow bars in Figure 9) is less than the
cost of peaking power today (the top two peaker solid and dotted lines in Figure 9). Trough
technology costs will only become more cost effected relative to peaking unit costs as the
cost of trough units are expected to decline by more than 50% by 2025.
Page 9
0
20
40
60
80
100
120
140
160
180
200
2006 2010 2025
$/MWh
Solar Trough
Peaker @ $8/MMBtu
Peaker @ $10/MMBtu
CC @ $8/MMBtu
CC @ $10/MMBtu
Operation (Hours/yr) 1,200 7,500
Heat Rate (Btu/kWh) 10,000 7,200
2006 Capital Cost ($/kW) $500 $650
260 MW
Combined
Cycle
50 MW
Peaking
Plant
Note: LCOE for solar includes Federal Investment tax credit, and accelerated depreciation.
2010 and 2025 assumes 6 hours of storage.
Figure 9. Solar Trough Economics Relative to Peaking Power Options
Some of the disadvantages of solar are that it is an intermittent resource and the sun does
not always shine. Peaking capacity may therefore still be needed to address the
intermittency and some of the non‐coincidence of solar output. On the other hand, solar
provides a hedge against gas price volatility, allows the gas plant to use less gas and may
therefore result in lower gas prices, reduces emissions, and by 2010 the trough technology
may be able to have cost effective storage to provide six hours of storage.
Customer‐Sited Solar System Economics
Residential PV economics, as shown in Figure 10, are currently 2 – 3 times more expensive
than retail electricity rates provided by utility companies in AZ. Commercial PV economics
on the other hand are currently more competitive as a result of the 30% ITC, 5‐year
accelerated depreciation, and other state incentives discussed in Section 1. Flat plate PV
costs are expected to decline as shown in Figure 10 and the economics in the figure assume a
business as usual cost reduction scenario. NCI also conducted an analysis assuming a cost
breakthrough or incentives scenario that would result in more aggressive system price
reductions.
Page 10
Residential Rooftop (2.5 – 3kW)
Key residential assumptions without incentives: 100% debt, cost of debt = 6.25%, Insurance = 0.5%, Loan period = 10 years. Project
economic life (for property tax calculations) = 25 years. Property tax rate of $11.70/$100 of assessed value. Electricity cost of
.095$/kWh growing at 1%/yr. Key commercial assumptions (without incentives): Debt equity ratio: 55%:45%, cost of equity = 15%,
cost of debt = 8%, Marginal federal + state income tax = 41%. Insurance = 0.5%, Depreciation under Modified Accelerated Cost
Recovery System (MACRS): Depreciation period considered is 15 years. Loan period = 10 years. Project economic life (for property
tax calculations) = 25 years. Property tax rate of $11.70/$100 of assessed value. Electricity cost of $.07/kWh growing at the rate of
inflation. Retail elect. rates assume constant (real) 2006 dollars and a 1%/yr real increase through 2025. See more detailed discussion
in Section 3 for with incentive assumptions. Note: The LCOE for residential is lower than for commercial building installations
primarily as a result of cost of capital assumptions.
0
5
10
15
20
25
30
35
40
2006 2010 2020 2025
Levelized Cost of Electricity
¢/kWh (2006 US$)
Without Incentives
With Federal Incentives
Retail Elect. Rate
With Federal and Utility Incentives
0
10
20
30
40
50
60
2006 2010 2020 2025
Levelized Cost of Electricity
¢/kWh (2006 US$)
Without Incentives
With Federal Incentives
Retail Elect. Rate
With Federal and Utility Incentives
Commercial Rooftop (50 – 300 kW)
Figure 10. Customer‐Sited Solar Economics
Market Penetration
In the accelerated cost reduction scenario, solar can result in 1,000 MW by 2020 and close to
2,600 MW of power by 2025, Figure 11, with rooftop PV accounting for 45% of the capacity.
0
500
1000
1500
2000
2500
3000
2005 2010 2015 2020 2025
Base Case
Accelerated
Figure 11. AZ Solar Deployment in MWs
Page 11
4. Potential Barriers and Opportunities for AZ
NCI conducted a series of interviews with key stakeholders in the state to determine the
strengths and uniqueness of AZ for solar development. Below are some of the key points
identified:
• AZ Corporation Commission provides proactive leadership on its Renewable Energy
Portfolio Standard
• There is population and economic growth in the state
• AZ has an excellent solar resource for central and customer sited PV along with large
areas of land for potential development
• AZ has high dependence on gas which has a volatile price
• The location is ideal and central to key nearby solar markets (TX, CA, NV, CO, NM)
• State Trust Lands and tribal lands may be used for large scale solar developments
• There are competitive labor costs and tax rates
• ASU Poly PV certification capability is only one of three in the world (the other two
are in Northern Italy and Germany)
• ASU hosts the Power Systems Engineering Research Center, a consortium of 13
universities and 39 companies which is funded by the National Science Foundation
• There will be funds available for solar close to $1.2 billion from the Renewable
Energy Standard (RES) through 2025 ($60 million per year)
• ASU has very good assets that can be leveraged such as its clean room, and
monitoring and evaluation equipment
• UA has very good assets that can also be leveraged such as its R&D on 3rd
generation solar cells, clean rooms and characterization equipment
• The STAR facility evaluates emerging technologies (there are only two others in
world: Weizmann Institute in Israel and Australian National University)
There are however, many potential barriers to solar development in the state:
• The capital cost of the solar technologies are very high
• Some solar technology immaturity
• Other countries provide significant solar incentives that could draw solar
development elsewhere
— Tax holidays (personal and corporate); free land; reduced power rates; access
to water and plant cost subsidies of 30 – 45% in locations such as Germany
• Lack of PV educated human capital and infrastructure
• Low utility rates relative to other nearby states
• Lack of local strong markets (relative to other some other U.S. states)
Page 12
• Competition from neighboring states (e.g. NM manufacturing incentives)
• Perception of the need for gas back‐up with solar to address intermittency
• Local building codes that restrict solar develop
• Homeowner associations and restrictions on solar installations
If many of these barriers can be overcome, there is tremendous potential for jobs and
emission reductions in the state. As shown in Figure 12, the accelerated development
scenario for solar can potentially result in over 3,000 jobs in AZ in 2020.
510
60
450
Direct
Manufact.
(# Jobs*)
30
26
4
O&M
Labor
Expenditure
(Million $)
2,229
429
1,800
Installation/
Construction
(# Jobs)
TOTAL 992 258 308 297
Central 742 143 233 54
Solar
Rooftop PV 250 115 75 243
Installation
Labor
Expenditure
(Million $)
O&M
(# Jobs)
Installations
in 2020
(MW/yr)
Cumulative
Capacity
(MW)
Accelerated
Scenario
In 2020
*Assumes none of central solar components are manufactured in AZ, except for PV where 20 MW were assumed to
be manufactured in state. Assumes that an additional 150 MW plant is in AZ for the rooftop PV market (some in
state and some exported).
Source: Navigant Consulting, Inc. estimates, June 2006.
Figure 12. Potential Jobs from Solar Development
Emission reductions are also estimated at 400,000 tons per year by 2020 in an accelerated
development scenario.
*Assumes .31 lbs/kWh of CO2 are displaced for a Combined Cycle Gas Turbine in 2020.
** Assuming market shares of: 70% trough, 20% dish Stirling, 5% concentrating PV, and 5% flat plate
PV based on economics.
Source: Navigant Consulting, Inc. estimates, August 2006.
2,570,575
2,182,500
1,728,000
299,000
81,000
74,500
388,075
299,775
88,300
Energy
Delivered
(MWh)
398,200
338,200
267,800
46,300
12,600
11,500
60,000
Total CO2
Reduction
(Tons)
TOTAL 992 26.3%
38%
23%
25%
23%
742
519
148
37
37
Central Solar**
• Trough
• Dish Stirling
• PV
• Concentrating PV
18.3%
16%
250
187
63
Rooftop PV
• Residential
• Commercial
Average
Capacity
Factor
(%)
Cumulative
Capacity
(MW)
Accelerated
Scenario
Figure 13. Emission Reduction Potential in Accelerated Scenario in 2020
Page 13
By 2020, the opportunities for solar can be significant in an accelerated development
scenario. As shown in Figure 14, there can be >250 MWs per year of solar being installed
that can result in close to 3,000 new jobs.
• MWs in 2020 (Accelerated Scenario):
– Central Solar: 145 per year
– Rooftop: 115 per year
• Jobs in 2020 (Accelerated Scenario):
– Direct Manufacturing: 510 per year
– Installation/Construction + O&M: ~2,535
• Emissions Reductions in 2020 (Accelerated Scenario):
– Central Solar: ~338,200 Tons of CO2/Year
– Rooftop: ~60,000 Tons of CO2/Year
• Spin‐off value of R&D development
• Additional economic development e.g. tourism to visit solar “centers of
excellence” and deployment centers
• Enhanced sustainable AZ: maintaining AZ’s quality of life
Opportunities
Figure 14. Opportunities for AZ with Solar Development
Page 14
5. AZ Solar Roadmap
NCI’s road‐mapping process identified actions and recommendations based on the analyses
of the market opportunities, competition, and barriers to solar development, Figure 15. NCI
and the Steering Committee used this information to develop initiatives and policies for
achieving the three initial project goals and ambitions.
Potential
Benefits
To Arizona
Arizona
Competitive
Position
Roadmap
& Action
Plan
Barriers
•Research &
Development
•Manufacturing
•Distributed
systems
deployment
•Central station
development &
operation
•Strengths
•Weaknesses
•Threats
•Areas of
competitive
advantages
•Financial
•Institutional
•Infrastructure
•Availability
•Wholesale markets
•Transmission
•Siting
•Other
Policy and program
recommendations
and action items
for:
• Near–term
• Mid‐term
• Long‐term
•Jobs
•Supply security
•Electricity prices
and stability
•Reduced
emissions
•Image
Market
Opportunity
Figure 15. Roadmap Process
Figure 16 lays out the major five initiatives identified to help meet the vision of achieving
1,000 MW of solar development by 2020, 3,000 new jobs, and a Solar R&D Center of
Excellence. The five initiatives include:
• Establishing a Marketing and Outreach Program;
• Establishing a Solar Zone;
• Developing a Solar Center of Excellence;
• Establishing “Sustainable Partners”; and
• Building Large Central Solar Plants.
Page 15
Distributed Generation
will be an integral part of
the California energy
system, providing
consumers and energy
providers with safe,
affordable, clean, reliable,
and readily accessible
energy services.
• 1,000 MW of solar
installations
• 3,000 new jobs
• Solar R&D Center
of Excellence
Foster
Leadership
Position &
Role in R&D
Accelerate
Development
& Adoption of
Solar
2006 2010 2015 2020
Strategic Objective:
Establish solar
electric cost-competitiveness
and stimulate
market demand for
solar
Strategic Objective:
Establish Arizona as a
Center for Solar
Electric R&D
Build Large
Central Solar
Plants
Establish Solar
Zones
Multiple installations as
technology develops
Develop Center
of Excellence
Establish
Marketing
and Outreach
Program
Establish
“Sustainable
Partners”
Rooftop PV
Both Rooftop &
Central Solar
Central Solar
Figure 16. Five Key Initiatives for Meeting the Solar Vision
Four of the initiatives are focused on accelerating the development and adoption of solar,
and one is focused on fostering a leadership position and role in R&D. The detailed
milestones for each of the key initiates to help accelerate the development and adoption of
solar are shown in Figures 17 and 18.
2006 2010 2015 2020
Establish Solar
Zone
Build Large
Central Solar
Plant
Alliance formed, project
site designated, and
design parameters
complete (‘06)
Provide political
support for
project (‘07)
Building/community
aesthetic and
structure analysis
complete (‘07)
Identify and approve
funding (‘07)
• 1,000 MWs of
Solar Installations
• 3,000 Jobs
Utility modeling,
analysis
complete (‘07)
Develop
utility
coalition
(’06 – ‘07)
Establish Solar
Cost
Competitiveness
Establish Solar
Cost
Competitiveness
Economic
analysis
complete
(‘07)
Interconnection,
storage, energy
control and DSM
strategies
developed (‘07)
Community pilot
scale effort
initiated (‘08)
Pilot scale
completed (‘10)
Large scale plant
built (‘11)
Issue solicitation
(‘07)
Figure 17. Key Milestones for the Solar Zone and Building Large Central Solar
Page 16
The initiatives in Figure 18 that identify the milestones for “Establishing Sustainable
Partners” and an Outreach and Education Program will help the development and adoption
of solar through stimulating market demand and building awareness.
2006 2010 2015 2020
Establish
“Sustainable
Partners”
Design program, logo,
criteria, promotional
campaign (’07)
Identify and
prioritize
opportunities to
target (‘07)
Launch initiative (‘08)
Define lead within
Department of
Commerce (‘06)
Develop incentive marketing packages
for central solar developer, big box
store, or manufacturers wanting to
locate in AZ etc. (‘07)
Talk with key
solar players
about possible
incentive gaps
in packages
(‘07)
Link with Governors
Innovation Awards
(’07)
•1,000 MWs of
Solar Installations
•3,000 Jobs
Stimulate
Market Demand
& Build
Awareness
Establish
Marketing and
Outreach Program
Stimulate
Market Demand
& Build
Awareness
Develop summary of
gaps and educate key
stakeholders as needed
(‘08)
Figure 18. Key Milestones for Sustainable Partners and Marketing and Outreach
To foster a leadership position and role in R&D, the NCI team and Steering Committee
members identified the milestones shown in Figure 19.
Page 17
2006 2010 2015 2020
Develop Center of
Excellence Solar
R&D
Form Solar
R&D Leadership
(‘06)
Brief state leaders
and congressional
delegation (‘07)
Tie research plan to
federal and state support
criteria (‘07)
Inventory capabilities, define AZ energy
needs, outline 10-yr solar research
plan (‘07)
• 1,000 MWs of
Solar Installations
• 3,000 Jobs
Establish
Arizona as a
Center for Solar
Electric R&D
Invite federal stakeholders to see AZ
solar science capabilities first hand
(‘07)
Market AZ science
capabilities
internationally (‘08)
Figure 19. Key Milestones for Developing a Center of Excellence for Solar R&D
Implementing the roadmap initiatives above will allow AZ to build upon its assets and
policies to establish a leadership position in fostering solar, Figure 20. The opportunities are
significant if the state can take a leadership role in facilitating the activities that will leverage
AZ’s strong assets to help achieve the MW and job targets desired.
Leadership
Initiatives
Arizona’s Solar
Policies
Assets
Arizona Solar Roadmap Ambitions by 2020:
• 1,000 MW of solar installations
• Solar R&D Center of Excellence
• 3,000 new jobs
• Establish solar zones
•Build large central station plant (s)
• Establish “Arizona Sustainability
Partners”
• Establish marketing & outreach
• Develop Solar Center of Excellence
•RES requirements
•Utility programs
• Tax credits (including sales
and property tax
exemptions)
• Job training funds
• Best solar resource in nation
• Rapidly growing markets
• Region committed to sustainable
development
• Pro‐business environment
•Opportunity for Tribal partnerships
• Intellectual capital at post‐secondary
institutions
Roadmap Initiatives
Figure 20. Foundation Elements for Achieving the Solar Roadmap Ambitions
Page 18
Appendix: Key Contributors to Report
There were four meetings that NCI held with the Steering Committee members listed in
Figure 21. They provided valuable input throughout the process to ensure accuracy and
completeness. NCI and the ADOC are thankful for their time and commitment to the
project.
Peter Johnston, Manager Technology Arizona Public Service
Development
Barbara Lockwood, Renewable Energy Arizona Public Service
Manager
Eric Daniels, President of Technology BP Solar
Gail Lewis, Policy Advisor Governor’s Office
Chico Hunter, Senior Engineer Salt River Project
Ed Fox, Vice President Arizona Public Service
Greg Flynn The League of AZ Cities and Towns
Jonathan Fink, Vice President for Research Arizona State University
& Economic Affairs
Lee Edwards, CEO BP Solar
Harvey Boyce, Director Arizona Power Authority
Chuck Backus, President Arizona State University Research Park
Bud Annan Solar Energy Advisory Council
Stephen Ahearn, Director State Residential Utility Consumer Office
Name Organization
Figure 21. Steering Committee Members
Page 19
Doug Obal, Director of Financial Analysis Stirling Energy Systems, Inc.
Joe Simmons, Chair of Department of University of Arizona
Materials Science and Engineering
Leslie Tolbert, Vice President of Research University of Arizona
Commerce and Economic Development
Commission
Fred DuVal, Member
Willis Martin, Vice President of Land Pulte Homes
Acquisition – Phoenix Area
Todd Madeksza County Supervisors Association of Arizona
Larry Lucero, Manager of Government Tucson Electric Power
Affairs
Robert Liden, Executive VP and General Stirling Energy Systems, Inc.
Manager
Name Organization
Figure 21. Steering Committee Members (continued)
In addition to the Steering Committee members, several staff from the Arizona Department
of Commerce contributed their time and oversight on this project. Those key members are
listed in Figure 22 along with the NCI contributors in Figure 23.
Deborah Tewa, Renewable Energy Tribal Arizona Department of Commerce
Energy Specialist
Martha Lynch, CPPB, Director of Arizona Department of Commerce
Procurement Services, Chief Procurement
Officer
Jim Arwood, Director Energy Office Arizona Department of Commerce
Lori Sherill, Support Specialist, Community Arizona Department of Commerce
Planning
Kent Ennis, Research Manager, Strategic Arizona Department of Commerce
Investment and Research
Lisa Danka, Assistant Deputy Director, Arizona Department of Commerce
Strategic Investment and Research
Deb Sydenham, Assistant Deputy Director, Arizona Department of Commerce
Community Development
Name Organization
Figure 22. AZ Department of Commerce Contributors
Page 20
Lisa Frantzis
Director‐in‐Charge
phone: 781.270.8314
lfrantzis@navigantconsulting.com
77 South Bedford Street
Burlington, MA 01803
Steve Hastie
Managing Consultant
phone: 215‐832‐4435
1717 Arch St.
Philadelphia, PA 19103
Rich Germain
Associate Director
phone: 415‐356‐7177
One Market Street
San Francisco, CA 94105
Craig McDonald
Managing Director
phone: 215.832.4466
cmcdonald@navigantconsulting.com
1717 Arch Street
Philadelphia, PA 19103
Jay Paidipati
Senior Consultant
phone: 781.270.8302
jpaidipati@navigantconsulting.com
77 South Bedford Street
Burlington, MA 01803
Figure 23. Navigant Consulting, Inc. Contributors