PHOENIX \u2014 Gov. Katie Hobbs wants Arizona to do more both to build more energy sources and curtail state electricity use, with at least one goal to ensure the state can attract more data centers and other large power users.<\/p>\n
But the governor on Monday sidestepped questions about why Arizona would seek to locate data centers here, not just because of the demand on the electric grid but because of the massive amounts of water it takes to cool them.<\/p>\n
The Environmental and Energy Study Institute says even a medium-sized data centers can use up to about 110 million gallons of water a year for cooling purposes, equivalent to what would serve 1,000 households. And larger centers can consume 1.8 billion gallons a year, enough to supply a town of up to 50,000.<\/p>\n
It was precisely that water issue that caused the Tucson City Council to vote unanimously last month to abandon what would have been its role in annexing land to allow for construction of Project Blue, a data center whose end user would have been Amazon Web Services.<\/p>\n
That, however, hasn\u2019t ended the plans, with the project\u2019s developer and Tucson Electric Power asking the Arizona Corporation Commission to allow the utility to provide power to a site near the Pima County Fairgrounds without the need for Tucson\u2019s approval \u2014 or water. But that still leaves the question of a source of water.<\/p>\n
Hobbs, in forming a new Arizona Energy Promise Task Force, said she wants a report by March 1 for the state, with a specific goal to \u201cfacilitate data center and other large load customer growth.\u201d And she wants it done while \u201cminimizing impact to ratepayers while preserving Arizona\u2019s competitive advantage.\u201d<\/p>\n
But at Monday\u2019s press conference Hobbs sought to turn away questions about data centers \u2014 and, specifically, the question of whether they make sense in the desert.<\/p>\n
\u201cThis is not just about data centers,\u201d Hobbs said in response to questions from Capitol Media Services. \u201cThis is about the high energy demand that we\u2019re seeing across industry that is growing our economy, creating jobs for Arizonans.\u201d<\/p>\n
So why would she even suggest Arizona would want data centers \u2014 as her executive order specifically mentions \u2014 what with the water use.<\/p>\n
\u201cThis is not about data centers,\u201d Hobbs responded. \u201cThis is about the energy we need.\u201d<\/p>\n
As to where that will come from, the governor specifically mentioned solar, wind, storage, advanced geothermal and nuclear projects.<\/p>\n
Hobbs\u2019 challeng is it is the members of the Arizona Corporation Commission and not the governor who have oversight of utilities.<\/p>\n
Commission members voted last month to repeal a 2006 rule about obtaining a certain amount of energy from renewable sources. Instead, members of the all-Republican panel said such decisions should be made by the market.<\/p>\n
Hobbs said she doesn\u2019t necessarily see the commission \u2014 and its constitutional powers \u2014 as an impediment to her goal to bring more power to the state.<\/p>\n
\u201cWe\u2019re going to partner with anyone who wants to be a partner on meeting the energy demands we need as a state,\u201d she said. Asked about whether her office has approached the regulators to be a partners, she responded, \u201cI don\u2019t know.\u201d<\/p>\n
The executive order also directs the state Land Department to streamline the process of granting leases for construction of new power sources. And it directs all state agencies to develop plans to reduce their own energy consumption by 5% by June 30, 2027.<\/p>\n
But the heart of the order comes down to the question of whether Arizona will have enough energy.<\/p>\n
Hobbs said that peak demand \u2014 the amount of energy needed when people and industry are using the most \u2014 will increase by 40% in the next 15 years.<\/p>\n
And she wants to remove hurdles to building new sources to meet that demand.<\/p>\n
The governor said it is important for the state to act.<\/p>\n
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There is, however, a political component behind that claim. She said recent federal actions and directives from the Trump administration are delaying the federal permitting process for solar and wind energy politics, something the governor said \u201cmay have a serious chilling effect on the growth of Arizona\u2019s energy industry.\u201d<\/p>\n
That, Hobbs said, will jeopardize more than 151,000 energy related jobs and $104 billion in private investment. She also is making the claim that those federal actions potentially will increase energy costs for Arizonans by $280 per household annually by 2035 \u201cand leaving thousands of Arizonans without access to electricity.\u201d<\/p>\n
Gubernatorial press aide Christian Slater said all the estimates in the executive order come from public and private information compiled by the Arizona Commerce Authority, the federal Energy Information Administration as well as public utilities.<\/p>\n
But Tucson Electric Power has never made such a claim of possibly being unable to meet demands. And it has said it can meet its long-term energy needs even as it shifts away from coal-fired power plants.<\/p>\n
Arizona Public Service has its own integrated resource plan showing how it will deal with demand through 2038.<\/p>\n
Hobbs said there\u2019s no reason the state should be without the power that it needs \u2014 including for large users.<\/p>\n
\u201cWe have incredible potential to deliver affordable energy to every business and family who needs it,\u201d she said. \u201cWe just need to unleash it.\u201d<\/p>\n
That, Hobbs said, means making changes to expedite the process.<\/p>\n
\u201cThere are too many burdensome government regulations, outdated processes and unnecessary paperwork that stands in the way of commonsense solutions,\u201d the governor said. \u201cThis red tape kills jobs.\u201d<\/p>\n
There may be other interests driving this push to ease state regulation of new sources of power.<\/p>\n
One of those Hobbs invited to speak Monday was Jim Shandalov, national vice president of NextEra Energy Resources. His company generates power to sell to utilities.<\/p>\n
And Jeff Holly, president of the Arizona Building and Construction Trades Council, said his focus is about creating more construction jobs, something he said is dependent on attracting more manufacturing operations. That, he said, is tied to ensuring there is enough power to support those new plants.<\/p>\n
\u201cArizona has become the central hub for building the future of technology,\u201d Holly said. \u201cAnd that means thousands of quality union jobs for our members.\u201d
That still leaves the question of water for industrial users.<\/p>\n
Project Blue had an estimated water demand of more than 1,910 acre-feet per year at full build-out, more than 622 million gallons, with plans to use potable water for at least two years while building an 18-mile pipeline to bring in reclaimed water.<\/p>\n
Despite the city council rejection, Beale Infrastructure, the company promoting the project, is pursuing a work-around that would allow it to obtain the needed power from Tucson Electric, at least initially, for a smaller data center. The issue of where it would get the water has not been resolved.<\/p>\n
Whatever happens with the proposed Project Blue, data centers continue to spring up in Arizona.<\/p>\n
Datacentermap.com says there are more than 150 operating or planned in the Phoenix area, with nine in Tucson \u2014 including Project Blue, which is not dead yet, and one in Nogales.<\/p>\n
All this is taking place as APS is seeking a $570 million rate increase, up 14% overall. The company says it also is designing rates so that new customers, like data centers, will pay what it costs to serve their high electricity needs without shifting costs to existing customers.<\/p>\n
Tucson Electric also has filed its own 14% rate hike request.<\/p>\n
Howard Fischer<\/p>\n