Arizona is having a grid battery growth spurt. Will that last?

To properly understand the boom in battery construction today, one must look back to market conditions around five years ago, when the utilities were awarding the contracts for these plants, said Autumn Johnson, executive director of the Arizona branch of the Solar Energy Industries Association.

In 2018, the Arizona Corporation Commission chastised APS for relying too heavily on gas power plants in its long-term planning, prompting the company to take batteries seriously as a cost-effective source of peak power. The Biden administration passed the Inflation Reduction Act in 2022, solidifying a decade’s worth of tax credits for installing solar and batteries. Within a few years, all the state’s major utilities had pledged to decarbonize their fleets by mid-century.

The wave of storage projects built in recent years is the result of contracts the utilities signed in those heady times, Johnson said. 

But the political landscape in Arizona and nationally has shifted since then, casting a pall over the future of the state’s solar and storage buildout.

The Trump administration gutted Biden’s climate law last year, though it preserved tax credits for batteries specifically. APS abandoned its own climate goals. The utility regulator is picking performative fights with clean energy instead of pushing the utilities to be more ambitious. The state legislature this year proposed ​“a record number of terrible energy bills,” Johnson said, including ones to mandate that 85% of electricity capacity come from dispatchable or baseload sources (not intermittent renewables) and to label wind and solar farms a ​“public nuisance” if they fall within 4 miles of a residential property.

And while the utilities can’t change the fundamental economics of solar and batteries, they can change how they assign contracts, Johnson noted.

APS, the biggest battery builder in the state, said in a July planning session that it was excluding four-hour duration batteries from modeling for its long-term energy plans, limiting the options to those with six to eight hours of duration. Four-hour batteries have in recent years become the standard type of peaker plant getting built in California and Arizona, but now APS seems to be taking them off the table. Adding more hours of energy discharge provides greater coverage for the grid but increases construction costs.

“Given all the changes, will we keep our top spot in five years?” Johnson asked of Arizona’s energy storage leadership. ​“I’m not sure it will be a long-lived reign at the top.”

At the very least, construction will continue at a rapid clip through 2026, according to the EIA data, anchored by the nearly finished Maricopa Energy Center, which includes a 550-MW/2.2-GWh-hour battery. Seven battery projects are already under construction for 2027 completion, ranging from 100 MW to 300 MW. Utilities will need to be signing new contracts now to keep the momentum going into the 2030s.