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Top 5 reasons why AZ lags in solar tech
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In my previous article, I discussed the overall status of the Arizona solar industry. This state is approximately sixth amongst all 50 states in terms of solar installations per capita, amidst having essentially the highest solar exposure across the country. Furthermore, Arizona lacks any significant solar cell manufacturing and research and development (R&D). Interestingly enough, over 40 percent of the state’s energy is derived from coal. The solar industry of this state primarily consists of solar installers for homes and businesses, whom are distributors of predominantly foreign photovoltaic (PV) or solar panels. Surprisingly, New Jersey ranks second after California in terms of solar capacity, while its solar exposure levels are among the bottom tier of US states.
So here are my top 5 reasons why Arizona lags in solar power amidst its gigantic potential:
1. Lack of economic diversity
Arizona’s state economy has primarily relied on construction and real estate for its revenue. The negative externalities of that issue are visible throughout the state at this time amidst the budget crisis that has generated reductions across the board. As a result, Arizona has a minimal manufacturing base, which is even shrinking with numerous plant closures and outsourcing in the once strong Phoenix semiconductor industry, which laid claim at one time to the name Silicon Desert.
2. State incentives
The state government has not been as generous historically as others like California, New Jersey, and New York with respect to tax credits and rebates for residences and commercial properties. The renewable energy industry is highly reliant on government or utility incentives due to the high upfront fixed costs associated with going Green. Thus, the relatively high cost to install solar panels of ~$25,000 remains a higher percentage of the overall cost of the house, especially with the modest real estate prices Arizona has enjoyed for many years compared to the northeast and west coast.
3. Power demand
The third most critical reason why Arizona lags in terms of its overall solar market is its lower population density and subsequent power demand compared to more populous states with less sunlight. Many of the highly populated states have essentially “bit the bullet” in building costly solar power plants due to necessity and limitations in natural resources such as coal and hydropower.
4. SRP market share
The Salt River Project (SRP) power utility is nearly the largest provider of power to the greater Phoenix metropolitan area, and the state collectively, and serves more than 935,000 electricity customers. However, it is not regulated by the U.S. government and is not required to abide by initiatives supporting increased percentage of power derived from renewable sources such as solar power plants. In addition, the rebates given by SRP are mainly a gesture of good will.
5. Manufacturing base
The dwindling manufacturing base of the state has generated numerous vacant plants and former flourishing microelectronic fabrication facilities, which have the potential to be converted to solar R&D and/or manufacturing plants. However, this trend of transforming plants, which has occurred in states such as Texas and California, has not spread to Arizona.
Thus, I reiterate my point from my most recent article “Solar is lacking in the Valley of the Sun” on the potential impact of the 2009 Greenbuild International Conference and Expo being held in Phoenix, AZ in November 11-13, 2009 -to see if it will transform the landscape of Arizona's underperforming solar industry and our open its eyes to a Green frontier- no pun intended amidst the photo in the article. Nonetheless, the US Economic Recovery Act, with its enhanced tax credits for homes and businesses adding solar components, will definitely have an impact in Arizona, especially once home construction regains its 2007 levels.
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For more info: SRP website, Updated U.S. Stimulus green construction and solar panel incentive reference site
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