"If you build it they will come…" is the old saying from the movie Field of Dreams. It also could be used to sum up Ohio’s energy policy toward growing green jobs.
Policymakers believed using grant funds and passage of a renewable energy portfolio standard (RPS) would kick start demand for renewable energy in the State. If demand for solar, biomass and wind projects significantly increased, then manufacturers would be more likely to locate in the State.
Governor Strickland was a strong believer in generating demand through government programs. Governor Kasich and the Republican controlled legislature are less convinced. September 21st and 22nd, Governor Kasich is convening a energy summit to help formulate his Administration’s energy policy. With Ohio’s renewable energy policy at a cross-roads, what are the results from the "if you build it they will come" energy policy?
Ohio’s Advanced Energy Fund Comes to an End
Ohio’s Advanced Energy Fund was created to provides loans and grants to help overcome the initial cost barriers to commercial and residential renewable energy projects. The Fund was paid for using a 9 cent per month fee on all Oho electric utility customers. Residential, commercial and industrial customers paid the same amount. Total fees in a year whether you owned a factor or a house was $1.08.
According to a July 16th Plain Dealer Article discussing the end of Ohio Advanced Energy Fund, the Legislature’s decision to discontinue the program will reduce demand for renewable energy products like solar arrays and wind turbines at at time Ohio’s clean energy economy is seeing real growth.
The Advanced Energy Fund, managed by the Ohio Department of Development, has awarded about $44.6 million in grants since Dec. 31, 2005, to nearly 700 projects, more than 400 of them solar projects with a total generating capacity of more than 9.5 megawatts (9.5 million watts).
The awards went not only for solar power arrays, but also for solar heating systems, more than 150 wind turbine systems and more than 60 energy efficiency projects.
The grants, according to a Plain Dealer analysis of a current report obtained from the state, have gone to more than 300 residential projects, about 180 commercial businesses, nearly 70 industrial projects, about 10 farms and about 70 institutions such as schools, colleges, churches and foundations.
Without the grants, making the financing work on these renewable energy projects becomes much more difficult. Project developers will largely resort to Power Purchase Agreements (PPAs) that typically involve fairly complex arrangements between the property owner, the developer and a corporation that can utilize federal tax incentives.
The concern is the more complicated financing will mean less projects. With less demand, the fear is Ohio will be less attractive to renewable energy manufacturers. One reason the grant program was ended was because lawmakers believed it was no longer necessary now that Ohio enacted an RPS.
Ohio’ Renewable and Advanced Energy Portfolio Standard
With the passage of Senate Bill 221 in 2008, Ohio became one of the 36 states to mandate a percentage of the State’s energy generation come from renewable or advanced energy resources. The law required utilities to secure a portion of their electricity supplies from these alternative resources.
By the year 2025, 25% of the electricity sold by each utility within Ohio must be generated from alternative energy sources. At least 12.5% must be generated from renewable energy resources, including wind, hydro, biomass and at least 0.5% solar. The remainder can be generated from advanced energy resources, including nuclear, clean coal and certain types of fuel cells. In addition, at least one half of the renewable energy used must be generated at facilities located in Ohio.
All utilities must meet annual renewable and solar energy benchmarks that increase as a percentage of electric supply each year. Here are those benchmarks for the first five years of the standard.
Ohio’s RPS was seen as the way to significantly pump up demand in the State for renewable energy projects. We are only part way through year three of the RPS. The RPS contains a modest glide path upward toward the 12.5% mandate. At this early stage utilities are under only very modest requirements in terms of securing renewable energy generation.
Renewable Energy Projects Rise But What About "Green" Jobs?
So has Ohio’s Advanced Energy Fund or the RPS grown Ohio’s clean energy economy?
Last week it was announced that Ohio was second only to Oregon in manufacture of solar panels. Ohio has enjoyed strong growth in solar equipment manufacturing. This from the article appearing in the Toledo Blade:
The Solar Energy Industries Association of Washington says Ohio produced 66 megawatts of photovoltaic modules in the first quarter of 2011, up 50 percent from 44 megawatts of solar modules produced in the state during the first quarter of 2010.
Last week’s announcement would certainly seem to suggest the Fund and/or RPS with the solar carve out was having its intended effect of driving up demand and bringing jobs to the State. But was last week’s announcement a result of national demand or Ohio demand for solar panels?
A more comprehensive analysis of Ohio’s green energy job generation by the Brookings Institute paints a complicated picture of Ohio’s clean energy economy. According to figures compiled for Ohio, while the number of renewable energy projects in the State is way up, the State’s performance in terms of clean energy job growth appears to be mixed.
On the positive side, Ohio ranks 6th in the country in total clean energy related jobs with a total of 105,306.
Ohio also ranked 12th in total clean energy jobs added between 2003-2010.
However, the graph shown to the left indicates Ohio’s clean energy job growth has lagged the rate of growth in U.S. The sector has only grown 2.5% annually which means Ohio ranks 38th.
It is important to note that Ohio’s RPS standard only kicked in during 2009. This is far too little time to determine what the impact of Ohio’s RPS has been on growing Ohio’s green energy economy.
The question will be whether the Kasich Administration and Republican’s are willing to keep the RPS standards in place despite mounting resistance from utilities. Some Republican’s believe that RPS mandates drive up electricity prices which hurts others sectors of Ohio’s economy. With Ohio’s clean energy sector only making up 2% of the total jobs in the State will the sector and its allies have enough political muscle to keep the standards in place?