Outlook is grim on Arizona's new community solar policy
The Arizona Corporation Commission (ACC) has adopted a community solar program that will likely fall short in establishing a vibrant market in the state, several industry professionals and energy advocates told NPM.
“I saw some people celebrating this—that Arizona has community solar now—it's not quite what it seems,” said Maria McCoy, Researcher on the Energy Democracy Initiative with the Institute for Local Self-Reliance (ILSR), in an interview with NPM.
The program, outlined in a one-page document, puts emphasis on the consumer, making sure they are protected, educated, and offered bill credits at the lowest possible costs. It also calls for all projects to be fifty percent LMI subscribed. The other fifty percent, should be subscribed to non-profits, including faith-based organizations, schools, and municipalities. The program does not address the complexity of meeting the subscriber base.
Possibly the most controversial component of the program is giving utilities the option of participating in the community solar program.
“Utilities may not even opt into the program and if they do, I don’t think any developers are going to try to propose community solar gardens because there’s too many factors that are unclear,” said McCoy. “There's no reason for them to try when they have no clue how they will make their bottom line."
ACC Legislative Liaison, JP Martin, told NPM that prior to adopting the policy statement, the stakeholder engagement process consisted of six meetings to see how a collaboration could occur.
On June 1, 2023, the Arizona Public Service (APS) will propose how or if they plan to integrate community solar, Martin said. APS is the state’s largest utility serving more than 1.3 million homes and in 11 of the state’s 15 counties.
“I’m not making an assumption for them, but we’ll see how that plays out,” he said.
The APS has been under scrutiny since news of their political spending surfaced last year. According to the Energy and Policy Institute, APS spent USD 4.8m on outside lobbying efforts over nine years to influence ACC elections, defeat a clean energy ballot measure, lobby state legislators, and fund charitable groups to help achieve their political goals.
The ACC will have oversight of Arizona's new program.
The program was officially adopted on March 7 in a 4-1 vote. During the public participation portion of the meeting, McCoy expressed her disproval of the program, along with representatives with the Coalition for Community Solar Access (CCSA) and Cypress Creek.
“This policy statement is not likely to lead to a successful community solar program in Arizona,” said Kevin Cray, CCSA Senior Regional Director of Policy and Government Affair, adding that community solar is inherently complex and can't adequately be addressed in a one-page policy statement.
Cray also highlighted missed opportunities with the passage of the 2022 Inflation Reduction Act (IRA).
“Regardless of whether you think that is appropriate federal tax policy or not: there are going to be winners and losers in this process,” Cray said. “States that have not taken proactive steps to establish programs like community solar to maximize their access to the benefits and prove them to the IRA—in particular the additional adders for serving LMI communities—will be left behind.”
In an August 2022 letter to the ACC from a coalition of solar industry partners that included Arcadia, Distributed Solar Development, Nautilus Solar, TurningPoint Energy, Soltage, and Solar United Neighbors, a program design was recommended to allow community solar facilities nameplate capacity not exceed 20 MW and interconnect to distribution facilities owned by APS.
The first year’s annual capacity to the APS service territory was suggested to be capped at 400 MW, which equates to about four percent of APS total annual retail sales, the letter states. Each year, the capacity cap would equal four hundred MW and APS would be limited to developing community solar facilities whose aggregate nameplate capacity does not exceed five percent of the annual capacity cap. Projects under or equal to 500 kWh will be exempt.
Allocation of the program would be awarded on a first-come, first-served basis to subscriber organizations that can demonstrate several things including legally bound site control and an executed interconnection agreement with the utility. Third parties and APS would be permitted to develop, own, and operate the facilities.
The program also proposed that at least 20 percent of subscriptions are reserved for LMI subscribers.
None of the suggestions noted were adopted in the new policy.
Instead, ACC and APS had moved to establish a community solar program by requiring the organization of a Community Solar Working Group, according to a previous NPM story. This group met to capture best practices from around the U.S. and establish mechanics, implementation, and operational details of a community solar program. APS initially sought to limit community solar capacity to 140 MW and proposed a competitive RFP process rather than a Must-Take Power model for community solar project, which was enacted in the current program.
“While we appreciate Commission and staff efforts on community solar to-date, we’re disappointed by the decision to vote in favor of staff’s policy proposal which is not aligned with what’s considered community solar across the country,” Maddy Symm, Political and Legislative Strategy with Cypress Creek Renewables, told NPM. “Community Solar can provide immense benefits to both customers and to the grid – this proposal will do neither.”
*This story was originally published exclusively for NPM subscribers last month.
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