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Most utilities now face some sort of renewable portfolio standard (RPS), but is that all that drives investment in greener generation assets? Green Utility spoke with Brad Albert, general manager of energy resource acquisition and renewable energy at Arizona Public Service (APS), about why the regulated utility has decided to exceed that state’s renewable energy requirements.
What’s driving your investment in renewables right now?
It’s really two things. The RES [renewable energy standard] really sets the floor, but through our research and planning process we looked at other factors we thought were important in the long term, such as price stability and energy source diversity, and even the fact that some of our customers are say they want more renewable energy. Factoring all that in, we actually are on a trajectory to substantially exceed that RES standard.
Does APS own and operate any renewable generation assets?
The ownership perspective has only been a recent addition. AZ-Sun is a program for us to install and own 100 MW of solar photovoltaics (PV), a utility-scale application. The other renewable energy we use -- the wind farms, the geothermal plant, and particularly the large-scale solar-thermal plant -- those are all PPAs. We do own some small solar installations -- currently about 5 MW. Those are very small projects around the state.
I understand that currently you have about 288 MW of renewable energy in your portfolio. What percentage of your overall energy profile is that, and do you see that ratio changing in coming years?
Right now, renewable energy is around 3 percent of our total energy. By 2015, we aim to get to 10 percent to 11 percent of retail energy sales coming from renewable energy. That’s a little bit more than double what the RES would call for in 2015 [editor’s note: Arizona’s RES calls for approximately 5 percent of retail sales to be served by renewable generation by 2015, and 15 percent by 2025].
How do you calculate the value of renewables in your portfolio?
That’s a very dynamic equation. In just the last year, for example, we’ve seen significant declines in the price of solar PV. The technology, the pricing, everything continues to evolve rapidly.
Some experts say PV prices have been dropping at a stable, predictable rate and that cost parity may be little as seven or eight years down the road. Do you pay attention to those kinds of projections and do they influence how you spend your money today?
We definitely spend a lot of time looking at price trends, thinking about what-if scenarios. My luck has not been very good in terms of predicting the future, but we certainly see solar PV as having that potential. It still has a ways to go. Even in a region like ours, where you have probably some of the best solar conditions in the world, it’s not currently competitive with conventional generation. It’s still very dependent upon the federal investment tax credit, tax subsidies. Then again, it has gotten closer and closer to conventional alternatives over time. Your guess is as good as mine as to when it actually gets to a point where it can survive on its own and is competitive compared to conventional alternatives, without tax subsidies.
What types of renewable generation do you see as having the best potential for eventual