Renewable Energy Crossroads
Wisconsin utilities have largely reached the state’s initial renewable energy goal, but they have little appetite for a new mandate.
They might have received average renewable energy grades overall, but the utilities that serve Wisconsin’s energy needs are making excellent progress in one category – meeting their goals en route to 2015, when the state expects them to generate 10% of their combined energy from renewable sources.
Which begs the following question: Now that they have largely complied with that initial mandate, what happens next? Advocates for renewable energy would like a new and higher standard established beyond 2015, but so far utilities are in resistance mode and their allies in the Wisconsin Legislature are starting to make the case.
While Renew Wisconsin’s total grading didn’t sit well with some utility executives – they received an average overall grade of C from the renewable advocacy group – utilities did receive high marks in what is arguably the all-important category of meeting the Renewable Portfolio Standard.
Four of five major utilities – Alliant Energy, Madison Gas & Electric, We Energies, Wisconsin Public Service Corp., and Xcel Energy – have met or exceeded the 2015 standard. “We’re doing great,” acknowledged Don Wichert, executive director of Renew Wisconsin, whose report card evaluated Wisconsin utilities in six categories. “All of the major utilities have already met the 2010 standard, which was about 6%, but almost all of them have met the 2015 standard, which was 10%.”
Wichert and other renewable evangelists are all for setting another, higher goal, noting that neighboring states Minnesota and Illinois have set a renewable energy goal of 25% by 2025. “We and some of our other environmental organizations wonder whether we should be pressing for a little bit higher standard, based on the fact that the utilities have pretty much met the existing standard,” he said. “There is no real driving force now for them to do any more.”
Gregory Bollom, assistant vice president of energy planning for Madison Gas & Electric, and Todd Stuart, executive director of the Wisconsin Industrial Energy Group, offered several reasons for the lack of appetite for new mandates.
Bollom noted that MG&E has renewable energy in its supply mix to serve two purposes. One is to satisfy the state portfolio standard; the other is to supply renewable energy to customers who want a higher percentage of renewable energy in their own mix. Renewable energy, while popular with customers, comes at a cost, and there is a trade-off between how much renewable energy utilities have in their supply mix and how much it costs customers to add more renewables.
According to Bollom, MG&E has more than 12,000 residential customers who participate and volunteer to pay extra to get additional renewable energy. Right now, that energy costs them an extra 2.5 cents per kilowatt-hour per month, which means that most customers are paying a little over $10 extra per month to get extra renewables. While the program is available to all customers, more than nine out of 10 customers choose not to participate, even with an extra 1,800 participants signed up earlier this year as the result of a marketing campaign.
Until more people are willing to pay that extra cost on a voluntary basis, Bollom suggested it would be a futile gesture to establish a newer, higher renewable energy mandate. “Clearly, there is a broad base of support for renewable energy,” he noted, “but it still represents a fairly small proportion of all the customers we serve.
“We’ve had a program available since 1999, so we’ve been through boom cycles and recessions. Our experience is that customers want as much renewable energy as possible, at the lowest possible cost, which is understandable. So the amount of energy we put into our mix, above what our minimum requirements are, is driven by trying to balance that desire for more without paying for more. There is a real fine balance that needs to be struck.”
Stuart cited the state’s current political environment in which key lawmakers oppose a new mandate. Calling the 10% mandate a mistake that is raising the cost of electricity, State Sen. Glenn Grothman, R-West Bend, said he would introduce a bill to freeze the RPS at 2012 levels. Grothman noted that Wisconsin utilities primarily are meeting the standard via wind energy and charged that windmills are linked to credible cases of health problems and “stories” of lower property values.
Stuart noted that Wisconsin’s electricity rates now are among the highest in the Midwest. He said the primary reason for that is a multibillion-dollar investment in upgrading the state’s electrical infrastructure since the blackouts of the late 1990s. Given that rise in energy costs, and given the state’s reliance on manufacturing, an industry whose financial health is heavily impacted by energy costs, Stuart said the WIEG is unlikely to support an increase in the RPS.
He cited the potential for upward pressure on electricity rates. “Some of these large manufacturers are very energy price sensitive,” he noted. “For many of my members, it’s one of their top three costs.”
The other reason a higher mandate is problematic is that Wisconsin’s investment in improving capacity, combined with a moderately growing economy, has produced a large surplus in capacity. “We’ve got 20% or more generation supply than demand,” Stuart noted. “Electric demand really hasn’t rebounded much since 2007, so having a mandate that says you’ve got to add more electricity doesn’t make sense right now.”
Energetic job creation
One of the arguments for establishing a higher standard is promoting employment growth in a job-challenged economy. For almost 20 years, Wichert has argued that renewable energy is a more potent job creator than traditional fossil fuels. In the early 1990s, he produced a study that asserted the ratio of renewable job creation to fossil fuel job creation is 3 to 1.
More recently, studies have asserted that development of renewables like solar, wind, and biogas are well aligned with Wisconsin’s core industry sectors, especially agriculture and manufacturing. The 2012 Wisconsin New Technology Jobs Report, which was published by Wisconsin Sustainable Business Council, cited renewable energy as one of the places where Wisconsin could increase its job creation opportunities.
The report noted that Wisconsin’s solar energy sector alone accounts for more than 3,000 businesses employing 12,000 people. In addition, the wind energy industry relies on Wisconsin manufacturers to produce ball bearings, towers, gears, and other equipment necessary for wind-turbine production.
Renewable energy advocates and policymakers believe the Wisconsin renewable with the most growth potential is biogas. The Wisconsin Bioenergy Initiative has produced a strategic assessment of the state’s biomass opportunities, and one of its conclusions is that Wisconsin has strong opportunities with anaerobic digesters producing methane gas from a variety of sources, particularly dairy animal waste, municipal waste diversion from landfills, wastewater treatment materials, and waste from food-processing businesses.
One of the more telling statistics contained in the assessment is that dairy cow manure biomass feedstock alone represents 4.77 million dry tons available per year, the energy equivalent of replacing a large-scale coal plant. Wichert noted that Wisconsin already leads the nation in the number of anaerobic digesters – about 100 digesters of various kinds now are producing energy here – but the state literally could quadruple that number and have the same number of digesters per person as Germany has.
“Germany is by far the largest user of biogas systems in the world,” Wichert noted. “We definitely have infrastructure for that. We’ve got the feedstocks. We have manure from dairy farms.”
Gary Radloff, Midwest energy policy analysis director for the Wisconsin Bioenergy Initiative, cited the diversity of applications. “The nice thing about that technology is you have four pathways for energy,” Radloff noted. “You can make electricity for the grid, you can clean it up for pipeline quality gas, you can go through another process and make compressed natural gas for a vehicle fuel, and there is a thermal opportunity where you capture some of the heat from that process, and then you have a value-added opportunity from that, too.”
In addition, Wisconsin has more than 1,000 food processors, many of them large enough to produce a high volume of food waste. Radloff said the organic waste produced from these facilities could be used in anaerobic digester production technology, especially to generate onsite heat.
Moreover, communities like Sheboygan and Milwaukee are tapping into the potential of using waste from wastewater treatment plants to produce energy for plant operation. According to Radloff, energy represents roughly 40% of their operating costs, and if they can produce energy in their own production process, that would result in significant savings for local taxpayers.
“In very broad sweep, waste energy is a tremendous opportunity for Wisconsin,” Radloff stated.
Stuart noted that with this in mind, policymakers reprioritized the $100 million allocated annually to Focus on Energy. While there were few complaints about how the program was run, state officials have shifted more of the funds to emphasize biomass and biogas and take advantage of homegrown renewable technologies that are considered more reliable and cost effective.
“Overall, policymakers are looking at getting more bang for the buck,” Stuart said. “We have high rates. We have more supply than demand. When policies are trying to push renewables harder, we run into problems with intermittency and with being non-dispatchable. That’s a fancy way of saying we can’t turn those plants on and off like we would a conventional plant. The wind does not always blow and the sun does not always shine.”
One cautionary note comes from Bollom, who is skeptical about job creation claims for all forms of energy because the conversation is too narrowly focused on production, rather than operation. “When we put up wind turbines, there are construction jobs involved,” he acknowledged, “but once they are up, the number of staffing needs are relatively low. The lost piece in the jobs discussion is keeping energy costs at a reasonable rate because energy is a significant cost for most businesses.
“If it’s a big part of their production costs, and if we can keep those energy costs lower, then there is more disposable income from greater cash flow for businesses and individuals that is not going to energy. That might allow them to spend money on other things in the economy, which has a bigger job impact potentially than just the direct jobs that are associated with energy production.”
Green energy has taken its share of public relations hits, but public opinion polling indicates it has not diminished public support for renewables. The controversy over the $528 million the federal government spent on Solyndra, a failed solar manufacturing company, is the most notable example of what Obama administration critics call crony capitalism.
However, solar still enjoyed overwhelming support in a March 2012 Gallup poll, with 69% of those surveyed favoring government spending on the development of solar and wind power, and 30% opposing. In Wisconsin, Kristen Joiner, executive director of Sustain Dane, senses bipartisan support for a broad array of energy options.
“Wisconsinites are very practical,” Joiner stated. “Solar energy and renewable energy in general are not really partisan issues here. It plays out that way at the national level, but in Wisconsin, people understand that we need energy from a wide variety of sources, and we need reliable sources. The way to provide for energy security is to diversify our sources.”
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