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Arizona   Arizona Profile

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Last Updated: April 21, 2022

Overview

Per capita energy consumption in Arizona is among the lowest in the nation.

Arizona is known for its stunning landscapes and natural wonders from the Grand Canyon in the north to the Saguaro deserts in the south.1 The state has few fossil fuel reserves, but it does have abundant renewable energy resources.2,3,4,5 Although higher elevations receive greater amounts of precipitation, including significant snowfalls, most of Arizona is semiarid or arid, and plentiful sunshine gives the entire state some of the nation's greatest solar energy resources.6,7,8 Elevations in Arizona vary from peaks more than 12,000 feet high in the north to nearly sea level in the deserts in the southwest. Some of the highest elevations and greatest wind potential in the state are on the Colorado Plateau just north of the 200-mile-long Mogollon Rim, which cuts diagonally across central Arizona from northwest to southeast and marks the southern edge of the Plateau.9,10 Arizona also has biomass resources, including the nation's largest ponderosa pine forest.11

Arizona is rich in minerals, and the area drew Spanish explorers seeking gold, silver, and copper as early as the late 1500s.12 Arizona still produces more copper than any other state, accounting for almost three-fourths of the nation's output in 2021.13 During the 20th century, mines in the state also began producing uranium.14 Arizona is the site of major uranium reserves, including the highest-grade uranium in the nation, but currently there are no operating uranium mines in the state.15 Mining has long been a significant contributor to the state's wealth. However, the economy has diversified. Real estate; government; professional and business services; finance and insurance; trade; and health care services are among the largest contributors to Arizona's gross domestic product (GDP).16 Other key industries in the state include computer and electronic products manufacturing; aerospace and defense; and biosciences.17

In part because many of Arizona's primary economic activities are not energy intensive, the state's total per capita energy consumption is the sixth-lowest in the nation.18 The transportation sector accounts for more than one-third of Arizona's total end-use sector energy consumption, and the residential sector uses more than one-fourth.19 The majority of Arizona's residents live in a few urban areas, leaving most of the state lightly populated.20 Mild summers in the north and mild winters in the south make Arizona a popular vacation and retirement destination, and the state's year-round population grew faster than in all but three other states in 2021.21,22 The pleasant weather also draws many seasonal residents, and almost 1 in 16 Arizona homes are occupied only part of the year.23,24,25 The commercial sector accounts for more than one-fifth of Arizona's total end-use sector energy consumption, and the state's industrial sector consumes about one-seventh.26

Electricity

Arizona’s Palo Verde Nuclear Generating Station is the nation’s largest nuclear power plant.

Natural gas is the primary fuel used for electricity generation in Arizona. Natural gas fueled more than two-fifths of Arizona's utility-scale (1 megawatt of larger) electricity net generation in 2021, up from less than three-tenths in 2017.27 More than 700 megawatts of new natural gas-fired capacity came online since 2018, but more than 380 megawatts of natural gas-fired capacity retired during the same period.28 Although 5 of the state's 10 largest power plants by capacity and generation are natural gas fired, the Palo Verde Nuclear Generating Station is Arizona's largest power plant and the nation's largest nuclear power plant.29 Palo Verde generates more electricity annually than any other U.S. power plant and is second only to the Grand Coulee Dam in total electricity generating capacity among the nation's power plants.30 In 2021, Palo Verde's three operating reactors generated almost three-tenths of the state's net electricity. Coal fueled about as much or more of the state's electricity generation as nuclear power until 2016.31 However, the Navajo Generating Station, which was the largest coal-fired facility in the state and Arizona's second-largest power plant, permanently closed in late 2019.32,33 Until its closure, the Navajo Generating Station typically provided two-fifths of the state's coal-fired power generation, and 10% to 20% of the state's utility-scale generation annually. In 2021, coal fueled 13% of the state's utility-scale net generation, down from 40% a decade earlier.34,35 Renewable resources, mostly solar and hydroelectric power, supplied almost all the rest of Arizona's in-state utility-scale electricity generation in 2021.36

Some of Arizona's in-state generating capacity was developed to power the crucial pumping systems that bring water for drinking and irrigation from the Colorado River in the north to the drier central and southern parts of Arizona, where most of the state's population lives.37,38 Arizona power plants typically generate more electricity than the state consumes, and in 2020 more than one-fifth of the electricity generated in-state was sent to consumers outside of Arizona.39 Because interstate transmission lines have become congested during peak demand periods, Arizona continues to work with other states and stakeholders to improve transmission capacity. Projects in development include one that will transmit electricity from carbon-free sources (renewable and nuclear energy) in Arizona and New Mexico to consumers across the southwest.40 Another project will bring wind power down from Wyoming to population centers in southwestern states, including in Arizona, and send solar power up from the southwest to the Rocky Mountain states.41 A third transmission project in development will connect areas of southeastern California to southwestern Arizona, facilitating renewable energy development along the route.42 Arizona also has almost 100 megawatts of battery energy storage systems at seven sites, three of which are lithium-ion batteries coupled with solar photovoltaic projects.43 Battery storage projects are a least-cost option for adding power in remote rural communities.44 An open-pit lithium mining project is in development in northern Arizona.45

Arizona consumes more electricity than almost two-thirds of the states, but its total per capita electricity retail sales are lower than in more than two-thirds of the states. Arizona's residential sector, where about 3 in 5 households rely on electricity for home heating and more than 9 in 10 homes have air conditioning, uses more electricity than the residential sectors in nearly three-fourths of the states and more per capita than half the states.46,47,48 Almost half of all Arizona's electricity retail sales go to the residential sector. The commercial sector uses almost two-fifths, and the industrial sector accounts for less than one-fifth.49 Arizona's transportation sector uses a small amount of electricity, and the state has more than 870 public charging stations for electric vehicles (including all-electric vehicles and plug-in hybrid vehicles), about 90 of which are direct current fast-charging stations.50

Renewable energy

Arizona ranks fifth among the states in solar-powered electricity generation.

In 2021, renewable energy from both utility- and small-scale (less than 1 megawatt) facilities provided about 16% of Arizona's total net generation. Almost three-fifths of that total came from solar photovoltaic (PV) and solar thermal energy. Hydroelectric power and wind energy supplied almost all the rest. Conventional hydroelectric power long dominated Arizona's renewable generation, but the contribution from utility- and small-scale solar-powered installations surpassed hydroelectric generation for the first time in 2017. By 2021, solar energy accounted for about 9% of the state's electricity net generation from all sources, and one-third of that was from small-scale solar PV installations, such as rooftop solar panels.51 Overall, Arizona ranks second in the nation in solar energy potential after Nevada, and in 2021 it was fifth in solar net generation, after California, Texas, Florida, and North Carolina.52,53 Arizona is also one of the four states with electricity generation from utility-scale solar thermal technologies, which concentrate sunlight to heat the fluids used to spin the turbines that generate electricity.54,55 The Solana Generating Station in Maricopa County is Arizona's only solar thermal power plant. It has a capacity of almost 300 megawatts. The state's largest solar PV facility is also one of the nation's largest. That plant, Agua Caliente, is located in Yuma County and has a capacity of almost 350 megawatts.56,57 Arizona ranks among the top five states in the nation in total solar-powered generating capacity from both utility- and small-scale installations, with more than 4,780 megawatts.58

Hydroelectric power typically accounts for less than one-tenth of Arizona's total in-state utility-scale net generation. In 2021, it supplied only about 5%, in part because of the state's prolonged (27-year) drought.59,60 Glen Canyon Dam and Hoover Dam, both located on the Colorado River in northern Arizona, are among the largest power plants by capacity in the state and are the two tallest concrete-arch dams in the nation.61,62 They provide most of Arizona's in-state hydroelectric generation.63 Arizona is also 1 of 18 states with pumped storage hydroelectric generation.64 Pumped storage is a process whereby inexpensive power purchased during periods of low demand is used to pump water from a lower reservoir to an upper reservoir. During periods of high power demand, water is released from the upper reservoir and flows to the lower reservoir. Water flows through turbines located between the reservoirs and generates electricity. A pumped storage facility uses more power than it generates, but it supplies power in periods of peak demand when electricity prices are highest.65 The state's three pumped storage plants have a combined capacity of almost 220 megawatts.66,67

Arizona has wind, biomass, and geothermal resources. The state's first utility-scale wind farm is in a high wind area just north of the Mogollon Rim in central Arizona. It came online in 2009 with 63 megawatts of electricity generating capacity.68,69 The largest Arizona wind farm came online in 2020 and has 350 megawatts of generating capacity. In 2021, the state's six wind farms provided less than 2% of Arizona's in-state utility-scale generation. Biomass fueled less than 0.5% of Arizona's power, almost all of it from the state's largest biomass-fueled power plant. That plant uses wood and wood derived fuels.70,71 Arizona biomass resources also provide feedstock for the state's one wood pellet manufacturing plant, which has an annual production capacity of about 60,000 tons. Wood pellets are used for power generation and space heating. About 1 in 50 Arizona households heat with wood.72,73 The state has some deep, high-temperature geothermal resources, particularly in southeastern Arizona. They may be suitable for power generation, but Arizona does not have any utility-scale geothermal power plants. The state uses its geothermal resources in several direct-use applications, including an active aquaculture industry that uses geothermal resources to raise shrimp and fish. The state also has many hot springs and a few small spas.74,75

Arizona adopted a renewable energy standard (RES) in 2006. It requires that regulated electric utilities acquire 15% of their electricity retail sales from renewable resources by 2025.76 A total of 30% of each year's required renewable energy target must come from non-utility, customer-sited generation, half from residential sites and the other half from non-residential installations.77 The state allows net billing, which encourages small-scale, customer-sited renewable generation, and provides limited credits to customers' power bills for the excess electricity they generate and send to the grid.78 In 2020, Arizona's largest utility announced that it plans to supply 100% carbon-free energy, including nuclear power, by 2050, with an intermediate target of 45% from renewable resources by 2030.79 Another large Arizona utility plans to get more than 70% of its power from wind and solar resources by 2035.80 In 2010, Arizona established an energy efficiency standard (EES) that required investor-owned electric utilities, electric cooperatives, and natural gas utilities to increase energy efficiency and to reduce consumption of both electricity and natural gas.81 In early 2022, the Arizona Corporation Commission voted down a 100% clean energy package that included a 10-year extension of the EES.82

Petroleum

Arizona has no significant proved crude oil reserves, and the state's oil wells produced only about 5,000 barrels of crude oil in 2020.83,84 The largest oil field in the state is on the Navajo reservation in the northeastern corner of Arizona.85 Helium, an important industrial gas, is produced from formations below the crude oil zones in that field.86 Areas on both the Colorado Plateau in the northeast and in the Basin and Range region in the southwest may have crude oil potential, but exploratory drilling has not yielded large finds, and much of Arizona remains unexplored.87

Arizona does not have any crude oil refineries.88 Motor gasoline and other petroleum products arrive by pipeline from southern California and from Texas.89 In 2019, the transportation sector accounted for almost nine-tenths of the petroleum consumed in Arizona.90 To meet federal air quality standards, the Tucson area requires oxygenated motor gasoline in the winter. More stringent state regulations require the use of an oxygenated blend of motor gasoline called Arizona Clean Burning Gasoline (CBG) in Maricopa County, including the city of Phoenix, where motor vehicles are the single largest source of air pollution.91,92 Ethanol is used as an oxygenate in motor gasoline in Arizona.93 The state has one fuel ethanol production plant, but its capacity—55 million gallons annually—is less than the state's consumption, and additional ethanol supplies arrive from midwestern states.94,95,96 The industrial sector accounted for most of the rest of the state's petroleum consumption, about one-tenth. In 2019, the commercial sector used about 3%. The residential sector, where only 3 in 100 households use petroleum products, mostly propane, for space heating, consumed less than 1%.97,98

Natural gas

About four-fifths of the natural gas consumed in Arizona is used for electric power generation.

Arizona has no significant natural gas reserves.99 With few producing wells and little new drilling activity, Arizona's annual natural gas production declined from its peak of more than 2.1 billion cubic feet in 1990 to about 66 million cubic feet in 2020.100 Almost all the natural gas consumed in Arizona comes from other states via interstate pipelines that enter Arizona at the New Mexico border. Nearly three-fifths of the natural gas that enters the state continues on to California, and almost one-tenth goes to Mexico. Arizona uses about one-third of the natural gas that it receives.101 There is no natural gas underground storage capacity in the state.102 However, an above-ground liquefied natural gas (LNG) storage facility near Tucson came online in late 2019.103

The electric power sector uses the largest share of the natural gas consumed in Arizona. In 2020, it accounted for four-fifths of the natural gas deliveries to state consumers. The residential sector, where about one-third of Arizona households use natural gas as their primary home heating fuel, accounted for almost one-tenth of the state's natural gas consumption. The commercial sector used about 7%, and the industrial sector accounted for 4%. The transportation sector used a small amount as vehicle fuel.104,105 Overall, Arizona's per capita natural gas consumption was less than in all but 14 states and the District of Columbia in 2020.106,107

Coal

Coal is Arizona's most abundant fossil fuel resource. However, the state's last coal mine closed in 2019.108 There are two coal fields in Arizona—Black Mesa, in the northeastern part of the state on the Navajo and Hopi reservations, and Pinedale in east-central Arizona.109 The state's only coal mine was in the Black Mesa field, but it ceased operations in 2019 because its only customer, the coal-fired Navajo Generating Station, closed.110 That mine was one of the 30 largest coal mines in the nation, and in 2018, it accounted for about 1% of the nation's coal reserves at producing mines.111 The coal that supplies Arizona's remaining four coal-fired power plants, one of which is scheduled for retirement in late 2022, comes into the state by rail, primarily from New Mexico, Wyoming, and Montana. In 2020, industrial plants in Arizona received a small amount of coal (about 3% of the state's total deliveries) from Utah and Colorado.112,113 Overall, Arizona consumed less than 8.6 million tons of coal in 2020, half of the amount the state used two years earlier.114

Energy on tribal lands

Arizona is home to 21 federally recognized Native American tribes, and 3 of the 10 largest reservations in the nation, including most of the Navajo Nation's reservation which is the largest reservation in the United States.115,116 More Native Americans live in Arizona than in any other state except California and Oklahoma.117 As tribes and individuals, Native Americans hold more than one-fourth of Arizona's land—the largest share in any state and second only to Alaska in total acreage.118 Almost all of Arizona's energy mineral resources are on tribal lands.119

Almost all of Arizona’s energy mineral resources are on tribal lands.

Nearly all of Arizona's coal reserves are on tribal lands. All of the state's commercial coal reserves at producing mines were in the Black Mesa coal field on the Navajo and Hopi reservations. Until its closure in 2019, the Kayenta mine on the Navajo Nation's reservation was Arizona's only operating coal mine. Its sole customer was the state's largest coal-fired power plant, also on tribal land, but the plant closed in 2019.120,121

Several natural gas pipelines, electricity transmission lines, hydroelectric dams, and uranium resources are also located on Arizona's reservations.122 From 1944 to 1986, more than 500 mines on Navajo Nation land, mostly in Arizona, produced almost 30 million tons of uranium ore. Those mines are now abandoned.123 The largest producing oil field in Arizona—Dineh-bi-Keyah, known as The People's Field—is on the Navajo Nation reservation. The field produced about 19 million barrels of crude oil since its discovery in 1967 and accounts for almost all of Arizona's crude oil production.124,125 That field and other areas on the reservation contain reserves of helium gas, which is widely used in scientific, medical, and industrial equipment.126,127

Many Arizona tribes have significant solar, geothermal, wind, and biomass resources suitable for on-site generation of electricity.128 Three of the nation's five tribes with the greatest electricity generation potential from solar resources—both solar thermal and utility-scale solar PV—are in Arizona, as are two of the five tribes with the greatest potential for geothermal-sourced generation. The Navajo reservation has the largest solar and geothermal energy potential among all U.S. reservations.129 In 2017, the first large-scale solar PV facility on Navajo land came online with 27 megawatts of capacity.130 In 2019, the facility added another 28 megawatts of capacity.131 In 2021, the Navajo Nation signed leases for development of two new large solar projects on its tribal lands that will have an expected combined generating capacity of about 270 megawatts.132

The U.S. Department of Energy (DOE) funded several Arizona tribal energy projects during the past decade.133 In 2019, DOE awarded a grant to the Fort Mojave Indian Tribe for the development of a new solar PV array. The Fort Mohave Tribe, whose reservation sits astride the Colorado River and is in Arizona, Nevada, and California, is using the DOE grant to build a 2.3-megawatt solar array in Arizona. It is scheduled for completion at the end of March 2022.134 Fort Mohave is one of the few reservations in the nation that has a tribally owned and operated electric and natural gas utility.135 Many reservations in Arizona use small-scale solar PV for electricity generation.136 The San Xavier District of the Tohono O'odham Nation received a DOE grant to develop grid-tied solar PV systems for two tribal buildings. The 255-kilowatt project began construction in November 2020 and the planned completion is in April 2022.137 DOE-funded energy projects on tribal lands also include energy resiliency projects. The Hualapai Tribe is using a DOE grant to add resiliency to its Grand Canyon West (GCW) diesel-fueled micro-grid by adding a 993-kilowatt solar PV array with a 750-kilowatt battery storage system. The solar PV will meet half of GCW's energy needs when commissioned in the third quarter of 2022.138

Endnotes

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5 Roberts, Billy, Geothermal Resource of the United States, National Renewable Energy Laboratory (February 22, 2018).
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55 U.S. EIA, Solar Explained, Solar Thermal Power Plants, updated February 17, 2021.
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72 U.S. EIA, Monthly Densified Biomass Fuel Report, Table 1, Densified biomass fuel manufacturing facilities in the United States by state, region, and capacity, December 2021.
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94 U.S. EIA, U.S. Fuel Ethanol Plant Production Capacity, Excel File, U.S. Nameplate Fuel Ethanol Production Capacity, January 2021.
95 U.S. EIA, State Energy Data System, Table F25, Fuel ethanol consumption estimates, 2020.
96 U.S. EIA, Movements by Pipeline, Tanker, Barge and Rail between PAD Districts, Fuel Ethanol, Annual, 2015-20.
97 U.S. EIA, State Energy Data System, Table F16, Total Petroleum Consumption Estimates, 2019.
98 U.S. Census Bureau, Arizona, Occupied Housing Units, Table B25040, House Heating Fuel, 2019 American Community Survey 1-Year Estimates.
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