In 2008, then Arizona governor, Janet Napolitano, said that Arizona could become “the Persian Gulf of solar energy,” a statement which could very well come to pass. After all, Arizona is one of the sunniest states in the US, and it unsurprisingly ranks second in the country for solar installations and energy production, behind only California. But there are a lot of components to this ranking—jobs, energy production and capacity, and market growth—that make it difficult to determine what exactly is going on. Breaking the market down allows for an easier and more informative analysis.
The market spiked recently. 719 megawatts (MW) of solar capacity were installed in 2012, which is slightly over half of the current capacity of 1,420 MW. In the third quarter of 2013, another 169 MW were added, which is fairly close to the average growth per quarter in 2012. The fact that the growth rate hasn’t dropped significantly is indicative of a stable industry and that it was a reasonably large state-funded incentive program. In addition, Arizona was the state that contributed the highest amount of utility-scale solar in 2012 – more even than California (solar power plants are the largest producers of utility-scale solar, used as an alternative to the more common coal-based power). The Arizona legislature has even mandated that by 2025, all state utility companies are to produce 15% of their energy from solar installations, which contributes to the cause of recent market growth.
Not all Arizona utility companies are happy about this policy, however. In fact, Arizona’s largest utility provider has received quite a bit of criticism in recent months for lobbying against it, trying to relax the restrictions that are placed upon it by the mandate. The controversy goes back further than the lobbying attempt, however. The same company from which the utility provider hired their lobbyists was also requested to provide a report that suggested this utility company donated to out-of-state nonprofit organizations with the hope that those organizations would publish information claiming that increasing Arizona utility providers’ reliance on solar energy would add costs for taxpayers (something that the majority of evidence has never supported).
The majority of utility companies are on board with solar energy, though, and private solar companies are always eager to expand their businesses. In the past few years, more than seven hundred million dollars has been invested into the solar market, causing it to grow significantly, prompting the expansion of existing companies and the foundation of new companies, and creating new jobs. As of the beginning of 2014, there were almost two hundred and ninety solar companies in Arizona (including maintenance companies, manufacturers, and distributors), employing more than 9,500 people; a number which is expected to increase significantly over the course of the next year. With every new company that is founded, the competition for the market increases, forcing existing companies to lower their prices. Surely enough, the financial cost of purchasing and installing solar has fallen 3% in the past twelve months. That may not sound like much, but when systems can cost about ten thousand dollars, it’s a very significant reduction. Surprisingly, though, prices decreased more in the rest of the country, where the drop was 5%. Is this a bad sign for Arizona’s market? Not necessarily. Since 2010, solar prices have decreased nationwide by more than a quarter, so a difference of 2% here or there most likely doesn’t foretell a decrease in growth.
Overall, the solar market in Arizona is thriving, with a very large amount of growth in recent years and probably more to come. Every month brings the state closer to realizing Janet Napolitano’s dream of an oasis of solar energy.