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Arizona's Struggle with Solar Energy

July 10, 2009

There’s a bill sitting on Arizona Governor Jan Brewer’s desk that would provide tax incentives for building renewable energy manufacturing facilities in the state.

JULY 13 UPDATE: Governor Brewer has signed the solar incentives legislation into law.

It’s not surprising that economic development advocates are pointing to solar as a growth opportunity for Arizona. That’s sort of like saying that coal was a growth opportunity for Newcastle.

What’s surprising is that the bill has had such a rocky ride on its way to the governor’s desk.

Arizona holds lessons for the country at large.

First, the background. As a result of surging population growth, Arizona’s economy boomed with construction. When housing took a dive, so did the state’s economy.

Economic development experts have called for diversifying Arizona’s economy. Renewable energy manufacturing, especially solar, seems a natural fit for the state. The state has a manufacturing labor force and plenty of land.

There’s also the small matter of Arizona’s abundant sunshine. That creates an opportunity to serve local demand for solar equipment as well as the colossal market next door in California, no slouch either when it comes to sunniness.

Arizona’s sunshine isn’t enough, however. Other states, Oregon and New Mexico among them, got the jump on Arizona and already offer incentives to solar manufacturers. State Senator Michele Reagan, one of the five Republicans who sponsored the incentives bill, said her state has done nothing to capitalize on renewable energy’s national growth.

In the last two years, Arizona has lost “every major opportunity” the state had to land solar manufacturers, the Greater Phoenix Economic Council’s CEO told a state Senate committee. Time’s a wasting for Arizona to get into the competition. According to the economic council, a dozen or so solar companies will make decisions this year on siting manufacturing plants.

But ideology reared its head against the bill in both the state Senate and House. There’s a strain of thinking that the government should not lift a finger to stimulate economic growth. That’s a respectable point of view, but government has been in the economic development business since the days of Alexander Hamilton, whose meddling ways planted seeds that turned the U.S. from a rural backwater into the largest industrial economy in the history of the world.

It’s cheeky to ask, but one has to wonder how that point of view’s adherents in the state Legislature feel about the drinking water delivered daily by the Central Arizona Project, built courtesy of Uncle Sam.

Arizona’s lesson for the rest of the country? Economic development doesn’t happen in a vacuum. Industries, including clean energy and environmental industries, will locate to places where they are welcomed with carefully drawn public policies. They will stay away from places where they aren’t.