Regional Clean Hydrogen Hub Develops in the Desert Southwest
Energy leaders focused on developing low carbon economies in Arizona, the Navajo Nation, and Nevada have joined forces to develop a regional clean hydrogen hub in the Southwest. The Center for an Arizona Carbon Neutral Economy, first introduced in May 2022, is collaborating with partners in Arizona, the Navajo Nation, and Nevada to launch the Southwest Clean Hydrogen Innovation Network, or “SHINe”.
On November 7, as its first step in developing the hub, SHINe submitted a concept paper to seek federal funding from the U.S. Department of Energy (“DOE”) for key clean hydrogen-focused initiatives including production, processing, storage, and delivery systems, community benefits, and other enabling infrastructure. Once fully operational, SHINe will help support DOE’s vision of a regional clean hydrogen hub that provides clean energy for the hard to abate carbon emissions in the transportation, industrial, and electricity sectors while maintaining a reliable and resilient electric grid. SHINe will also work to create economic development opportunities in the region.
“A regional clean hydrogen hub focuses on developing a network of hydrogen producers, consumers and local connective infrastructure,” said Ellen Stechel, AzCaNE’s Executive Director. “The SHINe network includes salt cavern storage, heavy duty transportation, and distribution technologies that will help accelerate the use of clean hydrogen as a source of low carbon energy powering the economy.”
In September, the DOE announced that up to $7 billion is available to fund the development of six to ten U.S.-based regional clean hydrogen hubs. Regional clean hydrogen hubs funding was outlined as part of President Biden’s Infrastructure Investment and Jobs Act, otherwise known as the Bipartisan Infrastructure Bill, which authorized up to $8 billion for at least four regional clean hydrogen hubs. These hubs are meant to help communities across the country benefit from clean hydrogen investments, quality jobs, and improved energy security. When coupled with other public and private investments in new clean hydrogen production, the hubs are expected to accelerate a nationwide clean hydrogen network and economy.
Arizona, the Navajo Nation, and Nevada are in the nation's sunniest region, with significant available undeveloped land and abundant clean energy resources. Arizona also has the nation’s largest nuclear power plant producing 100 percent carbon-free electricity, and energy providers committed to reducing carbon dioxide emissions. Arizona also has world-class universities, established clean energy and clean hydrogen companies, and a healthy environment for innovation and start-ups. The Navajo Nation is one of the largest tribes in the U.S., has a land base larger than West Virginia, and is transitioning to a clean energy economy. Nevada is an early investor in clean hydrogen infrastructure, which will be necessary to integrate more hydrogen-fueled vehicles. These resources, along with the region’s proximity to California, will contribute to decarbonizing the region and ultimately the entire U.S.
SHINe includes more than forty member organizations with expertise and operations throughout the region, including cities, clean energy companies, gas producing companies, non-profits, transit companies, universities, utilities, and others including the following:
THE SOLAR COALITION’S EXCEPTIONS AND PROPOSED AMENDMENT TO STAFF’S MEMORANDUM AND PROPOSED ORDER
DOCKET NO. E-00000A-22-0103
The signatories listed below appreciate the opportunity to continue their close involvement in the development of Arizona's community solar program and offer these Exceptions and Proposed Amendment to support the Commission as it decides how to move forward in the Arizona Public Service (APS) territory. This docket presents the Commission with an opportunity to provide savings to electric utility customers, promote electric grid resiliency, and assist Arizona in its transition to clean energy. The signatories have been committed to participating in the working group discussions and docketing information to assist in the Commission’s consideration of a proposal for implementation of a community solar program, as envisioned in Commission Decision 78583 (May 27, 2022). The signatories have come together and presented a comprehensive community solar proposal to the Commission on August 26th based on vast experience in community solar programs around the country. The signatories represent a diverse range of interests and the program proposal submitted encompasses a consensus agreement among all fourteen (14) parties represented at the time of filing, was responsive to the directives in Commission Decision 78583 and to the questions raised during working group meetings, was based on sound compromise, and was tailored to Arizona’s regulatory environment.
Unfortunately, Staff’s Memorandum and Proposed Order does not meet the requirements contained in Commission Decision 78583. After six (6) months of robust discussions and dozens of filings in this proceeding, Staff has not provided any substantive policy recommendations on the programmatic elements specified in Commission Decision 78583. Instead, Staff suggests that a substantial portion of the program details be moved to an evidentiary hearing process, which could lead to some elements being significantly delayed. This is not what the Commission directed. Six (6) months ago, the Commission discussed the process of developing a community solar program in detail and decided that this docket and the working group format was the appropriate pathway to create a program proposal on which to vote. The Commission directed Staff to put forth a proposal for implementation in advance of the November 2022 Open Meeting and further specified that the proposal should become effective within six (6) months of Commission approval. An evidentiary hearing would only serve to delay the implementation of a community solar program and needlessly increase the investment of time and resources from participants, Staff, and the Commission. Moreover, because a hearing process would trigger the Commission’s ex parte rules, such a proceeding would limit the Commission’s ability to discuss key program elements with the diverse range of stakeholders, which has been a key benefit throughout the working group process. An evidentiary hearing is simply not required to construct a workable community solar program.
Additionally, Staff’s Memorandum and Proposed Order references only Arizona Public Service’s (APS) program proposal. As discussed in the signatories’ response to the APS proposal filed on October 7, 2022, the APS proposal will not result in competitive third-party development of community solar projects and, as such, restricts benefits that would be created for APS customers and should be disregarded. As detailed in The Potential Economic and Fiscal Impacts of Community Solar in Arizona report prepared by the Seidman Research Institute at Arizona State University, the benefits of community solar investment extend beyond subscribers to the program, to the entirety of the state. The rollout of three hundred (300) MW of community solar each year for ten (10) years (study Scenario #6) would contribute over five (5) billion dollars to state Gross Domestic Product (GDP), result in the creation of more than fifty-eight (58) thousand job years of total employment, and nearly four (4) billion dollars in labor income over a study period of thirty-five (35) years. Commission approval of the APS program proposal, as written, would deny these benefits to Arizonans across the state.
Simply put, APS’s proposal is not community solar. The signatories have dedicated significant time and resources to help develop a program proposal pursuant to Commission Decision 78583 that includes program design elements based on successful community solar programs across the country and is responsive to feedback raised by parties participating in the working group. However, Staff’s Memorandum and Proposed Order does not reference the signatories proposal, despite the comprehensive and robust information that the signatories have continued to submit in this proceeding. The lack of discussion or consideration of any components of the signatories’ proposal is notable given that only two program proposals have been made in this proceeding – one by APS and one by over a dozen diverse signatories.
Herein, the signatories offer Exceptions and a Proposed Amendment to the Staff’s Memorandum and Proposed Order. See Attachment A for the Proposed Amendment. The signatories offer the Proposed Amendment in an effort to assist the Commission in devising a community solar program that is consistent with the intent of Decision 78583 and the months-long discussions in the community solar stakeholder workshops. The participants to those proceedings spent considerable time and resources in those workshops, including the utilities and Commission Staff, and should not be made to duplicate the effort in an entirely new proceeding. The signatories thus urge the Commission to reject Staff’s proposal and adopt the Proposed Amendment, which balances the key program requirements that must be included for successful implementation and operation of the program.
Arizona Corporation Commission
1200 W. Washington Street
Phoenix, AZ 85007
Re: Support for Approval of a Distributed Demand-Side Resource (DDSR) Aggregation Tariff and Service Schedule, Docket No. E-01345A-22-0143
Madam Chair and Commissioners,
Vote Solar, Solar United Neighbors, and the Arizona Solar Energy Industries Association (AriSEIA) urge you to approve the Arizona Public Service (APS) Company DDSR Aggregation Tariff, as amended by the Sunrun Proposed Amendment Number 1 (Amendment No. 1 and collectively, the DDSR Aggregation Tariff or Tariff).
Arizona is poised to continue to lead the adoption of demand side resources, including distributed battery storage, which benefits all customers. This DDSR Aggregation Tariff will reduce costs for all APS ratepayers, reduce peak capacity needs, and increase reliability and resilience by compensating aggregators for leveraging emerging technologies such as battery storage. The growth and declining cost of distributed storage technology creates a critical opportunity to leverage these customer-sited resources to provide grid benefits. APS’ innovative DDSR Aggregation Tariff is an important step towards realizing a more modern and resilient grid, and now is the time to begin leveraging the grid benefits it will provide. The Lawrence Berkeley National Laboratory (LBNL or the LBNL Report), a third-party evaluator engaged by the Arizona Corporation Commission (Commission), found that participation in this program is likely to be higher than ever because of the investment tax credit (ITC) available for stand-alone storage and other solar incentives available under the Inflation Reduction Act (IRA).
If approved, this Tariff will result in actual projects that will generate real-world data about the value provided by participating aggregators. This data is valuable because it will provide detailed insight into the specific value of participating resources and can be used to refine future iterations of the Tariff to improve its cost-effectiveness. The LBNL Report and Amendment 1 rightfully question why APS chose to consider only five (5) years of benefits when the measures employed will bring ten (10) years benefit to the grid, commensurate with the typical lifetime of battery storage. We agree with Amendment 1 and echo its conclusion that this DDSR Aggregation Tariff will provide ninety-five percent (95%) more grid benefits than are presently quantified by APS, including the benefits associated with daily shifting, avoided outages and associated costs, added grid resilience, and avoided carbon emissions. Current benefits under the LBNL Report include:
Significant Peak Load Reduction for APS Customers - The LBNL Report found that participants in the program will reduce peak period loads substantially during weekdays by installing battery storage to existing rooftop solar. This reduces costs for all utility customers
Increased Reliability and Resilience for Participants - The LBNL Report found that participants who add battery storage to existing rooftop solar will benefit from an annual cost savings of $14/yr. for Flagstaff, $25/yr. for Phoenix, and $29/yr. for Yuma. The LBNL Report also found participants will experience significant resilience benefits, valued at between $2,000 and $6,000 per customer. This is a step towards additional energy efficiency in Arizona.
Overall Cost Reduction for Ratepayers - The LBNL Report found that, from a ratepayer perspective, battery storage is cost neutral and does not result in cost shifting (the study did not consider cost for reconfiguration of an existing rooftop array to incorporate a battery). Further, LBNL found that if evaluated over 10 years, as they recommend, the benefits of the resources chosen through the DDSR Aggregation Tariff equal or exceed its costs. This means that both participants and non-participants will benefit from ratepayers with battery storage.
We support Sunrun’s proposed changes to the Tariff. These changes include requiring APS to periodically issue a minimum number of requests for proposals to drive competition, lowering bidder fees to encourage aggregator participation, accepting bids from aggregators that partially provide the services sought, and creating an open Tariff that all qualified aggregators may leverage, informed by cost data generated through the periodic RFPs. These changes improve the Tariff by allowing the program to develop to its full potential. Making the Tariff available to all aggregators will help reach the realized goal of bringing the Tariff to ratepayers.
While the initial cost savings may seem minor (and also considering the overall benefits are undercounted by 95% in the study), the benefits provided by this DDSR Aggregation Tariff are very significant. Overall, LBNL's expert analysis leads to the conclusion that this innovative Tariff is cost-effective.
We strongly urge the Commission to move forward with approving this Tariff in this docket at the November Open Meeting. Failure to approve the DDSR Aggregation Tariff will put Arizona behind the curve of this fast-changing technology and forgo an opportunity to support a
program that strives for a positive community outcome and can deliver significant cost and grid resilience benefits.
We are eager to participate in the ongoing efforts of the DDSR Aggregation Tariff, which will provide benefits to all ratepayers for many years to come, and feel confident that collaboration with other organizations, consumer advocates, Staff, and the utility will contribute to a bright future for residential solar in Arizona.
Thank you for your consideration of this important matter.
Autumn T. Johnson
Arizona Solar Energy Industries Association (AriSEIA)
Western Region Director
Solar United Neighbors (SUN)
Interior West Regulatory Director
 Arizona Corporation Commission’s Decision No. 78165 (E-10345A-19-148), Filed July 28, 2021, available here https://docket.images.azcc.gov/0000204280.pdf?i=1667008921051
 Sunrun’s Exceptions to Staff’s Memorandum and Proposed Order, Filed October 26, 2022, available here https://docket.images.azcc.gov/E000021983.pdf.
 Arizona Corporation Commission’s Memorandum Re: Lawrence Berkeley Laboratory Reports, Filed September 30, 2021, available here https://docket.images.azcc.gov/E000021442.pdf?i=1667005959409
 Arizona Corporation Commission’s Memorandum Re: Revised Lawrence Berkeley Laboratory Report, Filed October 21, 2022, available here https://docket.images.azcc.gov/E000021864.pdf?i=1667005959409
 See LBNL Report at page 12.
 See LBNL Report at page 15.
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