AZ Utilities and Universities form New Carbon Neutral Economy Center

Four Arizona utilities and the state’s three public universities are forming a new coalition with the goal of attaining a carbon neutral economy in Arizona. Arizona Public Service, Salt River Project, Tucson Electric Power, and Southwest Gas, along with Arizona State University, the University of Arizona, and Northern Arizona University, will together play a crucial leadership role in helping Arizona move the state toward a robust carbon-neutral economy.

The coalition’s work will operate in a new ASU-based center called the Center for an Arizona Carbon-Neutral Economy, housed within the Julie Ann Wrigley Global Futures Laboratory on the ASU Tempe campus. The Center will begin its work by pursuing the creation of a regional clean hydrogen hub under the framework of the Infrastructure Investment and Jobs Act, which was signed late last year and establishes program guidance and funding to create regional clean hydrogen hubs across the country. In Arizona, a hub would include hydrogen producers, consumers, and a connected infrastructure.

A successful regional clean hydrogen hub will help address difficult-to-reduce carbon emissions as well as grow Arizona’s economy, attract new businesses, and create high-quality jobs. Once operational, a new hydrogen hub would also support a reliable and resilient electric grid, provide clean energy for the electric, transportation and industrial sectors, and create economic development opportunities.

Arizona’s universities are optimistic about what the coalition can accomplish, and are eager to work together to explore the most effective ways to develop a sustainable and thriving carbon neutral economy.

Arizona’s utilities are similarly enthusiastic. Of the coalition, APS CEO Jeff Guldner said,

“The need to address the causes and impacts of climate change has never been more important. By partnering with Arizona’s universities and peer utilities, this statewide hub will help advance hydrogen as a clean-energy solution with tremendous potential to accelerate decarbonization. It also will further Arizona’s reputation as a national leader in the clean energy transition while creating economic opportunities for our state and its people.”

Likewise, Laura Nelson, vice president of sustainability and public policy for Southwest Gas, said,

“Southwest Gas is committed to helping our customers and the communities we serve achieve emissions reductions goals. Advancing hydrogen technology and increasing availability of hydrogen to the market is strategically important to achieving our clean energy goals. With existing infrastructure that can be used to transport this powerful clean fuel, Southwest Gas is excited to work with this coalition and stakeholders to lead efforts to bring a regional hydrogen hub to our state.”

Arizona is already making great strides toward greater deployment of clean and renewable energy resources and growing the clean economy. Further research, development, and deployment of hydrogen through the Center for a Carbon-Neutral Arizona has the potential to significantly reduce even further carbon-emissions while continuing to grow and strengthen Arizona’s economy.

TWW Supports Competitive Community Solar in Arizona

TWW’s Doran Miller submitted comments to the Arizona Corporation Commission today highlighting why it makes sense for the ACC to support and explore a docket on competitive community solar policies for Arizona.

Community solar presents an area of tremendous potential growth for solar energy by broadening the potential customer base to 100% of homes and businesses, thereby significantly expanding access to affordable clean energy for residential and commercial customers alike. However, this can only happen if “the right federal, state, and local policies can institute a supportive regulatory environment.”

TWW believes that creating competitive community solar policies will help unlock significant investment in Arizona as evidenced in a market analysis for the potential cumulative investment in the sector:

“According to a 2015 study by the National Renewable Energy Laboratory (NREL), nearly 50 percent of households and businesses at that time were unable to host a PV system due to factors like not owning the building or insufficient roof space. NREL estimated that by opening the solar market to these customers via community solar programs, “shared solar could represent 32%–49% of the distributed PV market in 2020, thereby leading to growing cumulative PV deployment growth in 2015–2020 of 5.5–11.0 GW, and representing $8.2–$16.3 billion of cumulative investment.”

Read TWW’s full comments here: https://docket.images.azcc.gov/E000019275.pdf

Arizona Corporation Commission All Source Bidding Rules Make Sense for Consumers

This piece originally ran in The Western Tribune on April 29, 2022 and can be accessed here.

Earlier this year, the Arizona Corporation Commission voted down, by a vote of 3-2, the energy rules package it had been considering for more than three years. The package would have required utilities to generate 100% of their energy from carbon-free sources by 2070, more robust energy efficiency standards, battery storage provisions, and critical updates to the Integrated Resource Plan (IRP) and purchased power agreement processes. 

The Commission was heavily criticized for ending years of work, but what was largely missing from that criticism was any mention of what happened after the energy rules were voted down: Chairwoman Marquez Peterson brought forward a separate proposal to open a new docket, moving forward with rulemaking on the IRP reform provisions on their own. 

Looking on the bright side

This is good news for Arizona and provides a reason to be optimistic. While the carbon-free standards of the now-defunct energy rules package certainly garnered the most headlines, the IRP process reforms, and all-source RFP provisions contained therein, will significantly benefit ratepayers by ingraining transparency, competition, and market forces in the resource planning process. These are important protections for ratepayers and will lead to a more efficient and effective power delivery system for the state of Arizona

Additionally, it will create a more open energy market that gives clean and renewable energy sources — which are now more cost competitive than ever — a real chance to compete for a place in Arizona’s energy arena.  

Competition carves a path forward to carbon-free

Understandably, it’s easy for someone to overlook the IRP provisions in favor of the headline-grabbing carbon-free goals. When someone says 100% carbon-free by 2050, it’s easy to understand what that means (even without necessarily knowing where all that carbon-free energy will come from). The same cannot necessarily be said for the IRP reforms. After all, they are technical changes to process-related provisions in Arizona’s existing energy rules. But, if done correctly, these provisions have the potential to achieve the same clean energy outcomes that stakeholders involved in the energy rules hoped to achieve. 

How can that be? The answer is simple: by creating a multi-step Commission review process that includes truly competitive, all-source bidding as well as opportunities for meaningful stakeholder engagement and input, all of which are included in the new provisions. 

The problem with existing processes

The existing IRP process is focused on two things: how much energy we need (called the load forecast) and where that energy is going to come from (called the resource mix). 

Years ago, these determinations were made in Arizona as part of a utility’s rate case, and were often contentious. That is because utilities had every incentive to maximize the load forecast. The determination about which resources were needed to meet a utility’s energy demands, while once more straightforward, has similarly become increasingly fraught over the years. It was also incredibly difficult for stakeholders to track and engage on these issues, because rate cases tended to be long and complicated. But in 2010, the IRP process was stripped out of the rate case into its own proceeding, creating additional opportunities for oversight, monitoring over load forecast and resource mix as technologies changed, and better opportunities for stakeholders to engage. 

Likewise, the request for proposal (RFP) process, used to determine the resource mix, has also gone through some changes over the years. In fact, there was a time in Arizona that RFPs were not required at all, resulting in self-dealing on the part of utilities. To deal with that problem, the Corporation Commission created an RFP process that required independent monitoring to ensure bids were truly arms-length transactions. Since then, the RFP process has gone through a subsequent evolution, wherein the parameters of an RFP might only include certain resources (natural gas, for example) or are clearly written to apply to certain predetermined winners. As a result, the situation now is that resources that could meet the energy demands in an RFP — such as renewable energy technologies — might be excluded entirely from a bid. 

Out with the old, in with the new

The new IRP process has three distinct steps to deal with all of those issues to create a more modern process with a truly competitive energy market. 

First, the Commission will review and vote on the load forecast provided by a utility. This provides a far more robust process in terms of stakeholder participation and input, making it much more difficult for a utility to, for example, simply forecast exponential growth indefinitely, and Commissioners will need to agree on the load forecast before the process can continue. 

Once the load forecast has been agreed upon, a utility can move to the second step of the process which is to issue an RFP. That RFP must be reviewed and voted upon by the Commission before it goes out for bidding to ensure it’s truly all-source. This second review also builds in additional Commission and stakeholder oversight and engagement to ensure utilities are not trying to skew the playing field for any predetermined outcome. The all-source RFP will generate a true market response on the resources that could be utilized to meet energy demand, including everything from clean and renewable sources to nuclear to traditional sources of energy production. 

Unlike the current system, an all-source RFP will yield a snapshot of what is actually available and all relevant factors on the various resources. It can even provide information on resource diversity mix, including demand side options like installing thousands of smart thermostats as part of an overall bid to meet a utility’s needs. As clean and renewable energy technologies continue to evolve and become even more cost competitive, the all-source RFP process ensures that those resources are given an opportunity to compete. And, if they are truly the cheapest energy source — as evidence suggests — clean and renewable resources will represent a growing percentage of Arizona’s portfolio. 

Finally, once the bids come in, the utilities propose back to the Commission an action plan outlining the procurement steps. The Commission then reviews the proposal and casts a third and final vote.

With these updates to competitive all-source bidding, market forces will help create an inclusive and cost-competitive energy economy that, over time, can bring Arizona closer to meeting the same types of carbon-free goals for which stakeholders were advocating in the Commission’s original energy rules package. 

Doran Arik Miller is the Arizona Director of The Western Way, a nonprofit organization that builds support for commonsense market-driven solutions to environmental challenges that support the economy and improve the environment.

TWW Joins Heidi Ganahl in Tour of Eastern CO

TWW’s Greg Brophy joined Colorado Gubernatorial candidate Heidi Ganahl on a tour in Eastern Colorado this week. The tour included stops at the Quail Ridge Dairy and Northeastern Junior College’s Applied Technology Campus and focused on important issues impacting rural Colorado.

At Quail Ridge Dairy in Ft. Morgan, owners Chris and Mary Kraft gave an overview of their milking operations and the practices they employ to increase efficiency and use less resources.

“I learned a lot about the efficiency of a dairy farm,” Ganahl said. “Every aspect of the farm creates amazing results of importance for the people of Colorado. I’m also impressed with how much care and love there is for the animals.”

At NJC’s Applied Technology Campus, Ganahl toured the wind technician training facility, hearing from instructors and students on the importance of hands on training that students receive.

The tour also included a visit inside the program’s nacelle model which houses the gear box and generator in a wind turbine. The nacelle was built by students at NJC from donated parts and equipment to help with training.

The tour was covered by the Ft. Morgan Times and Sterling Journal Advocate.

Hydrogen Policy Moves Forward in AZ

As Arizona continues to take a leadership role in clean and renewable energy technology–in particular when it comes to research, development and innovation–it is absolutely critical that the state has policies in place that will support the innovation sector.

In particular, efforts within Arizona to explore and bolster the use of hydrogen as an alternative energy source are gaining ground. For example, last year the U.S. Department of Energy awarded a grant of $20 million to study the production of clean hydrogen from nuclear power at Palo Verde Nuclear Generating Station in Phoenix. In addition, Arizona-based Nikola Motors is working to develop hydrogen fuel cell technology for the commercial trucking industry, and Southwest Gas has teamed up with Arizona State University to to study how hydrogen-blended natural gas can further reduce carbon emissions while still providing clean and reliable energy. These are but just a few examples, though there are more–which is why supportive policies to continue this trend are so important.

Fortunately, Senator T.J. Shope (R-Coolidge), has been a champion of hydrogen technology in the Arizona Legislature. This year, Senator Shope sponsored two bills to support Arizona’s hydrogen industry. The first, SB1396, was signed by Governor Ducey on April 22 and establishes a legislative hydrogen study committee to “investigate and evaluate existing laws and regulations and recommend legislation related to the production, distribution and storage of hydrogen.” The second, SB1599, would have exempted hydrogen from Arizona’s transaction privilege tax, but unfortunately it failed to advance through the legislature.

Senator Shope’s attention to Arizona’s hydrogen economy is exactly the type of approach we need from Arizona’s elected officials. Policies to support the research, development and deployment of new and innovative sources of alternative fuels will help ensure Arizona remains at the cutting edge of clean energy.

AZ Lands Huge Investment for New Battery Manufacturing Facility

This week, the Arizona Commerce Authority (ACA) announced that LG Energy Solutions will be investing $1.4 billion to build a cylindrical-type battery facility in Queen Creek, Arizona. This facility will be the first of its kind for LGES in North America. Construction on the facility is slated to begin this summer and production will commence in 2024. The facility is expected to bring thousands of highly-skilled high-paying jobs to the area and the state as a whole.

Cylindrical batteries offer high-density, compact energy storage ideal for applications like electric vehicles. According to the announcement by the ACA, the state-of-the-art Arizona facility aims to establish LGES’s presence in North America’s cylindrical battery market while also providing opportunity for further expansion. LGES’ Queen Creek facility will feature a cutting-edge smart factory system including remote support, manufacturing intelligence, logistics automation and more.

Of the announcement, Governor Ducey said, “Global technology leaders like LG are choosing Arizona because of our world-class business environment, advanced workforce, unbeatable quality of life, and culture of innovation - one that’s delivering unparalleled opportunity for current and future generations.”

Arizona’s energy innovation sector, including high-tech manufacturing, semiconductors, electric vehicles, and batteries, is flourishing. The state has seen recent multi-billion-dollar investments from global technology leaders such as Intel and TSMC, EV makers such as Lucid, Nikola, and ElectraMeccanica opening or expanding production operations in the state, and other battery storage and clean tech companies joining Arizona’s ecosystem.

Sandra Watson, President and CEO of the Arizona Commerce Authority, highlighted Arizona’s acceleration in recent years toward becoming a hub of clean energy and tech innovation. “With LG Energy Solution’s announcement, Arizona has cemented our reputation as the world’s production capital for cutting-edge battery technology. This high-tech facility further anchors Arizona as a hub for electric vehicles and sustainable technologies, bolstering our already robust EV supply chain.”

Echoing her remarks, Chris Camacho, President and CEO of the Greater Phoenix Economic Council, another economic development agency, noted, "The addition of LG Energy Solution's high-tech battery manufacturing facility to Queen Creek is a massive investment that solidifies the market's position as a hub for battery technology and energy storage and is significant for Greater Phoenix as it continues to attract global leaders in emerging industries.”

All of this is good news for Arizona, and underscores the importance of ensuring the state has the right policies in place for it to continue on this positive trajectory.

TWW Reviews Utah's 2022 Legislative Policies on Energy and Water

Utah’s 2022 legislative session adjourned on March 4th. Steve Handy and Greg Brophy took time to review several of the energy and water bills that were discussed this year. From a framework on carbon sequestration to making significant investments to preserve the Great Salt Lake, it was a busy legislative session in Utah.

Watch the full interview below:

Western States Respond to Regional Hydrogen Hub Strategy

Yesterday, Colorado, New Mexico, Utah, and Wyoming submitted joint response to the Department of Energy’s Regional Clean Hydrogen Hubs Implementation Strategy request for information process. The RFI seeks input from responders on the regional clean hydrogen hub provisions in the Bipartisan Infrastructure Law and how the Department of Energy should develop the overall Funding Opportunity Announcement solicitation process, structure and implementation strategy.  

The four state collaboration known as the Western Inter-States Hydrogen Hub (WISHH), highlighted the key attributes that will contribute to a successful regional hydrogen hub implementation effort, all of which the WISHH states are uniquely situated to provide as part of their collective effort.

The Bipartisan Infrastructure Law included $8 billion for the creation of four Regional Clean Hydrogen Hubs that will create jobs to expand use of clean hydrogen in the industrial sector and beyond.  These hubs will demonstrate the production, processing, delivery, storage, and end-use of clean hydrogen.  The hubs will have to demonstrate feedstock diversity, as the bill requires at least one hub produce hydrogen from nuclear energy, one from fossil fuels, and one from renewables.

Additionally, at least one of each of the hubs will be required to demonstrate hydrogen end-use in either electric power generation, industrial sector, residential heating or transportation. The four hubs are required to be located in different regions of the U.S. and, if feasible, there is preference that at least two hubs be located within natural gas producing regions.

Hydrogen energy has the potential to decarbonize multiple economic sectors, including heavy-duty transportation and steel manufacturing, create good paying jobs, and pave the way towards a grid powered by clean energy resources. Today, the U.S. produces about 10 million metric tons of hydrogen annually, compared to approximately 90 million tonnes produced per year globally.

While most of the hydrogen produced in the U.S. comes from natural gas through steam methane reforming, electrolysis technology, which uses electricity to produce hydrogen from water, is an emerging pathway with dozens of installations across the U.S. This technology could allow for the production of hydrogen using clean electricity from renewable energy including solar, wind, and nuclear power.

The state energy leaders of the WISHH include Thom Carter, Energy Advisor to Governor Cox of Utah; Randall Luthi, Chief Energy Advisor to Governor Gordon of Wyoming; Will Toor, Executive Director of the Colorado Energy Office; Sarah Cottrell Propst, Secretary of the New Mexico Energy Minerals and Natural Resources Department; and James Kenney, Secretary of the New Mexico Environment Department.

The next step will be for the Secretary of Energy to solicit proposals for regional hubs and then select the hubs before August of 2022.

TWW Talks Geothermal Energy with Colorado Sen. Rob Woodward

TWW’s Greg Brophy spoke with Colorado State Senator Rob Woodward (SD-15) about legislation he is carrying this year, SB-118. The bill would encourage the use of geothermal energy across Colorado and would put geothermal energy on equal footing with solar energy with respect to the permitting, installation, and other aspects of residential and commercial geothermal systems.  The bill would also provide an educational component to show how current geothermal systems can be used in residential and commercial applications and the associated cost savings for ratepayers. 

Sen. Woodward and Brophy also spoke about the importance of energy independence and how geothermal can play a role. They discussed how geothermal, as a very localized source of domestic energy which runs 24 hours a day, is impervious to cyber-attacks and has no fuel costs making it an ideal source for our nation’s “All of the Above” energy strategy.

Watch the full interview below.

TWW Supports Colorado Green Hydrogen Legislation

The Western Way supports, HB-1140, sponsored by Colorado Representatives Dan Woog (HD-63) and Donald Valdez (HD-62), the bill will pave the way for green hydrogen projects to be developed in Colorado.  Green hydrogen is defined as hydrogen that is produced by splitting water into hydrogen and oxygen using electricity from renewable resources.  Green hydrogen could be a critical component to energy storage and transportation and industry fuels in the near future.  HB-1140 from Representatives Woog and Valdez would allow for green hydrogen to be added to the state of Colorado’s resource list of allowable renewable energy resources to meet energy standards and the bill would also instruct the state to add green hydrogen to the state’s GHG emission reduction roadmap.  The bill would help spur new investments in hydrogen projects that are expected in the near future colorado.      

Companies and governments around the world are investing billions of dollars in research and development of hydrogen strategies, infrastructure, and deployment.   Colorado recently partnered with neighboring states to compete for $8 billion dollars for Regional Clean Hydrogen Hubs. 

Just last week a company in South Texas, announced plans to build the largest green hydrogen production and storage hub in the world.  The facility would utilize 60GW of behind the meter wind and solar and salt dome storage formations to provide up to 6TWh of energy storage.  That’s a big deal and a sign that this technology is being taken seriously by investors and developers. 

"Hydrogen City is a massive, world class undertaking that will put Texas on the map as a leading green hydrogen producer. Texas has been the world leader in energy innovation for over 100 years and this project is intended to cement that leadership for the next century and beyond," says GHI's founder and CEO Brian Maxwell.

Negotiations are ongoing with respect to end-use options for GHI produced green hydrogen, but these options include show the flexibility and potential uses of green hydrogen:

• Green ammonia for export markets: GHI is exploring the opportunity to export green ammonia to Asia. Japan's Ministry of Economy, Trade and Industry (METI) plans to add 30 million tonnes per year of renewable ammonia to the country's fuel mix by 2050. "Japanese and Korean companies are interesting partners for us in this project given their countries desire to shift to green ammonia" says Maxwell.

• Green ammonia for the fertilizer market: Higher natural gas prices has led to skyrocketing fertilizer costs for farmers. Fertilizer produced from green hydrogen can help remove unexpected price volatility.

• Sustainable aviation fuel: GHI is in discussions with potential off takers of green hydrogen as a feedstock for sustainable aviation fuel (SAF). GHI believes Corpus Christi is well placed to become a major SAF production hub.

• Sustainable Rocket Fuel: The company is looking at combining hydrogen with CO2 at the Port of Brownsville to create a green methane rocket fuel for launch operations in South Texas.

• Fuel switching power plants: H2 can also be used as a natural gas substitute at power plants. Over 4GW of new gas power plants have been proposed in the US that can burn a combination of hydrogen and natural gas.

Idaho Governor Brad Little Leads with 'Working Lands, Working Communities' Initiative

This week Idaho Governor Brad Little convened the final workshop for his Western Governors’ Association Initiative, “Working Lands, Working Communities.”   The aim of the initiative that was launched last September was to examine the interdependent relationships between western communities, state and federal land resource management entities, as well as the role that local communities play in successful land planning and management processes.  WGA held workshops in Utah, Colorado, and Idaho to bring together policy experts and stakeholders. 

When Governor Little kicked off the initiative he noted, “The goal of (Working Lands, Working Communities) is to develop bipartisan strategies to support western communities seeking to improve cross-boundary management of lands, mitigate wildfire, and restore ecosystems.  We face the growing need for additional capacity, both intellectual capacity and physical infrastructure, to responsibly manage the abundant natural resources we are so blessed with in the West.  One challenge is to expand market support for active management on western working lands. A good example is examining potential markets for the relatively low-value timber and biomass that needs to be removed to reduce the threat of uncharacteristic wildfires.”

The final workshop that took place this week in Boise, ID looked at opportunities to pursue natural infrastructure solutions for economic development, how invasive grasses are a catalyst for wildland fires, expanding sustainable rangeland markets, and how Idaho has been successful at creating a sustainable forests products market which lowers wildfire risks and protects vulnerable watersheds. 

Governor Little noted the need for collaborative land management to continue the region’s economic growth and develop more resilient western communities for generations to come. 

"It’s important that we continue to look at improving how we make our communities more resilient," Gov. Little said. "Everybody says we want healthier watersheds, we want less catastrophic fire, we want (better management of) invasive species. Those overarching goals need to have legs under them –policies, recommendations, where to best invest the next available dollar – and that’s what we expect as a result of these panels."  

Read more about WGA’s ‘Working Lands, Working Communities’ Initiatives and watch the workshop videos here.

Energy Innovation Spotlight: XNRGY Announces Cutting Edge Manufacturing Facility

XNRGY recently announced the construction of a new cutting-edge manufacturing facility in the Greater Phoenix area. XNRGY is one of the largest custom air handling manufacturers in North America, and designs, engineers, and manufactures sophisticated, sustainable solutions focused on reducing both carbon footprint and energy consumption for sectors such as life sciences, healthcare, data centers, semiconductor cleanrooms and battery manufacturing facilities. 

XNRGY plans to build a state-of-the-art one million-square-foot facility in the Phoenix area. The facility will be designated as XNRGY’s headquarters and represents an estimated $300 million investment and more than 900 jobs for residents over time. With the Arizona facility, XNRGY’s total manufacturing capacity will increase by a factor of eight, to 1,250,000-square-feet.

The Arizona Commerce Authority touted the news, noting that the new facility will focus on “research and development, spearheading innovation to facilitate the rapid growth and demand for XNRGY’s mission-critical climate systems . . . . Applying vertical integration, full automation, and eliminating supply chain delays will expedite product delivery and significantly reduce product lead times compared to the industry average.”

XNRGY is committed to sustainability and minimizing environmental impact with a goal of achieving net zero emissions by 2030. Its innovative climate systems use significantly less water and power and reduce overall building energy consumption by integrating very high-efficiency refrigerant systems coupled with proprietary machines moving the air; immersion cooling is the next step for the company, and XNRGY has made clear that it “wants to be part of the solution to cool hyper-scale data centers without millions of gallons of water a day.” Every unit is custom-engineered and manufactured by XNRGY with the aim to achieve the lowest power usage effectiveness (PUE) rating, using materials that are specifically chosen to ensure long life, durability, and environmental protection.  

Of XNRGY’s move to Arizona, Sandra Watson, President and CEO of the Arizona Commerce Authority, said “XNRGY’s new manufacturing facility highlights the state’s attractiveness as a destination for manufacturing excellence. XNRGY is bringing their state-of-the-art operations to Arizona, highlighting the state’s vibrant industrial manufacturing sector. We are grateful to XNRGY for their commitment to Arizona and look forward to supporting them as they establish their first facility in the U.S.”

TWW Supports Colorado's Advanced Energy Legislation

Advanced Energy legislation from Colorado State Senator Bob Rankin (R-Carbondale) and House Leader Hugh McKean (R-Loveland), was heard in its first Senate committee on February 15, 2022.  SB22-073 Advanced Energy Sources takes an all of the above approach to meeting Colorado’s future energy needs and emissions reductions goals. 

The bill encourages Colorado to look at the possibility of small modular nuclear reactors by authorizing a feasibility study.  The study would look at the policies, economics, safety, reliability and environmental impacts of the use of small modular nuclear reactors. 

The bill also increases the current limit of pumped hydro storage facilities from 15 MW to 400 MW, opening the door to larger utility scale pumped hydro storage projects.  Pumped hydro storage projects already must utilize renewable energy in order to be eligible under the definition of recycled energy so increasing the cap makes sense and would serve to benefit Colorado’s growing renewables industry. 

Proponents of SB22-073 including, TWW’s Colorado Director Greg Brophy, Colorado Rural Electric Association, ClearPath, American Conservation Coalition, Nuclear Energy Institute, and several others laid out the bipartisan argument for why an all of the above approach to Colorado’s resource mix makes sense and looking at the feasibility of small modular nuclear and increasing pumped hydro storage would help ensure reliability through increased baseload and long duration storage.   

“I am hopeful,” said Senator Bob Rankin. “I am hopeful that Democrats give careful consideration to this bill after hearing from professors, professionals, and experts in the field. I’m willing to work with Democrats however I can to get this bill across the finish line.”

In an opinion editorial published earlier this week, Judi Greenwald, the executive director of the Nuclear Innovation Alliance, stated that, “An essential first step to adopting advanced nuclear energy is for state policymakers, communities and stakeholders to understand the benefits of nuclear innovation…Colorado can start exploring this promising opportunity with a feasibility study for SMRs, as proposed in SB22-073.”

“Nuclear support has become a bipartisan issue in Washington for the first time in close to 40 years,” said Arthur Hyde of Segra Capital Management during his testimony. “Representatives on both sides of the aisle are beginning to understand the importance of investing in our nuclear future and are acting with a sense of urgency.”

SB-73 was laid over and the Senate Committee will vote on the bill on Thursday, February 17, 2022. 

Univ. of Wyoming Looks at Critical Mineral Production from Coal Byproducts

University of Wyoming’s School of Energy Resources (SER) recently published a study on the potential for domestic critical mineral and rare earth element production from unconventional sources located domestically in the United States. In particular the study provides a geologic assessment of critical minerals and rare earth element occurrences in coal fly ash sourced from the Powder River Basin, as well as a economic and policy analysis that explores a viable way to produce more of these critical minerals domestically from coal byproducts. 

The results of the study show that coal fly ash created from the combustion of Powder River Basin coal holds promise as an economic source of rare earth elements.

“We have really important work going on in SER and across UW through some key collaborations,” says SER’s Davin Bagdonas, the lead author on the study. “In addition to the assessment we conducted, we worked with SER’s Center for Energy Regulation and Policy Analysis for policy support, with the University of Wyoming Department of Economics, and partners at Colorado School of Mines and Idaho National Laboratory to assess the market viability for REE recovery from unconventional ore stocks. This study is very important because it highlights how necessary those three aspects are for successful project development in the future.”

The results of the study are expected to help drive a national conversation on ways to reduce reliance on foreign sourced rare earth elements and critical minerals.

“This highly anticipated article will serve as a very significant resource in a nationwide discussion,” says CEGR Director Fred McLaughlin. “Led by the Department of Energy, the U.S. has been investigating ways to reduce its reliance on REE imports, and to look at current waste products is environmentally astute. I’m very proud of our team for their efforts in providing an in-depth examination on a very timely and important topic.”

The study is also notable for addressing the needed policy framework at the state and local levels that will drive research into commercial applications. 

“The policy environment at both the federal and state levels is uniquely aligned to support continued applied research, including commercial investigations, centered on REEs from Powder River Basin coal,” says Kipp Coddington, SER senior adviser and a contributing author of the study. “Understanding the economics of all of this is critically important. With the right policy mechanisms and business models in place, the state of Wyoming could play an important role in advancing these critically needed resources for the United States in the decades ahead. Doing so would ensure continued economic use of Powder River Basin coal, thereby benefiting both federal taxpayers and the citizens of Wyoming.”

AZ Corp Comm Docket on IRP Reform and All Source Bidding Moves Forward

Today, the Arizona Corporation Commission voted down, by a vote of 3-2, the energy rules package it has been considering for more than three years. The package before the Commissioners would have required utilities to generate 100% of their energy from carbon-free sources by 2070, with interim benchmarks until then. The package also included a more robust energy efficiency standard, battery storage provisions, and critical updates to the Integrated Resource Plan (IRP) and purchased power agreement processes—including competitive bidding, all-source RFP processes, and prudency reviews—that would have introduced more transparency and competition into the overall process.

Fortunately, today’s vote isn’t the end of the story: the all-source RFP and IRP provisions will still be moving forward. That is because, after the vote on the energy rules package, Chairwoman Marquez Peterson brought forward a separate proposal to open a new docket moving forward with rulemaking on the all-source RFP and IRP process reform provisions on their own. Explaining her motivation in proposing to open a new docket, Chairwoman Marquez Peterson stated that those two provisions are particularly important pieces of the package, and she felt it was important to move forward with them should the rules fail, as they ultimately did. Commissioners O’Connor and Olson agreed with her, and the proposal passed by a vote of 3-2.

This is good news for Arizona. While the carbon-free standards of the now-defunct energy rules package tended to garner the most headlines, the IRP process reforms, and all-source RFP provisions will significantly benefit ratepayers by ingraining transparency, competition, and market forces in the resource planning process. These are important protections for ratepayers and will lead to a more efficient and effective power delivery system for the state of Arizona. 

Although speed has not been the hallmark of ACC rulemaking, this docket should move forward on a more expedited basis than did the energy rules package. That is because the Commission will not need to start from scratch. Rather, ACC staff will benefit from all of the work that went into the Energy Rules, basing the new docket on what was included in that package.

The next step is for utilities staff to put together a draft rulemaking, at which point the Commission can vote to proceed to formal rulemaking. If all goes smoothly, Arizonans could see new final rules in six to nine months.

AZ Corp Comm Approves EV Plan that could have $28 Billion in Economic Benefits

Last month, the Arizona Corporation Commission (ACC) approved a comprehensive statewide transportation electrification plan. This plan is a critical step in moving Arizona closer to greater incorporation and adoption of electric vehicles. The bipartisan plan aims to further encourage adoption of electric vehicles, including light duty vehicles as well as medium duty trucks, transit buses, and school buses, and increase the build-out of charging infrastructure. 

With that in mind, the plan anticipates just over one million EVs on Arizona roads by 2030, and focuses on what utilities need to do for Arizona to reach that goal. In particular, the plan identifies some barriers to greater adoption including insufficient charging infrastructure and the need for grid planning and effective rate design, and includes steps to overcome these barriers such as requiring utilities to assist communities in identifying the best charging station locations, developing incentive programs for vehicles and charging infrastructure, and proposing new rates for vehicle charging.

The plan also makes economic impact estimates that under the medium adoption scenario, transportation electrification could provide a total lifetime net benefits of $9 billion to EV purchasers in Arizona by 2040 through lower total cost of ownership, and $12 billion to electric utility customers through downward pressure on electricity rates. Reductions in greenhouse gas emissions, local air pollutants, and gasoline consumption could also lead to $28 billion in benefits for Arizona as a whole.

The plan, which follows previously approved individual transportation electrification plans submitted by Arizona Public Service and Tucson Electric Power in 2019, requires regulated utilities to file electric vehicle proposals every three years, and to report each year on their progress in helping customers switch from internal combustion engine vehicles to EVs. The first plans are due on June 1.

The statewide transportation electrification plan is a positive step forward for Arizona in greater EV adoption. Arizona has lagged behind other states in EV investment despite technological and manufacturing advancements, economic and environmental benefits, and broad public support for EVs. In part, that has been due to the lack of regulatory certainty in this area. The ACC’s approval of a statewide plan provides much-needed momentum, direction, and regulatory support for EVs that will help Arizona not just catch-up with neighboring states, but surpass them in EV adoption. 

Don't let a poorly drafted tax credit hobble Arizona's growing electric vehicle industry

This piece from TWW’s Jaime Molera and the Greater Phoenix Chamber CEO, Todd Sanders originally ran in the Arizona Republic on December 22, 2021 and can be accessed here.

Don't let a poorly drafted tax credit hobble Arizona's growing electric vehicle industry

Opinion: Tax credits can help electric vehicle manufacturing. But those in the Build Back Better bill would hurt Arizona's growing EV industry.

By Todd Sanders and Jaime Molera

Recently, we participated in an outstanding trade delegation of Arizona business, government and higher education officials to Mexico City.

A significant part of this mission was spent meeting with many Mexican federal administration and legislative leaders, including Secretary of the Economy Tatiana Clouthier. 

One shared area of concern is a major component of President Biden’s Build Back Better Plan that incentivizes electric vehicle (EV) purchases, albeit only for certain union-backed entities.

Incentives and tax credits, if designed correctly, can be an effective tool to accelerate transportation electrification and adoption, as well as strengthen EV manufacturing and international supply chain cooperation to put North America on a path to compete with China.

This would be particularly beneficial in Arizona, where we are already seeing tremendous growth in the EV sector. Mexico, too, is seeing tremendous growth and investment in EV and component part manufacturing.

Bill would subsidize 1 vehicle not in production

Unfortunately, the House-passed version of President Biden’s budget reconciliation spending bill includes an EV tax incentive proposal that will, if passed, damage Arizona’s burgeoning EV manufacturing sector by disrupting trade with Mexico and the integrated supply chains on which our EV manufacturing relies.

The credit proposed in the Build Back Better Plan would raise EV credits up to $12,500 per vehicle, including a $4,500 credit for American union-made vehicles, plus $500 for American-made EV batteries.

Problematically, the tax credits would only apply to EVs assembled in the United States with at least 50% U.S.-made parts. If the proposal passes, only the Chevrolet Bolt EV and Bolt EUV, neither of which are currently in production or available for purchase, would be eligible for the credit.

Unsurprisingly, both the Mexican and Canadian governments are actively lobbying against the tax credits, saying they contravene the United States-Mexico-Canada (USMCA) trade deal.

Representatives from both countries, with whom the United States shares well-integrated supply chain cooperation with economic benefits for all of us, have expressed disappointment that the United States would do something to significantly undermine the trade relationship with its main commercial partners.

Countries and manufacturers are opposed

But not just Mexico and Canada are opposed – France, Germany, Italy, Japan and South Korea also opposed the provision and sent a message to the Biden administration pointing out that the proposed tax credit will run afoul of international trade laws. 

Moreover, other major automotive manufacturers weighed in against the provision, including BMW, Daimler, Honda, Hyundai, Tesla and Toyota, whose companies engage in EV production but do not have a unionized workforce and would not be eligible for the full credits.

We in Arizona know how critical supply chain cooperation is to our economy. Mexico is Arizona’s largest trading partner by a factor of four, with two-way trade representing more than $16 billion in 2018.

Arizona and Mexico are leaders in the automotive industry, with net trade of nearly $1.7 billion in auto parts annually, together producing 1,488 vehicles daily and supporting more than 50,600 employees.

For years Arizona worked with government and business leaders to improve border infrastructure in a way that supports international trade at our six border ports of entry, including infrastructure upgrades to the Nogales, Ariz., port of entry that resulted in nearly $60 million of private investment for warehouses and distribution centers.

Let's transform the industry, not hobble it

At a time when we can significantly transform the EV industry, we should be looking at policies that support Arizona EV manufacturing and the integrated supply chain on which this sector relies, thereby increasing the global economic competitiveness of North America as a whole. 

As Luz María de la Mora, the undersecretary for foreign trade in Mexico’s Secretariat of Economy put it, “By disarticulating supply chains in an emblematic sector that generates great opportunities in the three countries, we go against a competitive and integrated North America.”

It seems clear that this tax credit, as currently drafted, is more focused on protecting labor unions than it is on incentivizing EV production and bolstering the global economic competitiveness of the United States.

Even though the wider Build Back Better bill appears to be on life support, we urge our state’s congressional delegation, particularly our U.S. senators, to ensure that this portion of the legislation is not included in any ultimate deal.

Todd Sanders is president and CEO of the Greater Phoenix Chamber. Jaime Molera is former Arizona state school superintendent and the Arizona director for The Western Way, a nonprofit organization that builds support for market-driven solutions to environmental challenges.

Utah’s Congressional delegation is building a constructive path forward on the environment

This piece from Steve Handy originally ran on Utah Policy on December 21, 2021 and can be accessed here.

Utah’s Congressional delegation is building a constructive path forward on the environment

By Steve Handy - December 21, 2021

In Utah, conservative principles and protecting the environment go hand in hand. Utah’s history and culture embraces the responsible stewardship of our land, water and air. But historically conservative leaders in Washington D.C. have been slow to recognize the importance of environmental issues, too often expending all of their energy opposing extreme environmental proposals like the Green New Deal rather than creating proactive policies that support the environment and enhance the economy.

Thankfully, things are changing. More and more, conservative officials in Washington D.C. are listening to Western conservatives concerns on these key issues. This could mean a breakthrough on real challenges affecting our state economy, like climate change, forest management, and water policy, where politicians on the left and right need to find common sense solutions rather pushing extreme positions. 

For proof, consider the new Conservative Climate Caucus that was recently formed by Congressman John Curtis and now includes the entire Utah congressional delegation – Congressmen Christ Stewart, Burgess Owens, and Blake Moore.  In total, this House caucus includes nearly 70 members – making up a third of all the Republicans in the House.    

Instead of creating overreaching regulatory programs that require massive federal spending, like those on the far left keep advocating for, the goal of the Conservative Climate Caucus is pragmatic. It is focused on private sector innovation that is driven by the free market and utilizes American resources and R&D investment and innovation. These programs aim to not only lower emissions but also keep energy affordable.  In other words, this caucus is finding solutions that both enhance the U.S. economy and support the environment. 

Conservative leaders in Washington D.C. support conservatives taking a proactive role on environmental issues as well.  House Republican Leader Kevin McCarthy hosted a three-day Energy Innovation Agenda event earlier this year which brought together conservative lawmakers, energy sector officials and conservation groups. They discussed dozens of GOP legislative proposals “to deliver a cleaner, safer, and healthier environment while also growing our economy.”

These proposals focus on real solutions to actual climate challenges, such as securing a domestic supply chain for the critical minerals used in wind turbines, solar panels and electric cars; streamlining the permitting process for clean energy and infrastructure projects; promoting zero-carbon nuclear power especially in the developing world; and maximizing the use of agriculture, forestry and other natural solutions to pull carbon out of the atmosphere.

Conservative proposals to diversify U.S. energy sources not only supports the economy, they are sound environmental policy as well. Traditional energy sources produced in America are cleaner and better for the environment. For example, Russian natural gas exports to Europe and China have more than 40% higher lifecycle emissions than liquefied natural gas exports from the U.S. Likewise, mining coal in China releases 33% more methane than coal produced here.

“We can develop and build new technology at home that is clean, affordable, and exportable,” said McCarthy, the GOP House leader. “Unlike Democrat plans, ours don’t kill American jobs or make American energy more expensive through increased taxes and regulation.”

According to a new report by The Western Way, Utah’s renewable energy sector is a growing force driving the state’s rural economies with $5.3 billion in total output, 4,368 construction jobs, an annual output of $154.4 million, and nearly $25 million in annual property tax revenue.  

Utah’s mining sector could also receive a boost from the policies as well. According to the Utah Geological Survey, our state hosts 28 of the 35 critical minerals used “in clean-energy technologies and high-tech devices.” Our state already produces six of them and Utah “is poised for further development of domestic critical mineral resources,” the UGS says.

But we will need strong, commonsense environmental regulations and permitting procedures to overcome unfounded opposition to mining so that we can unlock this potential. By connecting these projects to responsible climate change policy, conservatives are creating proactive solutions that can earn bipartisan consensus to support mining investment and mining jobs in states like Utah.

Congressman Curtis, recently made a statement that sums up why we must advance solutions to actual challenges facing our environment, saying  “I had a great Scoutmaster and my father loved the outdoors, and they would take me into the outdoors and I could just see the beauty of God’s creation,” he said. “I just vowed to myself that I would do all we can to make sure my kids and grandkids have that same opportunity.” 

Western conservatives like Utah’s congressional delegation are right to actively engage on U.S. energy and environmental policies. Creating real solutions to actual environmental challenges not only supports Utah’s special environment but boosts our state’s economy and jobs. Utah should urge these elected officials to continue to make this a priority in Washington DC.

Steve Handy is the state representative for Utah House District 16 that covers part of Layton, Clearfield and Hill AFB. He has been a member of House since 2010. He is a member of Utah’s Clean Air Caucus.

AZ: Proposed energy rules would strengthen state’s competitive edge

This piece from TWW’s Doran Miller originally ran in the Arizona Capitol Times on December 11, 2021 and can be accessed here. Update, the ACC did not take a vote on the Energy Rules in it’s December 2021 meeting and will hear the issue in 2022.

Proposed energy rules would strengthen state’s competitive edge

Doran Miller

On Wednesday, the Arizona Corporation Commission is scheduled to vote on a package of updated clean energy rules that is years in the making. The package now under consideration, which benefits from several recent amendments, is the product of an extensive and bipartisan stakeholder process with significant support from individuals and businesses large and small from across Arizona. Most importantly, these rules allow Arizona to remain competitive with other states by providing the type of robust clean energy commitment that businesses demand before bringing jobs and substantial investment into a state while at the same time providing key protections to make sure the public does not pay more for clean energy. 

The current standard, set by the Arizona Corporation Commission back in 2006, only requires regulated electric utilities in Arizona to generate 15% of their energy from renewable sources by 2025. While Arizona’s standards may have been competitive when adopted, Arizona has since fallen behind neighboring states. Falling behind on this metric has real world consequences that make Arizona less competitive than other states at attracting key investments and jobs. More and more, the marketplace requires that a state provide access to robust clean energy options, or it will be left off the list for economic development projects and will be out of the running in the heated competition to attract the businesses of the future. That is why major corporations like Apple, Oracle, Microsoft, PayPal and others support updated clean energy standards.   

The current package will give Arizona an advantage when competing for economic development opportunities by repositioning Arizona as a national leader with a 100% clean energy goal by 2070. To reach that goal, the new rules take a carbon-reduction approach, allowing utilities to meet the carbon-free requirement by using renewable energy as well as nuclear power and energy-efficiency measures, rather than a technology-based requirement, which would have required utilities to use a set amount of renewable energy to reach the goal. By setting a standard of 100% carbon-free by 2070, the rules package gives industry more time and flexibility to design their energy portfolios in a way that takes into consideration costs and externalities.  

Importantly, the new energy rules will position Arizona for success in the ongoing competition for economic development while including safeguards to protect the public. Chief among these protections is a waiver provision that allows the Commission to excuse compliance with the energy rules if the Commission finds that there is good cause and that doing so will not harm the public. In practice, this means that if the Commission determines compliance with the rules will be too expensive or otherwise cause harm, it can issue a waiver.  

In addition to the waiver provision, the amendments added by Commissioner James O’Connor provide an additional safeguard to ensure the Commission has a complete understanding of the cost of complying with the rules. This provision requires utilities to analyze and provide to the Commission information on the relative costs of installing clean energy resources in compliance with the rules as compared to an alternative “lowest-cost” portfolio developed without regard to the rules. If the Commission finds that the costs do not favor the clean energy resource portfolio, the Commission can utilize the waiver provision. While clean energy is currently the lowest cost energy option, this provision enables the Commission to ensure ratepayers are protected from unduly burdensome costs if necessary.  

The proposed rules package also includes critical updates to the Integrated Resource Plan and purchased power agreement processes—including competitive bidding, all-source RFP processes, and prudency reviews—that will introduce more transparency and competition into the overall process.  These modernizing changes will significantly benefit ratepayers by ingraining transparency, competition, and market forces in the resource planning process. These are important protections for ratepayers and will lead to a more efficient and effective power delivery system for the state of Arizona. 

Perhaps most critically, the package will provide the necessary long-term market certainty to support utilities as they work to increase clean and renewable generation in Arizona and meet their own renewable energy goals, drive technology and innovation in the energy sector, and drive down costs for consumers. They also provide a guarantee that Arizona will be able to meet the clean energy demands of investors and businesses who want to locate in Arizona, spur critical rural economic development efforts, and reflect what Arizonans want to see from our state’s energy regulators. 

The Arizona Corporation Commission now has a critical opportunity to accelerate clean energy innovation and adoption even further at a time when it would be particularly impactful to Arizona’s economy. The fact is that modern businesses do not consider investment in states that do not provide access to ample clean energy options. These rules, if adopted, will strengthen Arizona’s competitive advantage over its neighbors, keep energy costs low and predictable, and provide the long-term regulatory and market certainty businesses and utilities need. Arizona’s Corporation Commissioners should feel confident in voting to approve them.  

Doran Arik Miller is the Arizona Director of The Western Way, a nonprofit organization that builds support for commonsense market-driven solutions to environmental challenges that support the economy and improve the environment.   

CO: TWW Supports Xcel ERP Settlement Agreement

TWW’s Colorado State Director, Greg Brophy, provided written and oral testimony in support of Xcel’s Electric Resource Plan which is currently being heard by the Colorado Public Utilities Commission.

TWW supports the settlement agreement between the parties, which: "strikes an important balance between rapidly and immediately adopting the latest technology for generating electricity and ensuring that Colorado customers of Xcel Energy enjoy the reliability of electrical supplies that they deserve.”

See below for the full letter of support.