Proposed Freeze of Ohio’s Clean Energy Standards is Misguided, Not in the Best Interest of Consumers

, , senior energy analyst | March 27, 2014, 2:17 pm EDT
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The defeat last year of Sen. Seitz’s efforts to undermine Ohio’s clean energy laws was a hard won fight and was good news for Ohio. And with the recent approval of Ohio’s newest wind farm, a new  report showing how energy efficiency is our cheapest electricity resource, and the Kansas legislature smartly refusing to roll back their renewable energy standard, you would hope that opponents of clean energy would finally get the message that the public knows that investing in energy efficiency, wind, solar and other clean energy resources is good for Ohio.

But the Ohio legislature is once again considering legislation that would roll back the state’s successful renewable energy and energy efficiency standards.

Ohio Statehouse - Columbus

The Ohio Senate Public Utilities Committee is considering freezing the state’s successful renewable energy and energy efficiency policies. (Photo source: The Ohio Channel)

This time, rather than gutting the standards, clean energy opponents are calling for a “freeze”. But make no mistake – this is not a thoughtful pause. It is just the latest attempt by utility and fossil fuel interests to stop Ohio’s momentum towards a cleaner energy future.

Ohio’s clean energy standards are working for Ohioans. Energy efficiency programs are reducing electricity demand and driving down electricity costs. Renewable energy is producing clean, affordable electricity while providing economic development in Ohio communities. And both are reducing Ohio’s dependence on fossil fuels and the risks that accompany that dependence. If the legislature decides to freeze these standards, Ohio’s progress towards a cleaner, more diverse, and sustainable electricity sector will halt.

Unfortunately, the Legislators behind this attack are echoing the false and misleading claims from utility and fossil fuel interests that the standards will become too costly at some point in the future. Yet, these standards already have protective measures built into the law. In the case of efficiency, programs must be proven cost effective before they are approved. And the cost of meeting the renewable energy standard cannot, by law, increase rates by more than 3 percent.

Photo of Blue Creek Wind Farm in Northwest Ohio

The Blue Creek Wind Farm in Northwest Ohio is providing clean, reliable, and affordable electricity to power Ohio, including 25 percent of Ohio State University’s electricity needs. Source: chascarper.

So what’s the problem? The standards are currently being met cost-effectively. Consumers are protected from excessive or unexpected cost increases in the future. And we know that renewable energy and energy efficiency provide economic, environmental, and public health benefits to Ohioans while helping to address the rising risks of climate change and an overreliance on fossil fuels. The legislature should leave these standards alone—or better yet, focus on strengthening them so they are more in line with leading states in the region. That would encourage Ohio’s businesses and industries to continue building the clean energy future that Ohioans deserve.

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  • Tom Stacy

    “What’s the problem, you ask? Science minded people know the direct problems, yet some organizations continue to act as if they don’t. I believe this article makes “science” look more like “PR and lobbying.” Science can’t be scientific when “concerns” drive the scientists to argue to a predetermined outcome. We are ALL “concerned” about the environment. The difference is your group is determined that the concerns should eliminate the free market, while I believe the free market should eliminate the concerns.

    The problem, as you know, is wind’s
    1) low capacity factor
    2) low capacity value
    3) short device design life
    4) production patterns being out of phase with demand cycles
    5) low realized power density of land
    6) Maintenance costs are high because of the number of machines per realized MWH and each device is 300 ft. above grade
    You are welcome to argue only one side of the renewables issue – one where wind is a major player. But the more you do, the less the word “science” in your organization’s name seems to fit.

    Please don’t censor my comment this time. Censorship is for non-scientists. Thank you for your professionalism and defense of science and free speech.

    • Tom

      I appreciate you reworking your comments to be more in line with a productive and civil conversation.

      In response to the substance of your comment, I would point out that we are a science-based advocacy organization, meaning that we advocate for the use of science and sound analysis in the policy-making arena. We do not shy away from our advocacy role, but we do not advocate based on special interests or political ideology — we advocate based on the numbers. In a nutshell — the numbers (based on real-world experience and unbiased, sound analyses) tell is that renewable energy and energy efficiency work, are cost-effective, and provide a variety of benefits to consumers, including lowing the electricity sector’s contribution to climate change and environmental degradation — two of the issues that we are most concerned about. I would refer you to our report from September: Managing Risk in Ohio: The Role of Renewable Energy in Reliable, Diverse Power Supply that documents many of the risks associated with a continued over reliance on fossil fuels and discusses how renewables and efficiency can help mitigate those risks.

      Real world experience also tells us that clean energy standards are an effective, affordable and relatively simple way to accelerate our transition to a cleaner electricity sector.

      Your comments focus on wind power, but I would note that much of this fight is over Ohio’s energy efficiency standard. I hope we can both agree that efficiency is an important element of a sustainable and affordable electricity sector in Ohio, and that Ohio should continue to invest in this cost-effective, clean and readily available resource.

      You raise several issues with wind power that we do not ignore. However, it has been shown that high levels of renewable energy can be successfully integrated into the electricity sector while affordably keeping the lights on. We are not advocating for 100 percent renewable energy, but for a more diversified electricity portfolio that includes significant contributions from renewable energy resources. I would refer you to our report from last year: Ramping Up Renewbles: Energy You Can Count On that documents the real-world experience and reference several industry analyses that show how high levels of renewable energy penetration are achieved while maintaining reliability.

      Regarding your comment about free markets. UCS is certainly not an anti-free market organization. I would point out that the utility sector has never been a free market — and for good reason. Reliable and affordable access to electricity for everyone is a cornerstone of our economy and decades ago governments struck a deal with utilities — utilities received government created monopolies in exchange for a reasonable level of regulation to ensure the best interests of the populace are considered in the decision-making process. It is a system that has worked well, and some level of regulation is necessary to continue ensuring consumers are accounted for in the decision-making process. It is the process of finding the right balance between regulation and free markets that can be most vexing. That being said, clean energy standards move us towards cleaner, more sustainable, more reliable electricity while providing utilities with considerable flexibility in how they meet the standards and providing consumer protections against such things as unexpected or excessive costs.

      We believe the evidence shows that Ohio’s clean energy standards are a success and are doing what they were intended to do — affordably drive Ohio towards a cleaner, less risky electricity sector. For this reason, they should be left in place to continue working for Ohio.

      Again, thank you for you comment.


      • Tom Stacy

        Thanks Sam, but, no offense, those are really “canned” responses that are crafted for people who don’t really understand the electricity system very well. I doubt you are one of those people. But in case you are, here is what UCS appears to be ignoring (either out of a lack of awareness, a lack of understanding or for some other reason) mathematically with wind:

        1) There is never a shortage of electricity except at very specific times (usually hot summer weekday afternoons). Occasionally there are issues like we had in January this year. Regarding that one, it is a fuel transitional time in the electricity business. The gas transmission system inadequacy we can bring under control – unlike the persistent fuel supply problem with wind which we cannot.

        2) When we really Do have a shortage of electricity, we don’t need “maybe-watts”, we need firm capacity. If we want low cost electricity, then the need for that firm capacity at those specific times should drive investment, and nothing else. And we should seek the least cost means to dependably fill those shortage periods.

        3) The free market is so corrupted by the PTC and RECs that I am surprised you won’t admit it creates a parasitic situation for wind – able to bid negative into energy markets and have “margin” to spare even if they drive the clearing price negative. That’s really saying something! But it means wind is allowed to encroach on the capacity factors and margins of the dependable plants – plants we are still committed to paying for!

        Regarding efficiency, it works in a demand growth model but no a stagnant demand cycle as we are in and expecting to constinue. Prematurely deactivating plants of any kind is wasteful, goes against conservation, and hurts rate payers (and as deregulation gains ground will hurt investors first and ratepayers later). So does under utilizing them. With Ohio’s efficiency (MWHs/YR/capita or GSP) already increasing and demand expected to stay flat, the best way to keep rates low is to not induce the building of anything. That includes efficiency projects.

        As you point out, there is good reason to have enough power plants and to keep them operational, which means profitable. State regulation has been very good at this through economic growth periods, but rather bad at stopping the spending (and imposing ratepayer repayment commitments) when no more plants are needed for a while. Efficiency and renewables mandates are two perfect examples.

        NOW, as if this isn’t deep enough, the Federal EPA is doing their MACT coal plant firing squad routine. Isn’t that enough of an insult to ratepayers and our conservation sensibilities? We have to push more of what we have already built and which is fully functional, much of it paid off, providing far lower cost electricity than ANYTHING new we could build to replace it (and by replace I am talking about the only times we would fall short – mainly hot summer afternoons)?

        Why do you not reply regarding the capacity value issue? Science and math would tell us it is the most important aspect of this discussion because it is designed to be what determines whether we need new power plants or not. Do you understand capacity value, effective load carrying capability, loss of load probability and how these terms effect the value of wind generation compared to other technologies? Please answer because this is where the mathematics really matter. If you believe in the mathematics that matter, then we need to talk about this.

        Finally, lets not play a shell game between “diversification of fuels” and “cost per unit of emissions saved.” Let’s talk about one at a time, OK?

        I hope this post passes through the allowable speech filters. I tried hard to reign in my free speech rights knowing the standards are stricter here. Thanks!

      • Tom — I’ll offer a response because you raise some good issues, but please understand I’ll need to end this conversation and turn my attention to other matters after this.

        In the interest of brevity, I will not try and respond point-by-point. But I will offer these few thoughts:

        1) Regarding energy efficiency, you’re wrong that it is not beneficial in a stagnant demand cycle. Ohio’s energy efficiency programs are saving electricity for 1 cent per kilo-watt hour (see utility filings before the Ohio Public Utility Commission), far cheaper than any other available resource. There is an initial upfront investment necessary to reap those savings, but it is a good investment regardless of demand projections. Further, a subset of energy efficiency, called “demand response” specifically targets energy savings during those critical peak times you speak so much about. Ohio’s energy efficiency standard includes specific target for reducing peak demand through demand response programs.

        2) The PTC and REC’s do not corrupt the free market. They begin to level the playing field for renewable energy that must compete with fossil fuels that have received decades of permanent subsidies that dwarf the PTC and that have imposed additional costs on all of us in the form of public health and environmental degradation that is not factored into the cost of electricity from fossil fuels. Further, renewable energy’s ability to outbid fuel-intensive resources in the free market is not because of the PTC, but because they do not have to pay fuel costs and therefore have very low marginal costs (which, as I’m sure you understand, is the real basis for competition within the free market).

        3) Regarding the capacity value of wind during peak times (i.e. how much value it has in terms of providing reliable capacity at peak times), you’re correct, it is relatively low because wind is an intermittent resource and the best wind tends to come during off-peak hours. However, it is not, by a long shot, the “most important aspect of this discussion.” As I referred to in my previous reply, the grid operators are very adept at maintaining reliability in the face of constantly changing demand and supply, and studies have show the ability to cost-effectively integrate much higher levels of renewable energy without impacting reliability even at peak times. Further, another renewable resource, solar, performs very well during periods of peak demand (typically hot summer afternoons). Ohio’s renewable energy standard includes a solar carve-out, which, if left in place, will drive the development of this valuable resource.

        Perhaps most importantly, your comments fail to recognize the necessity to transition our electricity sector to a cleaner, more sustainable, 21st century system. You are correct that the cheapest way to produce electricity TODAY is to just keep running what is already built. But if you look just a few years down the road, you quickly realize that the status quo, (that you’re clearly advocating for), is not good enough. There are two critical elements to planning our electricity future. Cost is one — and the cost of our current system is rising, and risk is the other, and our continued reliance on fossil fuels is very risky — fuel costs and supply, climate change, water quantity and quality, air quality, reliability risks, public health risks — just to name a few of the big ones.

        We now have the ability to affordably reduce our dependence on fossil fuels while keeping the lights on and building a new clean energy economy. Energy efficiency is, hands down, our cheapest, cleanest and most readily available resource to help meet future electricity demand. In fact, a new report just verified that once again. And we are quickly approaching a time when it will be cheaper to develop new renewable energy resources than it will to be to continue operating old and inefficient fossil fuel plants. We are already beginning to see this in various parts of the country.

        The decision to do nothing is still a decision, and according to the data that I see every day, doing nothing is a bad decision. We should be actively transitioning our electricity sector to take better advantage of the affordable, low risk and sustainable energy sources that are readily available.

        Well that’s my attempt at being brief. Perhaps we’ll have a future chance to discuss the more technical aspects of our differing perspectives in a more appropriate venue. Thank you again for your comments.