Arizona
Incentives/Policies for Renewables & Efficiency
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Last DSIRE Review: 07/16/2009
| Incentive Type: |
Renewables Portfolio Standard |
| State: |
Arizona |
| Eligible Renewable/Other Technologies: |
Solar Water Heat,
Solar Space Heat,
Solar Thermal Electric,
Solar Thermal Process Heat,
Photovoltaics,
Landfill Gas,
Wind,
Biomass,
Hydroelectric,
Geothermal Electric,
Geothermal Heat Pumps,
CHP/Cogeneration,
Solar Pool Heating (commercial only), Daylighting (non-residential only), Solar Space Cooling, Solar HVAC, Additional technologies upon approval,
Anaerobic Digestion,
Fuel Cells using Renewable Fuels
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| Applicable Sectors: |
Investor-Owned Utility,
Rural Electric Cooperative,
Retail Supplier
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| Standard: | 15% by 2025 |
| Technology Minimum: | Distributed Generation: 30% of annual requirement in 2012 and thereafter (4.5% of sales in 2025); half of this must be from residential installations and half from non-residential, non-utility installations |
| Credit Trading: | Yes |
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Web Site: |
http://www.azcc.gov/
divisions/utilities/electric.asp
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Authority 1:
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AAC R14-2-1801 et seq.
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| Date Enacted: | 11/14/2006 |
| Date Effective: | 8/14/2007 |
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Summary:
In November 2006, the Arizona Corporation Commission (ACC) adopted final rules to expand the state's Renewable Energy Standard (RES) to 15% by 2025, with 30% of the renewable energy to be derived from distributed energy technologies (~2,000 megawatts). In June 2007, the state attorney general certified the rule as constitutional, allowing the new rules to go forward, and they took effect 60 days later. Investor-owned utilities serving retail customers in Arizona, with the exception of distribution companies with more than half of their customers outside Arizona, are subject to the standard.
Utilities subject to the RES must obtain renewable energy credits (RECs*) from eligible renewable resources to meet 15% of their retail electric load by 2025 and thereafter. Of this percentage, 30% (i.e. 4.5% of total retail sales in 2025) must come from distributed renewable (DR) resources by 2012 and thereafter. One-half of the distributed renewable energy requirement must come from residential applications and the remaining one-half from nonresidential, non-utility applications. The compliance schedule is:
2006: 1.25%
2007: 1.50% (5% DR)
2008: 1.75% (10% DR)
2009: 2.00% (15% DR)
2010: 2.50% (20% DR)
2011: 3.00% (25% DR)
2012: 3.50% (30% DR)
2013: 4.00% (30% DR)
2014: 4.50% (30% DR)
2015: 5.00% (30% DR)
2016: 6.00% (30% DR)
2017: 7.00% (30% DR)
2018: 8.00% (30% DR)
2019: 9.00% (30% DR)
2020: 10.00% (30% DR)
2021: 11.00% (30% DR)
2022: 12.00% (30% DR)
2023: 13.00% (30% DR)
2024: 14.00% (30% DR)
2025: 15.00% (30% DR)
A utility may use bundled RECs acquired in any year to meet its annual requirement. With the exception of incremental generation from hydropower facilities or hydropower output used to firm intermittent renewables, renewable energy from facilities installed before January 1, 1997, are not eligible. Energy produced by eligible renewable-energy systems must be deliverable to the state.
Extra credit multipliers may be earned for early installation of certain technologies, in-state solar installation, and in-state manufactured content. The multipliers are additive, but cannot exceed 2.0. RECs derived from renewables installed after December 31, 2005, are not eligible for multipliers. If a utility makes an investment in a solar electric manufacturing plant located in state or provides incentives for a plant to locate in the state, the utility can acquire RECs for the main RPS tier equal to the capacity of the panels produced multiplied by 2,190 hours, which approximates a 25% capacity factor. These RECs cannot account for more than 20% of the annual requirement.
Utilities subject to the RES must submit compliance and implementation plans annually to the ACC. Utilities recover RES costs through a monthly surcharge. Each affected utility may adopt their own surcharge but it must be substantially similar to the sample tariff provided in the rules, and it must receive approval from the ACC. Affected utilities also have the option to file a rate case with the ACC in lieu of a tariff.
Background
Prior to the 2006 rules, Arizona's original Environmental Portfolio Standard (EPS) required regulated utilities to generate 0.4% of their power from renewables in 2002, increasing to 1.1% in 2007-2012. Solar electric power was to make up 50% of total renewables in 2001, increasing to 60% in 2004-2012. The EPS was an update of repealed 1996 ACC rules for a solar portfolio standard, which set a goal of 0.2% from solar energy by 1999 and 1% by 2003.
* For renewable energy systems that produce electricity, one REC equals one kilowatt-hour (kWh). For renewable energy systems that produce heat (solar water heating, solar industrial process heating and cooling, solar space cooling, biomass thermal systems, biogas thermal systems, and solar space heating systems), 3,415 British Thermal Units (BTUs) equals one REC.
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Please note: The information on the DSIRE web site provides an overview of incentives and other policies, but it should not be used as the only source of information when making purchasing decisions, investment decisions, tax decisions or other binding agreements. Please refer to the individual contact provided in each record to verify that a specific incentive or other policy is applicable to your specific project.
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