OK, You Met Your Renewable Goals — Now What?
State laws boosting wind and solar power have seen remarkable success over the past two decades.
But in the past couple of years, the role of renewable portfolio standards — state requirements for utilities to supply a minimum amount of retail electricity from renewable energy — has waned, according to a Lawrence Berkeley National Lab study. In some cases the use of renewables has grown even without mandates, but many environmental leaders contend they are still necessary to drive growth in the industry.
As half of the 29 states with a renewable portfolio standard (RPS) reach their final target year by 2021, lawmakers deciding whether to extend the targets face a fundamental question: Has renewable energy become economically viable enough for utilities to embrace it without a nudge from government? The answer is likely to depend largely on regional differences. The Northeast, Mid-Atlantic and West have relied mainly on mandates to drive growth, while booming wind capacity in Texas and the Midwest already has far outpaced RPS goals.
Politics also will likely play a role. California this week became the second state, following Hawaii, to require that 100 percent of its electricity come from renewable sources by 2045. “Today California sends an unmistakable message to the nation and the world: Regardless of who occupies the White House, California will always lead on climate change,” Democratic state Sen. Kevin de León, who wrote the bill, said during the bill signing.
President Donald Trump, by contrast, has vocally supported the coal industry, and his administration has moved to roll back several climate regulations and to leave the Paris Climate Accord, under which signatories pledged to reduce their greenhouse gas emissions. Several states, Texas among them, have seen their oil and natural gas drilling surge in the past two years with the rise in oil prices.
Source: National Conference of State Legislatures
States’ renewable energy mandates vary considerably, typically ranging from 10 to 50 percent of a state’s electricity production. But energy companies have been able to meet them in almost every case. Just two of the 29 states haven’t come within 5 percent of their mandate for their most recent compliance year. (Another eight states have goals rather than required standards.)
Renewable portfolio standards are credited with spurring half the growth in renewable energy production since 2000. Factors besides state mandates that have driven renewable energy growth include federal tax credits, cost declines and corporate renewable energy goals.
The design of standards is key, according to a study published in July in the journal Nature Energy. The most effective renewable mandates have been stringent and mandatory, the study found. States that have a conducive economic climate and good resources — such as strong wind or abundant sun — also were found to achieve greater success.
This year, lawmakers in Massachusetts, Connecticut and New Jersey voted to increase the amount of electricity that must come from renewables. In November, voters in the sun-drenched states of Arizona and Nevada will weigh in on similar initiatives.
The debate over the controversial Arizona measure exemplifies the nationwide split on renewable standards. The measure would raise the amount of energy that must come from renewable sources to 50 percent by 2030, up from the 15 percent by 2025 standard set in 2006.
“At the time, utilities said, ‘We’ll never achieve that. It’s crazy. You’re burdening us with a mandate we’ll never be able to achieve,’” said DJ Quinlan, spokesman for Clean Energy for a Healthy Arizona, which is pushing the ballot measure. “And then of course it turns out to be really easy for them.”
Arizona Public Service Co., the largest utility in the state, is on track to meet the state’s current renewable energy target, but it has also been the chief backer of Arizonans for Affordable Electricity, which opposes the measure, saying it would increase consumers’ bills.
Matt Benson, a spokesman for the group, said the measure would make the state’s nuclear plant vulnerable to a shutdown — if the state gets too much energy from renewable sources, it won’t be cost-effective to keep the plant running.
Quinlan said Arizona, which boasts an average of nearly 300 sunny days a year, doesn’t take full advantage of one of its most valuable resources, getting only 5 percent of its energy from solar power in 2016.
But the more ambitious plan has hit roadblocks. The state’s utility regulatory body first put the current 15 percent standard in place. This year, Arizona lawmakers lowered the penalties for any utility that doesn’t meet the standard to no more than $5,000. Under prior law, the state’s utility regularity board could force them to comply.
Arizona Public Service asked lawmakers for help in thwarting the renewable energy standard, and the $5,000 penalty law passed shortly thereafter, according to the Arizona Republic. The utility also sued to keep the renewable energy measure off the ballot, arguing it lacked enough signatures, but lost that case in court.
“For a company that made $488 million last year, that’s obviously the change under the couch cushion,” Quinlan said of the utility.
State Sen. Sonny Borrelli, the Republican legislator who sponsored the penalty legislation, did not respond to a request for an interview.
Nationwide, in 2016 and early 2017, lawmakers introduced 181 bills on renewable portfolio standards, a Lawrence Berkeley National Laboratory report said. Only 13 were enacted, seven of which strengthened the standards and six of which were considered neutral; none weakened the mandates, the report said.
Galen Barbose, a research scientist and the author of the Lawrence Berkeley National Laboratory report, said regional differences matter. In the Midwest, states have not relied as heavily on standards to drive growth in the wind industry. Once modest standards were met, the report said, the industry continued to grow on its own. But in the mid-Atlantic and up the coast to New England, growth in wind energy has more closely tracked timetables set by the state.
Specifically, in 2016, between 70 and 90 percent of renewable energy additions in the Northeast, Mid-Atlantic and West served demand created by renewable energy portfolio policies, the report said.
Texas, by contrast, reached its mandated level of new renewables in 2008, seven years ahead of schedule, and the next year surpassed its 2025 goal. It has never extended its mandate. “When you think about how renewables cost is declining over time, in some states you may see what is happening in Texas, where it’s just becoming the lowest-cost resource that utilities want to buy,” said Jenny Heeter, a senior energy analyst with the National Renewable Energy Laboratory, also funded by the U.S. Department of Energy.
Only one state, Kansas, has succeeded in repealing its standard – instead making it voluntary – but utilities had already surpassed the 20 percent renewables target. In other cases, efforts to stifle renewable energy bills have failed.
Last year, Maryland lawmakers overturned a veto by Republican Gov. Larry Hogan of a standard that requires 25 percent renewables by 2020. While Hogan lauded that goal, he said the bill represented “a tax increase that will be levied upon every single electricity ratepayer in Maryland.”
Heeter said few bills would scrap the requirements altogether. Instead some bills would undermine the requirements either by reducing penalties, like in Arizona, or including hydroelectricity as a renewable despite the environmental impacts of large dams, Heeter said. But most states are setting more ambitious standards.
“It’s not an even split by any means,” she said. “Most states are expanding them.”
Utility companies, however, say the standards are at times too ambitious, sparking reliability and affordability concerns.
“Many of our members feel that they want a balanced portfolio. They don’t want to just get renewables for the sake of renewables,” said Paul Zummo with the American Public Power Association, which represents publicly owned utilities. “They want to make sure to maintain reliability and ensure that the services they are providing are affordable. So they’re careful to not make promises or promise goals that may impact reliability and rates.”
Many observers, however, argue utilities can’t be entrusted to embrace renewable energy, even though it has become cheaper.
“I think we’re seeing a lot of opposition driven by the utility companies holding on to this antiquated business model and doing everything they can, frankly, to keep using dirty energy for as long as possible,” said Ben Hellerstein, state director for Environment Massachusetts, which advocated for the state to adopt more ambitious renewable requirements than ultimately passed this year.
Sam Sankar, executive director of the Environmental Council of the States, which represents state environmental regulators, said the mandates help push growth in technology to make them more affordable. While prices have dropped, he added, it hasn’t been enough to spark sufficient renewable energy. “We’re not there yet.”