Quantcast
Don't Miss
Home / News / Energy / Environment / States back away from renewable energy mandates
More than half the U.S. states with laws requiring utilities to buy renewable energy are considering ways to pare back those mandates after a plunge in natural gas prices.

States back away from renewable energy mandates

A train transports turbine blades for Vestas Wind Systems A/S in Colorado in this undated handout photograph released in 2009. Vestas has recently fired 10 percent of its workforce at two Colorado factories after opposition from Republican lawmakers delayed the extension of a federal tax credit for wind power. (Bloomberg News File Photo: Vestas Wind Systems A/S)

More than half the U.S. states with laws requiring utilities to buy renewable energy are considering ways to pare back those mandates after a plunge in natural gas prices brought on by technology that boosted supply.

Sixteen of the 29 states with renewable portfolio standards are considering legislation that would reduce the need for wind and solar power, according to researchers backed by the U.S. Energy Department. North Carolina lawmakers may be among the first to move, followed by Colorado and Connecticut.

The efforts could benefit U.S. utilities such as Duke Energy Corp. and PG&E Corp. as well as Exxon Mobil Corp., the biggest U.S. oil producer, and Peabody Energy Corp., the largest U.S. coal mining company. Those companies contributed to at least one of the lobby groups pushing the change, according to the Center for Media and Democracy, a Madison, Wis.-based nonprofit group. It would hurt wind turbine maker Vestas Wind Systems A/S and First Solar Inc., which develops solar farms.

“We’re opposed to these mandates, and 2013 will be the most active year ever in terms of efforts to repeal them,” said Todd Wynn, task force director for energy of the American Legislative Exchange Council, or Alec, a lobby group pushing for the change. “Natural gas is a clean fuel, and regulators and policymakers are seeing how it’s much more affordable than renewable energy.”

President Jack Gerard of the American Petroleum Institute, a trade group for the oil and gas industry, along with the former governors of Colorado and New Mexico spoke about the issue Tuesday in New York at a conference hosted by Bloomberg New Energy Finance.

Hydraulic-fracturing technology opened aging reservoirs for natural gas drilling, driving prices down about 72 percent from their record 2005 high. That’s making more expensive wind and solar power projects harder for utility regulators to justify, according to Alec and its allies, which include the Heritage Foundation in Washington.

“The shale revolutions are not just having ramifications politically and economically in the U.S. but also around the world,” said Michael Liebreich, chief executive officer of Bloomberg New Energy Finance. “In 17 years, not that far away, we could reach peak energy use. This is not generally accepted.”

Threat to wind

Killing support for renewable-energy policies threatens sales at companies from wind-turbine makers General Electric Co. and Siemens AG to SolarCity Corp., the San Mateo, Calif.- based rooftop energy developer.

The push at the state level replicates efforts in Washington. Opposition from Republican lawmakers delayed the extension of a federal tax credit for wind power, prompting Vestas, the biggest turbine maker after GE, to fire 10 percent of its workforce at two Colorado factories.

“There haven’t been any outright repeals yet, but we’ve seen some watering-down,” said Justin Barnes, senior policy analyst at the North Carolina Solar Center. “Activity against renewable portfolio standards has been increasing in the past year. Their arguments are mostly on cost.”

The Raleigh, N.C.-based research group is supported by the Energy Department and operates the DSIRE database of state incentives.

U.S. investment in renewable power and energy efficiency fell 54 percent last year to $4.5 billion as government support waned, according to data compiled by Bloomberg. The level may slip again this year if states dilute their requirements, which have pushed utilities to contract power from renewable providers and scale-back use of coal- and natural gas-fired generation.

Alec wants to repeal state mandates, arguing that the free market is a better way to determine the most cost-effective source of power, Wynn said. It typically drafts model legislation for state lawmakers to use as a blueprint when drafting bills, including the Electricity Freedom Act, which was published in October.

The anti-renewable mandate effort is also fueled by the Heartland Institute, the lobby group that’s pushing to repeal clean-energy goals that it says increase power prices, cost jobs and do little to improve the environment, according to Heartland’s website. Officials from the organization weren’t available for comment.

North Carolina’s renewable requirements will cost state ratepayers as much as $1.8 billion from 2008 to 2021, the Heartland Institute said in an April 2 policy statement, citing a report from the John Locke Foundation and Beacon Hill Institute.

Repealing the state’s RPS policy “would help increase disposable income, attract more business investment and make energy more affordable for consumers,” according to the statement.

A Heritage Foundation spokesman referred questions to Alec.

“We expect in the next year or two that state-based incentives will disappear,” said SolarCity Chief Executive Officer Lyndon Rive. “Whenever you see the effort, peel the onion and find out who’s behind it, who’s funding the effort. It’s very annoying that people can get away with the shell efforts and call it the people’s voice when it’s funded by coal.”

Legislative debate

North Carolina lawmakers began debating this month a bill that would cap utilities’ required purchases of renewable energy at 6 percent of demand in 2015, half the current target, and eliminate the requirement in 2021.

“North Carolina is leading the nation in protecting consumers from the mandates for high-cost energy,” Wynn said in an interview. “It will show other states how to follow suit.” North Carolina’s bill revises the targets in the existing 2007 law and isn’t based on Alec’s template legislation.

A House committee already approved it and General Assembly Majority Whip Mike Hager, who introduced the legislation in March, said he expects it will pass this year.

“We could never have imagined in 2007 such an abundance of domestic natural gas,” Hager said in an interview. “We need that Marcellus shale gas to offset the high cost of renewables and prevent electricity prices from rising further. It’s like raising children: they need to grow up learn to live in the real world.”

Hager is a Republican whose top campaign donors include Duke Energy and the Charlotte, N.C.-based utility owner’s Progress Energy unit, according to the National Institute on Money in State Politics, a Helena, Mont.-based nonprofit group. He expects that the bill will pass through the GOP-controlled Legislature and that Gov. Pat McCrory, also a Republican, will sign it.

Duke hasn’t taken a position on the North Carolina bill, said Jeff Brooks, a spokesman who confirmed the company has supported Alec.

Colorado’s state Senate passed a bill April 16 that would increase the amount of energy utilities must get from renewable sources, and also expands the definition to include nonrenewable sources such as methane produced from coal mining.

Connecticut is following a similar strategy, by including large hydroelectric plants in its definition of renewable energy. That will help utilities meet the state’s goal of 20 percent renewable energy by 2020, said Nick Culver, an analyst at New Energy Finance in New York.

“Connecticut has thrown up the white flag on its ambitious renewable targets, and is now negotiating its terms of surrender,” Culver said. “Instead of simply easing back targets, they intend to widen eligibility criteria to include imported hydropower from Canada that would have been built regardless, which amounts to pretty much the same thing.”

Proposed bills

Other states considering similar policies include Missouri, Ohio and Kansas. Thirty of the proposed bills in those states were deemed “significant,” meaning they have the potential to affect demand for renewable power, by the North Carolina Solar Center, a partnership between the Energy Department and North Carolina State University that tracks such activity for the U.S. Energy Department.

Alec’s Wynn said groups in six additional states are planning attacks on renewable-energy policies.

The wind and solar industries are beating back efforts to reduce demand with their own lobbying, said Carrie Hitt, vice president of state affairs at the Washington-based Solar Energy Industry Association.

“This is a deliberate campaign by conservative think-tanks, the Heartland Institute and Alec to overturn renewable energy policy that threatens the fossil industry,” Hitt said in an interview.

3 comments

  1. Wow, aren’t we short-sighted?! I guess if we kick the can far enough down the road, a meteor or something else will wipe us out before renewable energy can gain enough of a foothold to buy some Republican representatives.

  2. The US is a disgrace of two extremes, both fascist in their picking of winners and losers.

    The right favors fossil and nuclear fuels. They claim to support free markets as they favor monopolization by utilities. They misrepresent the gas boom by crediting technology when the truth is it started after the Bush administration exempted shale gas from the Safe Drinking Water Act.

    The left favors wind and solar. They have preserved utility monopolies while allowing them to select the renewable energies. The left has also favored wind power with about 6 cents per kWh in taxpayer subsidies (PTC, federal and state accelerated depreciation, etc.) and pressured utilities to spend three times as much in transmission costs because wind is intermittent.

    Last week, a new DOE report indicates that as wind power is added “Relatively inefficient single cycle gas turbines are likely to be the only practical option for load-following on the grid.” This means wind will supply power only 34% of the time and will be backed up with peaking fueled by natural gas the other 51% of the time. Since peaking costs are about 12.4 cents per kWh, wind power will likely require backup costs of about 6 cents per kWh. This more than doubles costs compared to just using combined cycle fueled by natural gas at 6.6 cents per kWh. Moreover, wind plus peaking uses as much natural gas and emits as much carbon dioxide as just using combined cycle.

    The US needs free markets, or feed-in tariffs like the rest of the world, that offer opportunities to lower-cost renewable energies like biomass cogeneration and geothermal.

  3. The headline of this article may mislead the average reader as actually most states are standing firm on their renewable standards, while some are considering increases. Also, natural gas prices recently reached two year highs.

    For the full story on state renewable standards and why renewables such as wind power are great compliments to natural gas, please visit: http://www.powerofwind.com/blog/post/fact-check-the-real-story-state-rpss-hold-strong_1

Leave a Reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

 

Scroll To Top