Arizona Community Solar Program Would Deliver Billions in Positive Economic Impact, ASU Report Projects

November 4th, 2022

PHOENIX, Ariz. — Arizona State University’s (ASU) L. William Seidman Research Institute published a study Friday estimating various economic and fiscal impact scenarios for the potential rollout of a community solar program in Arizona. Study findings suggest that creating a community solar program in Arizona would deliver billions in economic benefits over a 35 year time horizon and create thousands of good-paying jobs in counties across the Grand Canyon State.

Community solar refers to small- to mid-scale solar arrays located within a community where multiple customers can subscribe and receive credits on their utility bills for their share of the power that is produced, just as if the panels were on their own roofs. Its popularity has risen in recent years due to its ability to provide customers with equal access to local, reliable, and affordable renewable electric power. 

In May 2022, the Arizona Corporation Commission (ACC), which is responsible for regulating most utilities in the state, formed a working group to study community solar and is now primed to vote on a measure next week that could open up a path for the Commission and one of the state utilities, Arizona Public Services (APS), to pursue scenarios outlined in the ASU study.

The study highlights a number of possibilities for economic and fiscal outcomes that may be delivered by such a community solar program. The forecasts are based on the number of solar projects built and operated within the service territories of Arizona’s two public utilities, APS and Tucson Electric Power (TEP). 

In projecting a mid-range 10-year rollout of up to 200 MW of projects per year in APS’ service territory, and 60 MW of projects per year in TEP’s service territory, ASU estimates that community solar could contribute approximately $4.8 billion in state gross domestic product (GDP), and more than 50,000 job years of employment over 35 years. These estimates assume a combination of more than 250 ground mount single axis tracking solar arrays of various generating capacities installed over 10 years, generating 2.19 gigawatts (GW) of capacity, and 25 years of operation.

“Our study found that if the right policy levers are pulled, community solar could produce significant economic benefits for Arizona for the life of the program,” said Dr. Anthony Evans, Principal Investigator of the ASU study. 

In projecting an upper-range 10-year rollout of up to 300 MW of projects per year in APS’ service territory, and 90 MW of projects per year in TEP’s service territory, ASU estimates that community solar could contribute in total approximately $7.2 billion in state GDP, and more than 76,000 job years of employment over 35 years. These estimates assume a combination of more than 400 solar arrays installed over 10 years, generating 3.31 GW of capacity, and 25 years of operation. With program implementation possible in the first half of 2023, customers and utilities could quickly reap the benefits.

APS and TEP serve a combined 1.74 million homes and businesses across Arizona, ranging from the urban areas of Tucson to customers near the Grand Canyon. The benefit of community solar is its ability to allow households the choice to connect via subscription to local solar power facilities. Customers then receive a credit on their electricity bills for their share of power produced. Twenty states and the District of Columbia already have community solar programs, and the projected output of those markets is only expected to increase: forecasters expect 7.7 GW of community solar to come online over the next five years. In a state with 300 sunny days a year, Arizona is uniquely positioned to add momentum to the U.S. community solar sector and benefit in the process. The recently passed Inflation Reduction Act also provides state incentives for community solar, but to take advantage of those incentives, a state must establish an eligible program.

“By creating the process for APS to offer third party community solar to their customers, the ACC has an invaluable opportunity to set the state on a path toward a more diverse energy mix,” said Kevin Cray, Mountain West Regional Director with Coalition for Community Solar Access (CCSA). “That path will support local economic growth, as well as additional jobs, and provide customers with more energy choice.” 

With average utility bills increasing nationally due to global conflict, fuel supply disruption, and domestic inflation, programs such as this can help ensure consumers have a choice in their energy needs all while ensuring more energy independence for Arizonans. 

“For our country’s long-term national security, it’s imperative that we look at multiple sources of locally-generated energy that will shield us from international uncertainties,” said Landon Stevens, Director of Policy and Advocacy at the Conservative Energy Network. “Community solar is a great vehicle to do that while also giving customers freedom of choice and bill savings.”

About the L. William Seidman Institute

The L. William Seidman Research Institute is the consultancy arm of W. P. Carey School of Business at Arizona State University. First established in 1985 to serve as an applied business research and consultancy resource for the southwest business community, Seidman currently offers a diverse range of business and economics consulting services to public and private sector clients throughout North America. For more information, please visit: https://seidmaninstitute.com/ or follow @SeidmanResearch on Twitter.