Clean Energy Innovation

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Participants in the Southwest Energy Innovation Forum, held this week in Scottsdale, discussed ideas to improve the nation’s clean energy future. Two speakers at the event, Arizona Corporation Commission Chairman Kris Mayes and Gary Dirks, director of ASU’s Lightworks, talk about opportunities for Arizona to reach its potential as a leader in renewable energy.

Ted Simons: Clean, renewable energy is an emerging part of Arizona's economy. Developing strategies to build the industry and promote clean energy innovation was the focus of the southwest energy innovation forum that took place yesterday in Scottsdale. Here to talk about the forum and Arizona's clean energy future are Kris Mayes, chairman of the Arizona Crporation Commission, and Gary Dirks, the director of ASU's Lightworks, a research initiative that focuses heavily on renewable energy. Good to have you both here.

Kris Mayes: Good to be here.

Ted Simons: Let's start with you, Gary. Growing regional energy innovation. What does that mean?

Gary Dirks: Great question, Ted. The idea is that many renewable energies actually have a very regional focus. So, for example, Arizona is blessed with a lot of sunlight, we can grow algae, we can develop photovoltaic devices, they can -- there's a lot we can do. That creates an opportunity for research institutions, like Arizona State University, University of Arizona, for local entrepreneurs, for policymakers to really focus on what would it take to create a really dynamic local economy. Often referred to as the ecosystem that will drive innovation from the Universities, from research laboratories, right out into the marketplace.

Ted Simons: Where do we stand on this?

Kris Mayes: I think Gary is exactly right. And I think increasingly we're going to have to take both a local and regional look at these issues. And I think that's what we've done in Arizona. I think Arizona has over the last eight to 10 years set the table for the kinds of innovation that Gary and Arizona State University and the University system here is probably going to take the next step on. We've done that by setting a renewable energy standard of 15% with the most aggressive DG solar rooftop requirement contained within it. We just established Ted, as you know, the most ambitious energy efficiency standard of 22% by 2020. The corporation commission telling our utilities they've got to engage with more energy efficiency companies to help Arizonans save on their energy. These types of policies which I think Arizona has set in the last eight years will lay the ground work for the kind of innovation that we are starting to see happen.

Ted Simons: Much of what you've mentioned, though, has been in the last few years or so. Where has Arizona been on this?

Kris Mayes: Well, we are out front in the last few years. And I think -- I think when you look -- you take a look at where Arizona stands on a lot of these policies, believe it or not, we have managed to attract a lot of national recognition, and a lot of national respect. We have one of the best RPSs, one of the best energy efficiency standards, we have I believe the best net metering standard in the nation. We're working on renewable energy transmission in a way that we haven't I think no other state is doing in the country. So we're taking steps and we're starting to see the fruits of those labors, but it's going to take time for this to really roll out. It's not going to happen overnight.

Ted Simons: Talk about ways the economy can support a clean energy economy. The dynamics they're in.

Gary Dirks: Well, there's the number of things. Kris has already talked about the policy side of it. But what you really need ultimately is to be able to create markets for clean energy products. You go all the way to the consumer end, you need the opportunity for people to be able to buy, afford to buy solar panels, for example. Or to energy efficient products. But there's also back from that the larger, and again I'm going to use the word "ecosystem," associated with the industrial group. And that is players in different parts of the chain of manufacturing. So if you're going to do photovoltaic's, do you have people that can produce mirrors, or do you have people there that can produce the materials you need to make panels? And do you have people that are making the steel, and aluminum, and all of those things? Having all those customers and suppliers in the same general area, the ecosystem creates that dynamic market, where innovation becomes easier. As opposed to having to go to California or to, let's say Massachusetts to work with a company, they're down the road. And you can go right down there and deal with the supplier or your customer. And that really creates the kind of thing we need.

Ted Simons: Are we seeing those satellite industries, if you will, are we starting to see that a little bit here?

Kris Mayes: I think we are. I think if you look around Arizona, you're starting to see companies rise up that just didn't exist 10 years ago. Bright source, first solar, we now have sun tech coming in to Arizona to engage in manufacturing, one of the largest Chinese manufacturers of solar panels. I could go down a very long list of companies that have risen up in Arizona just in the last five years, all because of the policies that we've put in place. But not just because of that, because Universities, the legislature, the Arizona corporation commissioner we are all focused on a clean energy economy and pushing that forward. And it takes sort of a concerted effort I think on the part of all of these different players, but let me tell you, our surrounding states are doing this too. They want this economy, they want to be a leader in this economy as well. They see where this country is going, and if we don't do the same thing, we're going to be far behind.

Gary Dirks: And I would push that to the global level, Ted. As you know, I've just come back from an extended period of living in China, and they take this extremely serious. They're spending enormous amounts of money. The Chinese fully intend to be a dominant player in the world of green tech. I think it's critically important for the American economy for the economy of Arizona to succeed in this area. We have to play. We have to do the kinds of things that Kris is talking about, we have to have research combined with innovation and innovators, young companies, mature companies, good policy, very aggressive finance, all of these things is what we need as a country, and as the state of Arizona.

Ted Simons: A lot of solar has been mentioned, even in this discussion, there is more to renewable energy, there is more to green energy than solar. Talk about some light-related industries that are ready to burst.

Gary Dirks: Well, the one that I'm actually quite excited about is microorganisms. Specifically algae or bacteria. We heard a lot about that yesterday. Because Arizona State University has got some very good funding from the federal government to support both of these areas. What this really is -- is recognizing that there are microorganisms, and they are small, nanometer scale, but they are very efficient in growing and producing biomass. They can be modified so they produce special energy products, or health care products, or specialty chemicals and materials. And the technology is just now really coming into its own. And I think this -- there's a lot of potential down the road.

Ted Simons: What else did you hear at the -- what did you hear from entrepreneurs, from researchers, what did you hear from policymakers, are they listening for one?

Kris Mayes: I hope, so because there are a lot of people at this conference, and I think what we heard is -- from my standpoint, what I heard was that there's a lot of excitement around states and what's going on in the states. Frankly, there's not a lot of leadership at the federal level, it's very hard to tell what Congress is going to do if anything on these issues we're talking about. They're not leading on renewable energy, they're not leading really on energy efficiency. They're certainly not leading on the carbon issue. So it's going to continue to be the states that are the driving force behind the kind of both policy and innovation that we're talking about. And I really believe that we are on the verge of potentially something very large happening in our states and in our country in terms of the kind of -- the speed with which this innovation is going to go, because if some of these technologies would take solar, for instance, solar reaches grid parity, or if the kind of algae that Gary is talking about really gets commercialized, you could see entire industries disrupted, and you can see consumers really being put in the driver's seat much their own energy destiny. In a way that I think our utilities and our other industries are -- may not be prepared for at this point. It's very exciting and interesting.

Ted Simons: You mentioned a lag as far as the feds are concerned regarding this. But it helps to work with the feds in terms of funding, and procuring funds, and these sorts of things. Again, how do you work that dynamic?

Kris Mayes: For sure. And I'm sure Gary could speak to some of the funding that's coming in to his University. And we are seeing some stimulus money still going into some of our renewable energy projects. What the federal government I think really needs to do is to say, look, we ought to have a minimum amount of renewable energy, all of our states, we should probably have a minimum RPS so at least the southern states are doing something on renewable energy. The feds could come in and say, you know, we're going to really put a lot of money out there for renewable energy transmission. Let's create a transmission infrastructure bank. The feds could do those kinds of things. Set some kind of uniform policy on carbon emissions or mercury emissions, but do something. So that we know where they're going and where the country wants to go.

Ted Simons: Let me give you three things here. We don't have too much time left. Investment, innovation, policy. Can you rank them?

Gary Dirks: Well, they're almost inseparable, Ted. You really have to do all of it, but if I was forced to rank it, would I start pretty much where Kris has, and that is you really need a good solid, stable policy environment. Because people need to be able to plan against the investments they're making and particularly -- even innovation, you need some reason to believe that the environment that you're planning for is going to be there when you get there. One of the problems coming out of the federal government, this is reinforcing what Kris says, we don't keep our policies stable. Every couple of years the investment tax credit has to be re-upped, or the benefits, tax benefits associated with renewable fuels. That kind of environment really kills investment. Because people just can't plan on it. But I think the stable environment is where I would start.

Ted Simons: Do you agree?

Kris Mayes: Absolutely. And I think the one thing that we've done pretty well in Arizona for the last eight to 10 years is we've said, OK this, is where we're going, we want more renewable energy, we want more energy efficiency, we have a solid standard in both of those areas. We're not backing off of it. And that's what's bringing companies into the state of Arizona. That's what's bringing scientists to our Universities, that's what's bringing all of this energy behind energy. And we can't -- we can't pull away from that. Because the second we do, they're going to move some place, someplace else. It's a great environment for what we're talking about, but we can't back off of our commitment as a state.

Ted Simons: All right. Very good. Thank you both for joining us.

Kris Mayes: Thank you.

Gary Dirks: Thank you.

Kris Mayes:Arizona Corporation Commission Chairman;Gary Dirks:ASU Lightworks;

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