How Arizona became a hotspot for clean energy investments
Arizona is experiencing a surge of investment activity in green projects and clean energy, emphasizing the state’s unique attractiveness for this growing industry.
Billions in clean energy investments have poured into the state over the last couple of years, representing a wide array of renewable energy projects from wind, hydrogen, electric and solar from companies like LG Energy Solution, NextEra Energy, American Battery Factory, AES Corporation and more. Arizona saw more than $8 billion in clean energy investments in the 12 months between August 2022 and August 2023, among the highest in the nation.
As the nation’s sunniest state, Arizona is well known for its thriving solar energy sector. The state’s annual 300 days of sun present perfect conditions for harnessing the sun’s power; 78 solar manufacturers operate in the state and Arizona ranks second in net generation of solar energy in the U.S.
But the Grand Canyon State is quickly establishing itself as a leader in renewable energy beyond solar.
“Arizona is primed to lead the way in clean energy and show the nation and the world that growth and sustainability go hand-in-hand,” said Gov. Katie Hobbs at a groundbreaking in January for Strata Clean Energy, which is building a 1 GWh battery storage complex in Phoenix. When complete, the project’s batteries will store enough electricity to power more than 250,000 homes.
In July 2023, state and business leaders gathered in northeastern Arizona in celebration of a multimillion-dollar investment in what will one day be the state’s largest windfarm.
Upon completion, AES Corporation’s $680 million investment into the Chevelon Butte windfarm will include 105 turbines producing 454 megawatts of wind energy, anticipated to power 110,000 homes annually. The company expects to begin commercial operations this year.
The past couple of years have also been a period of major investment in electric vehicle manufacturing and adoption.
Five major EV manufacturers have established a presence in Arizona since 2016, including Lucid Motors, Nikola and ElectraMeccanica. Arizona ranks seventh in the nation for most registered electric vehicles, with four electric vehicles registered in the state for every 1,000 residents.
Experts say that no single renewable source will fulfill the state’s carbon-neutral energy goals. Wind, electric and, of course, solar, will all play a part in creating Arizona’s carbon-neutral economy.
Ellen Stechel believes another element to play a critical role in that transition will be hydrogen — a renewable that has seen promising investments in recent years.
Stechel is the executive director at A Center for an Arizona Carbon-Neutral Economy (AzCaNE), an organization founded by the state’s four utilities and its three public universities with the goal to build a thriving, carbon-neutral Arizona.
“There’s a lot of challenges to getting to 100% carbon neutral,” Stechel said. “Hydrogen can help us get there.”
While hydrogen is a budding industry in most states, Arizona is uniquely positioned for growth since the state is situated between Texas and California, which lead the nation in hydrogen energy production.
Stechel has seen promising developments in hydrogen investment in the state. Over the last few years, companies like NextEra Energy, Fortescue and Air Products have together invested over $1 billion in hydrogen facilities in Arizona.
Local governments have also embraced hydrogen in city initiatives. The city of Phoenix announced in spring 2023 that it will add 26 low- and zero-emission transit buses to its fleet — several of which run on hydrogen.
While hydrogen alone is not a “magic bullet,” Stechel said it will play a significant role in getting Arizona 100% carbon-neutral alongside other renewable energy sources.
“The nation needs Arizona to be part of a hydrogen economy,” Stechel said.
As investments in renewables continue to pour into the state, leaders at the Arizona Commerce Authority are actively working to incubate future growth by creating opportunities for local, sustainability-focused startups.
This spring, the ACA will launch Plug and Play accelerateAZ, a program that will pair small, sustainability-oriented startups with established corporate partners.
The program will help accelerate fledgling businesses focused on solving pressing global issues such as renewable energy, water resiliency, sustainable mining, circular materials and carbon neutrality.
“Over the last decade and more, the ACA has worked closely with our innovation partners to advance our startup ecosystem and create new opportunities for Arizona entrepreneurs,” said Sandra Watson, president and CEO of the Arizona Commerce Authority. “The Plug and Play accelerateAZ Sustainability program represents an exciting new chapter in these efforts.”
Startups selected by the program will gain access to hundreds of industry partners that are part of Plug and Play’s network of over 50 offices around the globe.
Ongoing investment activity in renewables and robust initiatives encouraging clean energy innovation ensure that Arizona is well-positioned to meet a greener, carbon-neutral future.