Representatives Poe (R-TX), Thompson (D-CA), Welch (D-VT), Gibson (R-NY), and Gardener (R-CO) simultaneously introduced an identical bill in the House.

UCS joined 235 other groups to support the MLP Parity Act. This diverse group of supporters includes manufacturers, project developers, utilities, financial institutions, non-profit organizations, trade associations, and organized labor.

What are MLPs?

MLPs are a corporate structure that can raise capital by issuing shares of ownership in the stock market, but at the same time enjoy tax benefits not available to typical corporations. While profits from publicly traded corporations are taxed at both the corporate and shareholder levels, income from MLPs is taxed only at the shareholder level because it is treated as a partnership for tax purposes. Established by Congress in 1980, MLPs have been used extensively by the oil, natural gas, and coal industries. Investment in energy-related MLPs has grown from $2 billion in 1994 to $241 billion in 2012, according to Bloomberg New Energy Finance (BNEF).

To be considered an MLP, 90 percent of the partnership’s gross income must be from passive income, such as royalties, interest, and rents from real property, rather than income from business operations. An exception is made, however, for income from production, processing, and transportation of minerals and natural resources. Under this exception, a significant amount of investment has been channeled through MLPs to conventional energy infrastructure such as oil and natural gas pipelines and exploration and coal mining, transportation, and processing. Income from geothermal energy is also eligible. The Emergency Economic Stabilization Act of 2008 expanded MLP-eligible income sources to include transportation of ethanol and biodiesel.

Expanding MLPs to include clean energy technologies
Source: Senator Chris Coons. 2013. Master Limited Partnership Parity Act White Paper. Online at: http://www.coons.senate.gov/MLP

Expanding MLPs to provide tax parity with fossil fuels

The Senate and House bills would expand the definition of MLPs to include 14 new technologies and fuels. This includes several renewable energy technologies such as wind, solar, biomass, marine, hydropower, and biodiesel. However, it would also include energy efficient buildings, as well as several technologies that could use either renewable or fossil fuels such as fuel cells, combined heat and power (CHP), carbon capture and storage (CCS), and electricity storage.

The benefits from these changes could be significant. For example, BNEF concludes that vehicles such as MLPs that make “project investments a more liquid option and that allow…projects to tap a broader pool of investors through capital markets” will be a significant driver in unlocking lower costs of capital in the future. BNEF projects that the cost of capital for financing the commercial operation of renewable energy systems could decrease from a 14 percent cost of levered equity to a cost of 8-12 percent. Such a decrease in the cost of capital would translate into a significant decrease in the cost of generating electricity from renewable energy sources.

MLPs are an important complement to other renewable energy policies

The renewable energy industry currently relies on a relatively small number of investors that require relatively high rates of return. The recent financial crisis greatly exacerbated this problem. By giving renewable energy projects access to a much larger pool of investors and lower cost financing, MLPs help address a specific market barrier that’s currently inhibiting development. In this way, they provide an important complement to other policies such as federal tax credits and state renewable electricity standards, which have been the primary drivers of the recent growth in renewable energy in the U.S.  These policies have also created new jobs, reduced emissions, and helped drive down costs, making renewable technologies more cost-competitive with conventional energy sources.

MLPs have played a similar role in the oil, gas, and coal industries over the past 30 years by supplementing dozens of other federal and state tax incentives available to those industries. For example, shale gas developers have received approximately $10 billion in tax credits, and millions in research and development funding, that have helped fuel the shale gas revolution.

Giving renewable energy projects access to the low cost financing available from publicly traded MLPs would help level the playing field with fossil fuels, while giving all Americans the opportunity to invest in the transition to a cleaner, low-carbon economy.

How big is your state’s role?

The states have always had much more to say — and much greater influence — over power plant decisions because they control several pieces of the puzzle:

• States adopt renewable and clean energy standards. In 29 states and the District of Columbia, state law requires a portfolio of power plant types, with a requirement some fraction of power come from alternative, renewable, or low-carbon technology. This has been good policy for the average consumer from the beginning of such policies when Iowa sought wind development in its state. Carbon emissions and fuel costs are lower for everyone due to these policies. Tell your state legislator the most powerful energy policy at state level is a clean energy standard.
• States guide funding of energy efficiency.  Cost-effective energy savings opportunities are everywhere in existing buildings and homes. States, not the Federal government, decide how much will be spent on utility programs to improve energy efficiency, and how to bring those savings to low-income customers. Where $1 spent on reducing heating and cooling bills saves $2.57 for consumers, AND reduces CO2 emissions, AND lowers the cost for future grid and power plant needs, every state has plenty to do right now on this. Your public utility commissioners and governor should hear about this, from you.
• States approve nuclear plant costs. In the few examples of private companies building new nuclear plants, the state has shifted the costs to utility customers. Since nuclear plant construction costs have been tremendously difficult to predict, and delays add cost and cash flow problems, states favoring the nuclear choice assure the owner’s revenues will come from consumers long before the plant is completed and producing electricity.

Your day has come

There are a few ways we can make energy choices while the the EPA works through its delay. In addition to the points to raise with state decision-makers described above, you can be a decision maker in your own home.

• If you want to be a prosumer, and generate electricity by adding solar panels, you can join more than 6000 building owners per month doing just that.
• If you want to be a cooler, smarter consumer, UCS has written a book, Cooler Smarter: Practical Steps for Low-Carbon Living, about individual choices that are most sensible for reducing climate impacts and saving money. Check out the Cooler Smarter web tool to get started.

Renewables are providing a significant source of electricity in many states and countries

Wind and solar power increased nearly four-fold in the United States from 2007 to 2012, and has been growing at even higher rates in other countries. New U.S. records were set for both wind and solar in 2012, which provided more than half of the total new electricity generating capacity installed in the country. Because of this growth, many states and countries are already achieving high penetrations of these clean power sources. For example:

• Wind power provided more than 10% of the electricity generated in nine states in 2012, with Iowa and South Dakota leading the pack at 24%.
• Denmark is the global leader, with wind power providing 30% of the country’s electricity in 2012, followed by Portugal (17%), Spain (16%), Ireland (13%) and Germany (11%).
• Germany is the global leader in solar photovoltaics (PV), which can currently provide more than half of the nation’s electricity on hot sunny days when demand is high.
• California leads the U.S. in installed solar PV capacity, followed by Arizona and New Jersey, which can all supply 5% or more of electricity demand on sunny days.
• On specific days in 2012 and early 2013, wind power supplied more than 30% of Texas, Kansas, and Oklahoma’s electricity; 25% of the Midwest’s elec­tricity; and more electricity than hydropower for the first time in the Pacific Northwest.

Utilities are integrating high levels of renewable energy

Some of the nation’s largest utilities are also relying on significant levels of renewable energy.  For example:

• Renewables supplied 21% of the electricity Southern California Edison (SCE) sold to its 14 million customers in 2011, which included 7.5% from wind and solar. SCE projects that wind and solar will supply 18% of its retail electricity sales by 2017, as the utility works to meet California’s renewable electricity standard (RES) of 33% by 2020.
• In Minnesota, Xcel Energy projects that wind and other renewable sources will rise from 19% of annual electricity sales in 2012 to 30% by 2020, to meet the state’s RES.
  

  Xcel Energy’s Cedar Creek Wind Farm near Grover, CO, helped the utility generate 57 percent of its electricity from wind one night in spring 2012—a U.S. record.
  Source: National Center for Atmospheric Research 2011.

We have the tools to significantly ramp up renewable energy and maintain reliability

Transitioning to a system that relies heavily on wind and solar does pose challenges to man­aging the electricity grid. After all, the wind doesn’t always blow and the sun doesn’t always shine. However, meeting electricity demand in the face of variability and uncertainty is not a new concept for grid operators. They already make adjustments for constantly changing demand, planned power plant outages for maintenance, and outages stemming from severe weather, equipment failure, and other unexpected events. Adding variable energy sources to the system may increase the complexity of the chal­lenge, but does not pose insurmountable technical problems or significant costs.

Fortunately, we have the tools to significantly ramp up renewable energy use and keep the lights on, while lowering costs and reducing emissions. These tools include:

• Geographic dispersion. Integrating wind and solar projects over larger areas helps smooth out an uneven supply of power from individual projects.
• Better forecasting. Some larger utilities and regional grid operators are using weather observations, meteorological data, com­puter models, and statistical analysis to project wind and solar output, reduce power and reserves from fossil fuels, and cut costs.
• Improved scheduling. Because wind and sunlight can fluctuate, allowing operators to schedule power delivery on a sub-hourly basis can make the grid more efficient.
• More flexible power plants. When wind and solar power diminishes, grid operators can use reserve power sources, such as hydro and quick-starting natural gas plants, to fill the gap.
• Building new transmission lines to deliver high-quality wind and large-scale solar from remote areas to cit­ies, and to provide stronger links between regional grids and utilities.
• Managing customer demand. Paying customers to reduce electricity use when demand is high is often the least expen­sive way to manage variability on the grid.
• Creating a smarter grid. New technologies in sensing, communications, control, and power electronics can enable grid operators to integrate larger volumes of renewable power.
• Storage. Several technologies are now available to store electricity from renewables for use when demand is high and to manage variability on the grid.

With strong policies, renewable energy could provide 80% of U.S. electricity use 2050

With these tools in hand, we can ramp up renewable energy to much higher levels. At least 18 countries have bind­ing renewable electricity targets. For example, Germany has a binding target to produce at least 35 percent of its electricity from renewable sources by 2020, rising to 80 percent by 2050. While the U.S. does not have a national target or other long-term policy to expand the use of renew­able energy, 29 states have adopted renewable standards.

As I described in a blog last August, a 2012 study by the National Renewable Energy Laboratory (NREL) found that renewable energy technologies available now could supply 80 percent of U.S. electricity in 2050. Using many of the tools described above, the study found that wind and solar alone could provide nearly half of U.S. electricity in 2050, while meeting demand every hour of the year in every region of the country. To get there, we need to make smart investments and policy decisions today that move the country toward a cleaner energy future.

Data Worthy of Diving

The report, from GTM Research and the Solar Energy Industries Association (SEIA), points out that the 2012 growth has taken both solar photovoltaics (PV) and concentrating solar power (CSP) to notable new heights. By year’s end, the 3,313 new megawatts meant that the U.S. had 7,221 megawatts of PV and 546 megawatts of CSP online, enough to meet the energy needs of some 1.2 million homes.

The report offers all sorts of other tasty tidbits, such as:

• 12 states installed more than 50 megawatts last year, compared with eight the year before.
• California became the first state to install more than 1,000 megawatts in a single year.
• The year’s total came from more than 90,000 solar installations — 83,000 of those in the residential market.
• The “non-residential segment” — commercial, governmental, and non-profit systems — accounted for more than 1,000 megawatts of the capacity installed in 2012.
• Over half (54%) of the new megawatts came in the form of utility systems, more than 150 of them.

The report also has cost trend data that offers great news for customers of all stripes, as shown in the graphic at right from the new report.

On the home front, the report notes:

The residential market saw meaningful growth in California, Arizona, Hawaii, Massachusetts, and New York, as average residential system prices dropped nearly 20 percent in one year — from $6.16 per watt in Q4 2011 to $5.04 per watt in Q4 2012.

Ten States to Beat, and a Couple of Reasons Why

The GTM/SEIA research also offers an informative (and inspiring) Top 10 list of the states hosting the most new solar in 2012. The list includes sun-drenched states such as California, Arizona, Colorado, Texas, Nevada, and Hawaii, but also New Jersey, North Carolina, Maryland, and Massachusetts.

So what’s driving the leaders? In California, it’s the California Solar Initiative and the broader Go Solar California effort, which are aiming to help Californians install 3,000 megawatts of solar by 2016. That push is in addition to the state’s nation-leading renewable electricity standard, which is driving development of renewables, including large-scale solar, in California and neighboring states.

At number 6 on the top 10 list, Massachusetts is particularly noteworthy — and I’m not just calling it out because of where I hang my hat these days. The Bay State, the northernmost entry on the list, also models the power of productive policy, even in a state not known for its abundance of sunshine (though it’s always beautiful here). It’s on the list because of the state’s strong commitment to solar, to taking advantage of the state’s history of innovation and grabbing hold of the economic opportunities solar represents.

Always sunny in Massachusetts (Credit: J. Rogers)

A big driver in Massachusetts is the state’s solar carve-out. The state is actually one of 16 (plus D.C.) that include solar carve-outs or multipliers for distributed generation (smaller systems closer to customers) in their renewable electricity standards. What do these terms mean? The DSIRE website explains:

A credit multiplier for solar offers “extra credit” toward compliance for energy derived from solar resources. Solar carve-outs, which are more common than credit multipliers, require that a certain percentage of the [renewable electricity standard] be met specifically with solar energy.

SEIA suggests that carve-outs for solar are important because most renewable electricity standards “tend to favor lower cost renewable technologies, and these programs provide incentives for the deployment of more costly technologies.”

What Next?

In 2013, the interplay between costs and policies and markets that has driven the successes in California, Massachusetts, and elsewhere will continue. The GTM/SEIA report predicts the market will keep growing, though at a more moderate pace than the sector’s stunning 82 percent annual growth rate from 2009 to 2012.

Just how right that prediction is will depend not just on cost trends and other market factors. It will also depend on the policies that stay in place or get strengthened — or weakened — and in how the market and customers respond. Solar’s a field well worth watching, in any case.

Feature image: Courtesy of NREL

Historic (under)funding for clean energy research

After World War II, the U.S. government began to take a more active role funding research to develop new forms of energy and support economic growth. When the Department of Energy (DOE) was created in 1977, all of the energy funding was consolidated under its administration.

But, the the graph to the right shows that even in the last 35 years, as the country has been forced to come to grips with the public health and national security implications of relying on dirty and potentially unsafe fuel sources, funding renewables and energy efficiency were still lower priorities than funding fossil fuel or nuclear technologies.

However, the playing field has been somewhat leveled in the last 10 years, in large part to due to the focus on clean energy in the American Recovery and Reinvestment Act of 2009, otherwise known as the “stimulus bill.”

Data source: Table 1 from Sissine, F. (2012) “Renewable Energy R&D Funding History: A Comparison with Funding for Nuclear Energy, Fossil Energy, and Energy Efficiency R&D.” Congressional Research Service.

What we’ve achieved

By directing more of our investment dollars towards clean energy innovation, we’ve created vibrant, new markets for renewable energy technologies that can no longer be considered “alternative.”

Between 2007-2012,  wind capacity nearly tripled and solar photovoltaic (PV) capacity grew by a factor of thirteen. Wind power was the fastest growing source of electricity generation capacity in 2012, beating even the growth in natural gas. Records amounts of solar (PV) were installed in 2011 and 2012. Today, there is enough solar power in the U.S. to supply over one million average American households.

These clean energy investments have helped significantly lower the price of renewable energy and benefited domestic manufacturing. The amount of made-in-the-USA equipment for wind farms grew from roughly 35 percent in 2006 to nearly 70 percent by 2011.

What’s at stake now

The Budget Control Act of 2011 capped the amount of federal discretionary spending, which includes almost all federal R&D, to remain essentially flat (accounting for inflation) over the next decade. This alone represents a decrease of about $1 trillion. If the across-the-board “sequester” cuts happen, the American Association for the Advancement of Science (AAAS), estimates that total R&D cuts would be at least $50 billion over the next 5 years.

Budgets for the National Science Foundation and the DOE, including programs at national labs and federally funded research at companies and universities, would be cut by $2.1 billion and $4.6 billion, respectively. These cuts could be even more extreme if  Congress decides to shift more of the discretionary spending-reduction burden onto non-defense programs and away from defense programs.

In a letter DOE Secretary Steven Chu sent to senators earlier this month, he outlined specific implications of the cuts to clean energy progress, and warned that the looming sequester would “decelerate the nation’s transition into a clean energy economy, and could weaken efforts to become more energy independent and energy secure.”

It’s clear that avoiding sequestration will require a colossal effort on the part of the Obama administration and Congress, and would likely require finding alternative ways to achieve similar overall cost reductions. There is no easy path around our money problems. But, as Congress works to address these issues, it should consider the impacts of slashing R&D within the broader context of our historically lean budgets for clean energy, and how much further behind countries like China, South Korea, and Germany we will be if we turn our back now.

Wind developers are already adding projects at rapid pace. Utilities are issuing RFPs and signing power purchase agreements that will deliver even more low-cost wind power to consumers. And wind turbine and component manufacturers are taking orders and ramping up production to fill those orders.

Here are a few examples of this progress:

• The wind industry installed 958 MW of capacity in the U.S. in January, according to the Federal Energy Regulatory Commission (FERC), representing 78 percent of the total capacity installed during the month and injecting nearly $2 billion of investment in the U.S. economy.
• GE, the nation’s leading manufacturer of wind turbines, predicted that the PTC extension could lead to the development of 5,000-6,000 MW of wind development in the U.S. in both 2013 and 2014, an annual investment of $9-12 billion. Without an extension, Bloomberg New Energy Finance had projected installations to decline to 1,500 MW this year.
• Boston-based wind developer First Wind announced plans to begin construction on 500 MW of wind projects in advanced stages of development in Maine, Oregon, Washington, Idaho, Utah, and Hawaii.
• Xcel Energy, the nation’s leading retail provider of wind power with approximately 5,000 MW at the end of 2012, is seeking regulatory approval in Minnesota and Colorado to accelerate its resource acquisition process so it can add more low-cost wind this year.  “We have a great opportunity to see if additional wind resources in Colorado would be of economic benefit to our customers with the extension of the federal tax credit, but we must act quickly,” said Ben Fowke, chairman, president, and CEO of Xcel Energy. “Our request is not being driven by state renewable energy standards, but by the opportunity to reduce costs.”
• Tri-State Generation and Transmission Association, which serves 42 electric cooperatives in four western states, and Alliant Energy Corp. in Iowa both issued RFPs for 100 MW of wind, while three Nebraska utilities (Nebraska Public Power District, Omaha Public Power District, and Lincoln Electric) are signing power purchase agreements for 325 MW of wind this year instead of waiting until 2017.
• DTE Energy’s ECHO Wind project planned for 2013 is reported to cost $52.50 per megawatt-hour. This is significantly lower than wind prices from a few years ago according to the Michigan Public Service Commission, which stated in a recent report “Compared to building a new, conventional coal facility, renewable energy contracts are significantly lower in price…less than any newly built generation including new natural gas combined cycle plants.”

Avoiding another roller coaster ride for the wind industry

The activity in the first two months since Congress extended the PTC is promising and shows that the wind industry and utilities can move fast to deploy clean energy. But a more deliberative approach that provides greater long-term investment certainty and stability is needed to expand U.S. wind manufacturing capacity and avoid the boom-bust cycle that has wreaked havoc on the wind industry over the past 15 years (see graph below).

Sources: Compiled by UCS based on data from DOE and AWEA.

President Obama pledged in his State of the Union address to double renewable electricity generation from wind, solar, and geothermal energy by 2020. In the President’s Plan for a Strong Middle Class & Strong America, he called on Congress to achieve this goal by making the PTC permanent and refundable as part of comprehensive corporate tax reform.

While a permanent PTC could be politically challenging, his goal of doubling renewable energy is not pie in the sky. The U.S. has already met the President’s 2009 goal of doubling U.S. renewable energy capacity from these sources in less than half the time.

Doubling solar capacity by 2020 would require adding less than 1,000 MW a year on average, which is less than one-third of what was installed in 2012. To double wind capacity to 120,000 MW by 2020, the U.S. would need to add an average of 7,500 MW per year, which is less than what was installed in the U.S. in 2008, 2009, and 2012.  It’s also less than half of what the U.S. Department of Energy projects is needed to meet President Bush’s goal of generating 20 percent of total U.S. electricity from wind by 2030, announced during his 2006 State of the Union speech.

Opposition to extending the PTC is misplaced

If this year is anything like last year, we can expect opposition to efforts to extend the PTC or replace it with other long-term policies to support renewable energy. The most vocal opponents of the PTC, including several groups funded by the oil industry’s billionaire brothers Charles and David Koch, argue that the government is playing favorites by granting the wind industry the tax credit.

Last September, Koch-backed Americans for Prosperity and other groups sent a letter to Congress opposing the extension, arguing that it “continues the deplorable practice of using the tax code to favor certain groups over others.”  Neither the House leadership nor the Koch-affiliated groups, however, question the fact that fossil fuels and nuclear power have been feasting on billions of dollars of federal subsidies for decades while renewables have been living on scraps.

Time to Level the Playing Field

The question is not whether the federal government has a role to play in helping promising technologies like wind and solar power compete in the marketplace. The question is whether the government should continue to underwrite extremely profitable, mature industries—especially highly polluting ones—at the expense of cleaner, more efficient, low-carbon alternatives. The obvious answer is no.

Feature Image: Lance Cheung, Flickr Commons

Well, dear reader, I am glad you asked!  Because today’s blog is about feed-in tariffs: policies designed to encourage the rapid development of smaller-scale renewable energy facilities in areas where the electricity is needed.

A more intuitive name for these policies would be standard offer contracts because they offer renewable energy developers a fixed price for projects if they meet certain, basic criteria. Cities and states that have adopted feed-in tariffs typically extend them to projects that range from 10 kW to 3 MW in size. The idea behind feed-in tariffs is to eliminate the lengthy contract negotiation process that can bog down smaller projects. Since these facilities are likely to connect to the distribution grid wires that bring electricity to our homes and businesses, they are also called distributed generation projects.

Why is small-scale renewable energy important?

In order to make a major transition away from fossil-fueled electricity and the pollution it creates, we are going to need both large and small-scale renewable energy projects. These smaller projects play an important role because if they are built in areas where we need the electricity the most, they won’t need to interconnect to transmission lines, which can be expensive to build or upgrade, and are increasingly vulnerable to storms, fires, and extreme heat events.

These projects are less likely to be built on land that is already populated with plants and animals and they will likely have fewer environmental impacts to mitigate, which means they can be built faster than some larger projects. And, these projects are more modular, which means that even if a section of a project is damaged by a storm, chances are the entire system won’t collapse.

Early assessments indicate that renewable energy projects in the Northeast weathered Hurricane Sandy much better than their fossil and nuclear counterparts. All of these factors contribute to a cleaner, more flexible, and resilient electricity grid.

States and cities across the country are promoting local clean energy projects

Source: Institute for Local Self Reliance

By the end of 2012, 14 states and cities had adopted feed-in tariff programs designed to install more renewable energy generation. These programs differ by the price they pay for the power, and the scope of the program.

For example, California expanded a statewide feed-in tariff in 2009 to allow renewable energy projects up to 3 megawatts (MW) to participate, and capped the total number of installations in the state at 750 MW. The Los Angeles Department of Water and Power, electron supplier to one of the sunniest cities in the country, rolled out the first phase of its 150 MW program this February. But states like Vermont and Rhode Island, which conjure up images of snow more often than sunshine, have also been early adopters of the policy. Although many of the policies focus on the installation of solar photovoltaic (PV) systems, feed-in tariffs can be developed to support any type of small-scale renewable energy generation.

It should also be noted that several countries, including Germany, have much more aggressive feed-in tariff programs than the U.S., with a fraction of this country’s solar resources. Today, Germany has installed over 25 GW of PV, compared to approximately 7 GW installed in the US. While the U.S. may have good reasons to chart a different clean energy course than our European neighbors, U.S. states and cities should take note of the clean energy that’s springing up because of the feed-in tariff policies we’ve already enacted and consider whether a local feed-in tariff policy could be right for them. Well-designed, local policies can be an important tools to drive us towards a cleaner electricity system.

Creating a long-term market for renewable energy

Over the last decade, state-level RESs have emerged as one of the most important and successful tools for promoting renewable energy sources. It is a bipartisan, market-based approach that stimulates competition among renewable energy developers, and creates an ongoing incentive to reduce costs.

At its core, the RES requires electric utilities to gradually increase the amount of renewable energy sources in their power supplies over a period of time, usually a decade or more. To date, RES polices have been implemented in 29 states and the District of Columbia (DC), and another eight states have adopted voluntary renewable energy goals (see map). While the renewable energy requirements differ substantially across the country, 17 states and DC have set targets of at least 20 percent.

Source: Union of Concerned Scientists

Proven track record

Collectively, state RESs are working very well. They have already supported the development of at least 33,000 megawatts (MW) of new renewable power through 2011, according to an estimate by researchers at the Lawrence Berkeley National Laboratory (LBNL). And that’s the just the beginning.

By 2025, my projections show that state RESs will support about 103,000 MW of renewable energy capacity, assuming the targets are fully achieved (Figure 2). More than 87,000 MW of this total comes from new development — that’s enough power to meet the annual electricity needs of 50 million typical homes. California, Illinois, Texas, New Jersey, and Minnesota currently represent the five largest U.S.-based markets for new renewable energy development, but California’s 33 percent requirement is by far the most aggressive.

Projected Renewable Energy Development from State Renewable Electricity Standards
Source: UCS

Utilities are demonstrating that they can comply with the annual RES targets at affordable costs to consumers. Evaluating actual compliance data from state and utility reports tracked by LBNL, it is clear that utilities are meeting about 96 percent of their renewable energy requirements overall, with most states reporting full compliance. In fact, many states — including Colorado, Texas, and Minnesota — appear to be several years or more ahead of schedule in terms of meeting future annual targets.

State RES policies are also proving to be consumer friendly, typically resulting in modest costs or savings. For example, LBNL recently evaluated 2009 and 2010 RES cost data available for 14 states and estimated that all but one state experienced cost impacts of about 1.5 percent or less. In Minnesota, Xcel Energy — the state’s largest utility — reported that renewable energy investments actually lowered prices in 2008-2009 by 0.7 percent. In addition, the required investments in renewable energy for Oregon’s second largest utility (PacifiCorp) also helped lower their total costs by $6.6 million in 2011.

Keeping the foot on the accelerator

As state legislatures across the country settle into their 2013 sessions, adopting a new and strengthening an existing RES should be high on the agenda. In fact, it ought to be a no-brainer given the success of state RESs so far and all the economic development, job creation, fuel diversity, and public health benefits that come from increasing our use of clean, homegrown renewable energy. Furthermore, there is strong precedence for doing so. Since 1999, 18 states have increased or accelerated their renewable energy targets, in some cases more than once.

Already this year, perennial renewable energy leader Minnesota appears to be exploring a higher target and heightened support for solar energy, and supporters in California are laying the groundwork for future expansion of their RES as well. In addition, a Pennsylvania law maker has introduced a stronger RES target, and the regulatory agency implementing New York’s RES is evaluating their policy in 2013 for possible future expansion. More states should be following their lead, which would help maintain the strong momentum that the renewable energy industry has gained recently.

Congress should also adopt a national RES, which would level the playing field by setting a minimum target for all states to achieve. A 2009 UCS analysis showed that a 25 percent by 2025 national RES would save consumers money and create nearly 300,000 jobs.

Standing in the way of progress

The significant growth in new renewable energy development spurred by state RESs has caught the attention of the fossil fuel industry. Led by the American Legislative Exchange Council (ALEC), special interest groups with deep-pocketed funders like the Koch brothers, who are heavily vested in coal, have launched a misinformation campaign targeting RESs across the nation. For years, ALEC has misled politicians by denying the role carbon emitted by human activities plays in warming our planet. Now, legislation ALEC is pushing to repeal RESs has been exposed as the handy work of the Heartland Institute, an anti-science group.

Similar efforts to go after RESs have failed in in more than a dozen states. Nevertheless, ALEC and company are unlikely to be deterred, so defending existing state RESs in 2013 will be as critical as expanding them. Fortunately, the real-world evidence about the success of the RES and the benefits of transitioning to a clean energy economy are hard to ignore.

Power plant carbon standards must be a top priority for the Obama Administration

In his inaugural address President Obama signaled that his Administration is committed to taking serious action to address climate change. One clear early way to deliver on that promise is to finalize the standard for new power plants that was proposed last year.

The EPA should also make a proposal for a carbon standard for existing power plants by the end of this year and ensure that it too is finalized as soon as possible thereafter. News reports indicate that the President might make mention of the carbon standard in his State of the Union address on February 12. Specifics will be important.

Why we need strong carbon standards

The EPA released its latest greenhouse gas (GHG) data yesterday, which show that fossil-fired power plants remain the largest source of U.S. global warming emissions, producing approximately a third of total U.S. emissions. These emissions have dropped in recent years as the electric sector has moved away from coal and toward more natural gas-fired power plants and renewable energy, as well as because of lower energy demand due to energy efficiency measures and a slack economy. The data show power sector emissions were 4.6 percent lower in 2011 than the previous year. However, these reductions are nowhere near enough to help drive overall U.S. emissions down in line with climate goals.

It’s also worth noting that the data show that refineries were the third largest source of GHG emissions in 2011. The EPA was supposed to set carbon standards for refineries by December 2011 under a settlement agreement reached in 2010. We have yet to hear a new schedule for these standards.

World Resources Institute just released a report today that emphasizes the importance of carbon standards in helping the U.S. reduce its emissions 17 percent below 2005 levels by 2020, a commitment that the U.S. articulated at the Copenhagen climate talks in 2009. According to the report authors, emissions reductions from power plants and natural gas systems under the Clean Air Act represent “two of the top opportunities for substantial GHG reductions between now and 2035.”

How renewable energy can help achieve a strong carbon standard

A carbon standard for existing power plants must help ensure that over time we transition away from fossil fuel-fired generation sources such as coal and natural gas to clean, renewable forms of energy such as wind and solar power (alongside strong energy efficiency measures). To accelerate that transition, we need a strong standard that will level the playing field for low carbon sources like renewable energy. But we also need some flexibilities that could provide extra incentives to ramp up renewable energy and energy efficiency, while keeping costs affordable.

One way the EPA could do that is to allow renewable energy and energy efficiency to count as compliance options to help meet a strong carbon standard. This would, for example, give power plant owners the option to reduce their overall emissions rate by investing in new renewable energy generation. To ensure that this flexibility delivers additional emissions reductions beyond what would have happened anyway, the investments must be over and above what would be required to meet existing state renewable energy or energy efficiency standards (RES and EERS). This could be a way to encourage states to build on existing RES and EERS policies.

NRDC recently published an innovative proposal that has some of these elements, with a focus primarily on energy efficiency investments as an alternative compliance mechanism.

Renewable energy is here and ready

As my colleague Jeff Deyette pointed out earlier this week, renewable energy is already being ramped up at record levels. 2012 saw over 13 gigawatts of wind and an estimated 3,200 megawatts of solar PV capacity installed. What we need now are enhanced policies and incentives to further decarbonize our electricity sector, including carbon standards, a national renewable energy standard, tax incentives, and a price on carbon.

Congress and fossil fuel lobby likely to continue to obstruct progress on climate change

Even though the proposed carbon standard for new power plants is simply underlining a market-driven shift away from coal that is already underway, there is bound to be opposition from the usual foes of climate action in Congress. It is very likely that when the carbon standard for new power plants is finalized there will be an immediate push in Congress to block it using provisions of the Congressional Review Act (CRA). Originally intended to protect the interests of small businesses, the CRA was regularly abused by the last Congress (and likely will be with the new one) to promote highly partisan ideological agendas. In particular, it has been used to attempt to block the EPA from taking action to reduce pollution under the Clean Air Act.

The American Legislative Exchange Council (ALEC), a political group funded in part by fossil fuel interests, has gone as far as proffering “model legislation” targeting EPA regulation of GHGs on the basis of a claim that there is a “lack of evidence that human-caused emissions of greenhouse gases will endanger public health or welfare.”

Bipartisan action on climate

Recent extreme weather events — including Hurricane Sandy and the ongoing drought in the Midwest — highlight the fact that climate change and its impacts are of critical importance to the health and economic well-being of Americans. We need our Senators and Representatives to show some backbone and be willing to work across party lines to ensure that carbon standards for power plants can move forward quickly. Regardless, it is the administration’s responsibility to show leadership, stand strong, and deliver on these standards alongside other actions to lower emissions and prepare for climate change.

2012: A banner year for wind and solar

While many of us spent much of 2012 engrossed in Downton Abbey, the Olympics, what felt like the longest election season ever, and the fiscal cliff showdown, folks in the wind and solar industries were busy building projects and recording their strongest year ever.

Last week, the American Wind Energy Association announced that 13,124 megawatts (MW) of wind power capacity came online in 2012, smashing the previous annual record by more than 30 percent. This development represented 42 percent of all new generating capacity in the United States (more than any other energy technology, including natural gas) and $25 billion in private investment. Total U.S. wind power capacity now stands at 60,000 MW, which is capable of producing enough power to meet the needs of 14.7 million typical homes.

Photo by Ruth Baranowski / NREL

The solar industry had a similarly strong year. While year-end stats have not yet been released, the Solar Energy Industries Association reported that solar photovoltaic (PV) installations surpassed last year’s record over the summer and were projected to reach 3,200 MW of capacity by year’s end, which would be a 70 increase over 2011 levels. As of September 2012, total installed solar electric capacity in the United States exceeded 6,400 MW—enough to meet the energy needs of more than 1 million typical homes.

Major energy transformation under way

The impressive growth in renewables is part of a major transformation underway within the U.S. electric power system. For decades, coal has powered America. But growing competition from abundant, cheaper, cleaner and reliable energy sources like renewable energy, energy efficiency, and natural gas are making it harder for the nation’s aging coal plants to compete.

Photo by Susan Bilo

Indeed, coal use has fallen from 47 percent of total U.S. generation in 2009 to about 37 percent in 2012. Since 2009, 51,000 MW of old, inefficient, and polluting coal generating capacity have already been scheduled for closure, with new retirement announcements being made seemingly every week. A recent UCS analysis found hundreds more uncompetitive coal generators that should also be considered for closure. Wind and solar’s track record in 2012 clearly demonstrates that renewable energy stands ready to provide clean, reliable, and affordable power as coal continues its decline.

Policies Matter

The transition toward more sustainable energy sources is not happening in a vacuum. A suite of smart and effective policies at all levels of government—including, for example, state renewable electricity standards and federal tax credits—has helped to put the renewable energy industry in its current strong position. However, building on these policies is necessary to continue the journey toward a clean energy economy that protects public health and helps avoid global warming’s worst consequences.

In our nation’s capital and all across the country, significant opportunities to expand and accelerate the clean energy transition are emerging. So are serious threats to undermine it. Stay tuned in to The Equation as my UCS colleagues and I take a closer look at some of the most important existing and new policies and regulations that are driving the clean energy transition at the local, state, and national level. We will highlight how they are successfully working and identify ways to expand or improve upon them in 2013. We will also shine on a light on the special interests behind the misinformation campaign to roll back the progress being made on renewable energy.

Renewable energy technologies have a lot going for them heading into 2013. Making sure they keep up the momentum depends a lot on the policies that are driving them forward—or holding them back.

We welcome you to join the discussion!