Policy Solutions for Increasing Economic Impacts of Wind Development in Arizona

Arizona recently dedicated its first utility-scale wind plant, the 63-MW Dry Lake Wind Project on private, state and BLM land near Holbrook. While Arizona has developable wind resources and some available transmission capacity, wind power development has not taken off in the state, and this is often attributed to policy issues and resource quality. The National Renewable Energy Laboratory’s Western Wind & Solar Integration Study quantified the wind capacity that should be built in Arizona under various wind development scenarios, including all-in-state development, least-cost wind resource across the western electric grid in the inter-mountain west, and a scenario providing some accounting for local economic impacts of wind development. In scenarios in which up to 20% of Arizona’s electrical energy was served by wind resources developed within Arizona, the study found that instate wind development actually resulted in a lower overall system operating cost of energy to state consumers than any other scenario (despite higher capacity factor sites being available outside of Arizona). In addition, the economic impacts of this potential development offer revitalization to many of the rural areas in the state. However, the state lacks coherent policies to attract wind power development and to bolster the services available in rural areas to meet the needs of developers during construction and operation of wind power plants. This study presents and evaluates policy mechanisms for use by the state, county, or tribal governments to increase wind penetration, attract wind development through financial incentives, and increase the local economic impacts of the development once it takes place. Example policies from other states, counties, and tribal governments are evaluated with regard to their appropriateness in Arizona, and suggestions are made for changes to federal policy that would increase the viability and impact of wind development projects on tribal land nationwide.