Uncertainty at the federal, state and climate levels will likely define energy policy and procurement in the coming years, especially in Southwestern states facing political and climate upheaval, new technologies and the impact of sweeping new laws passed in 2019, panelists at Law Seminars International's annual Electric Power in the Southwest conference, held virtually this year on Aug. 17 and 18, told attendees.
A number of states "have set these 100-percent clean energy goals, and they don't have a plan to meet these goals," Michelle De Blasi, an environmental and energy lawyer in Scottsdale, Arizona, and executive director of the Arizona Energy Consortium, said during a presentation on the federal energy outlook. Utilities are retiring 2 GW of fossil-fuel generation resources and replacing them with 200 MW of renewable resources, which will have an impact on cost and reliability, she said.
The economic impact of moving from fossil-fuel generation to renewables has already been felt in Arizona, with the November 2019 closure of the 2,250-MW coal-fired Navajo Generating Station. NGS employed about 800 people, most of them members of the Navajo Nation, for decades, Pilar Thomas, an attorney specializing in energy development on tribal lands, said during a presentation on tribes as energy suppliers.
Other speakers, including Doug Little, senior advisor at the U.S. Department of Energy's Office of Electricity in Scottsdale, said the Navajo Nation received $100 million in revenue annually from the plant and that its associated Kayenta Mine provided 80 percent of the Hopi Nation's budget each year. NGS was closed because it became uneconomical to operate when the U.S. Environmental Protection Agency required stricter pollution controls. The departure of large offtakers and declining prices for natural gas and renewable resources further hastened the plant's demise.
New Mexico and Colorado face similar realities for coal communities as plants edge toward early retirement for economic reasons, and also to comply with laws that call for carbon-free generation and emissions reductions in those states. Efforts by plant operators and government policymakers to cushion the economic impact of impending closures on coal-dependent communities with funds and job training might make for a smoother transition than the NGS communities experienced, but fossil-fuel plant closures are sure to shape local economies in the coming decade as Nevada, Colorado and New Mexico pursue newly codified climate goals. Utilities in Utah and Arizona have made commitments on their own to cleaning up their respective grids as policymakers in those states discuss changes or take more measured steps to transition from fossil fuels.
Southwestern tribes stand to benefit from the renewables revolution with an abundance of resources, especially solar, in the Southwest. In some cases, tribal leadership also has access to high-voltage transmission lines associated with shuttered or retiring coal plants. Tribes also see an opportunity to participate in manufacturing energy components such as solar-photovoltaic panels and wind generation components, but they must be able to access enough capital for such projects.
"The more robust the federal government can be, the more we'll see energy development on tribal lands," Thomas said during her presentation. Data centers and corporations that have set their own renewable resource goals and tribal assets such as casinos are all potential markets for tribal energy development, she said, whether that takes the shape of utility-scale resources, distributed generation or microgrids.
Bidtah Becker of the Navajo Tribal Utility Authority said the coronavirus pandemic, which has had a profound impact on the Navajo Nation, and the Black Lives Matter movement have caused a shift in perspective that seems to have motivated more people to reach out to the tribe for business endeavors. Recent events have prompted "interesting conversations," she said.
"If your mission doesn't align [with the tribe], maybe you don't belong in Indian Country," Becker said, adding that the tribe is continually building its institutions by bridging ancestral teachings with new realities. "We've been doing that since 1492, and we'll always be doing that," she said.
Todd Fridley, Public Service Company of New Mexico's vice president of New Mexico operations, canceled his Aug. 18 presentation on the expansion of independent system operators, energy imbalance markets, and regional transmission organizations at the last minute because he was reportedly dealing with a problem concerning the California Independent System Operator. PNM received approval from state regulators in late 2018 to join CAISO's Western Energy Imbalance Market, and has been working steadily to ready itself for that development, set to become official in April 2021. The utility did not offer comment on the nature of the problem with CAISO that prevented Fridley from making his presentation.
Other large Southwestern utilities that belong to or are pursuing membership in the Western EIM include Arizona Public Service, Salt River Project and Tucson Electric Power/UNS Electric in Arizona and NV Energy in Nevada.
Arthur O'Donnell, independent energy analyst and co-founder of California Energy Markets, updated conference attendees on the dramatic rise in energy storage, now frequently being paired with solar installations, in the West. Cost declines for battery storage have exceeded projections made by the U.S. Energy Information Administration in 2010, when the agency anticipated a 40-percent reduction by 2020, O'Donnell said. Actual figures reveal a 61-percent decline in battery energy costs—from $1,430/kWh to $834/kWh from 2010 to 2017. Nearly 25 GW of paired and stand-alone storage combined are in the CAISO interconnection queue, O'Donnell said. Small-scale storage is also on the rise and will likely replace generators in mitigating public-safety power shut-offs, he said.
Other presenters offered overviews on energy as the nation looks toward November with competing priorities. Presenters were reluctant to speculate on what the outcome of the presidential election could mean for energy, economic and environmental policy in a nation and a world in transition, but regardless of what happens, they agreed there will be change.