“Roadmap” study sees great economic potential
by Nancy Spring, managing editor
In Arizona, members of the private and public sectors are being asked to do what we’ve all been told not to: stare straight into the sun.
Anyone who’s been in Phoenix in July knows that there’s plenty of sunshine to go around. And now a state report released by the Arizona Department of Commerce earlier in the year will help make sure it’s put to good use, for power production and economic benefit.
“I’ve long said Arizona is the “ËœSaudi Arabia of solar energy’ within the United States, yet the vast solar resource of the state and its economic potential remain largely untapped,” said Arizona Gov. Janet Napolitano.
The Arizona Solar Electric Roadmap Study calls for several initiatives to boost adoption of solar power and develop a robust solar electric industry in Arizona. The study projects that up to 1,000 MW of solar electricity could be implemented in Arizona by 2020, creating more than 3,000 new jobs in the process, with the bonus of reducing emissions by 400,000 tons per year.
Public sector Roadmap initiatives call for the Energy Office to establish a marketing and outreach program to attract solar manufacturing companies to Arizona.
“Bringing this resource to widespread use will require cooperation among all of the key stakeholders: the solar industry, utilities, government, and the consumers of electricity,” said Lee Edwards, Roadmap committee member and president and CEO of BP Solar. The steering and technical advisory committee included representatives from Tucson Electric Power, Salt River Project and Arizona Public Service Co. (APS).
The Commerce and Economic Development Commission, Arizona’s strategic economic research and initiatives entity, commissioned the project in order to develop the strategy for future business development in the solar industry. Arizona has the potential to become a world leader in many aspects of solar development, according to the report, and “is a model location for the evolution of new solar technologies and applications.”
The state’s renewable energy portfolio standards require state-regulated utilities to generate 15 percent of their power from renewable sources by 2025, and solar is sure to play a big role in meeting or exceeding that requirement. In 2006, Phoenix-based APS increased the amount of renewable energy it uses to serve Arizona’s rapidly growing population by almost 1,800 percent. The sharp increase was buoyed by 90 MW of wind capacity brought on line in December 2006, 10 MW of geothermal capacity and an increase in solar generation output to 10 million kilowatt-hours-a record for both the company and the state of Arizona.
The report, prepared by Navigant Consulting Inc., notes that there are 20 states with renewable portfolio standards, and of those, eight specify solar or non-wind set asides, which could result in as much as 6,200 MW of new solar capacity by 2020. Navigant assessed existing state, federal and utility incentives that would impact the economic viability of different solar technologies for Arizona, including programs in place at APS, Salt River Project and Tucson Electric Power, and estimated the likely market penetration of solar for customer and central station applications.
Central station power options
The study’s central station analysis evaluated the comparative economics of four central station power options: dish/Stirling, photovoltaics central station/1-axis tracker, concentrator photovoltaics and solar parabolic trough.
Compared to a new gas turbine combined cycle plant (GTCC), assuming $5-$10/MMBtu gas prices, or a new coal plant, assuming $1-$3/MMBtu coal prices, the central station power option is not currently competitive, Navigant found. Excluding additional revenue from renewable energy certificates, new coal will generate electricity at 3.7 to 5.6 cents/kWh and new GTCC at 5.7 to 9.2 cents/kWh, while the levelized cost of electricity for many of the central station options ranges today from about $.14 to .20/kWh, with federal incentives.
Dish/Stirling technology is the only central station application that the study finds dropping in price enough to be competitive with coal and gas. Economies of scale for dish/Stirling could kick in, as one of its leading manufacturers, Stirling Energy Systems, plans to increase production volumes to fulfill power purchase agreements with California utilities. Using installed cost estimates provided by SES, for 2010 Navigant calculated the levelized cost of electricity for dish/Stirling technology at $.13-.14/kWh in 2010, and under $.08/kWh in 2025.
Peak load growth in the the desert Southwest states-Arizona, New Mexico and southern Nevada-will be just about as great as California’s: nearly 2,000 MW per year for the next 15 years, according to the study. That’s where parabolic trough solar technology could come in. Currently, the cost of parabolic trough solar technology is less than the cost of peaking power, the study found, and costs should decline further, as manufacturing costs for the units are expected to be cut in half by 2025.
Solar’s advantage is that it generates power coincident with utility peak load requirements. Imagine Tucson at 2 p.m. on a sunny day in July, with air conditioners whirring. The flip-side of that is of course that every day’s not sunny, so peaking capacity will still be needed. But the report says solar provides a hedge against gas price volatility, which could “result in lower gas prices [and] reduce emissions.”
The economics for residential solar installations is not quite as good as those the study found for commercial applications. Currently, residential customer-sited PV is more expensive than electricity purchased from Arizona’s utilities, but state incentives combined with other accounting differences reduce that gap for commercial applications.
Flat-plate PV costs are expected to decline, too, and Navigant also conducted an analysis assuming a cost breakthrough or incentives scenario that would result in more aggressive system price reductions. In the study’s accelerated cost reduction scenario, solar could provide 1,000 MW by 2020 and close to 2,600 MW of power by 2025, with rooftop PV accounting for 45 percent of the capacity.
According to the study, roof space available on residential buildings for PV installations is about 27 percent of total roof area. Not considering economics, that could support approximately 7.5 GW of solar installations in 2025-“roughly twice the size of the Palo Verde Nuclear Generating Station.” The roof space available on commercial buildings for PV installations is close to 60 percent of the total roof area, and once again not considering economics, that could support approximately 7 GW of installations in 2025.
Arizona hopes that by implementing the Roadmap’s initiatives, the state will establish a leadership position in solar. The study notes that the National Renewable Energy Laboratory estimates the technical potential for concentrating solar power in Arizona is close to 2.5 GW, “almost three times the potential for California.” An executive summary of the study and the full report are posted at the Arizona Department of Commerce’s website, at azcommerce.com/energy.