Are renewable portfolio standards on the way out? Three ballot initiatives say otherwise
Michigan, Arizona and Nevada could see major political fights over proposed measures to boost renewable energy standards.
In the beginning, renewable portfolio standards drove the renewable energy market. While its role has diminished somewhat as wind and solar, especially, have become cost-competitive, a handful of states are still expanding these mandates for more ambitious targets.
A trio of proposed renewable energy ballot initiatives has caught the eye of the energy sector. Confined to two Western and one Midwestern states, these ballots are backed by climate activist and billionaire Tom Steyer, through his super PAC NextGen America.
The initiatives aim to increase existing mandates for renewable energy; in some cases, this requires amending the state's constitution. For now, the initiatives must gather the requisite number of signatures, before appearing on the ballots. But their introduction has sparked discussion over whether or not RPSs are still necessary to drive the renewable energy market forward in states now that costs for wind and solar have dropped.
The push for RPS initiatives comes during the highly anticipated 2018 election, two years after President Donald Trump stunned the United States by winning the nation’s highest public office. His public disdain for renewable energy and support for fossil fuels is at odds with the growing popularity and investment in wind and solar as well as increasing public awareness of climate change impacts.
But even as wind and solar energy costs decline and tax credits are extended, some clean energy advocates say RPSs are still necessary to drive growth, especially in states where the monopolistic utility model dominates, such as in Arizona, Michigan and Nevada.
Michael O’Boyle electricity policy manager for Energy Innovation, notes that the states have made headlines with political wrangling over investing in renewable energy.
“I would think that these states, have the privilege of moving later than California and have the privilege of buying solar that’s 85% cheaper than 2009,” O’Boyle said “The utilities in those states, particularly Arizona, have been notoriously slow in embracing renewable energy that is right in their backyard.”
While the 2018 elections are eight months away, these initiatives are likely to be a flashpoint during the cycle as utilities in some of these states oppose more policy pushing investment in this resource. Here’s how it could play out in each state.
Michigan has recently stepped into the spotlight as its officials grapple with changes to its renewable energy portfolio and mandates. The state garnered attention when its lawmakers passed legislation in 2016 to overhaul its energy marketplace and its renewable energy incentives and mandates.
The bill kept the state’s limited retail energy choice, net metering incentives and expanded the Renewable Portfolio Standard from 10% to 15% by 2021. Fast forward more than a year later, and a coalition of local clean energy groups backed by Tom Steyer is pushing a ballot initiative that would bump the RPS to 30% by 2030.
A similar initiative was launched six years ago, but withered under a financial onslaught of opposition from the state’s major utilities: DTE Energy and Consumers Energy. But that was in 2012. Last year — and by extension 2018 — saw renewable energy prices fall even more to undercut even natural gas in some instances. Utilities are signing major deals for renewable energy — including some paired with storage — raising the question of whether the RPS is even necessary.
Recent announcements by the state’s utilities demonstrate an appetite for more investment in renewable energy and reducing emissions. DTE Energy just announced a plan to slash emissions 80% by 2050 from 2005 levels — and eliminate coal entirely by 2040. Consumers also wants to shed coal from its portfolio and cut emissions by the same amount — ten years earlier. In addition, Consumers said more than 40% of its energy will come from energy storage and renewables by 2040.
These announcements indicate a shift toward decarbonization by the same two utilities that fought any attempt to expand the RPS in 2012. But there may still be some fight left from these two utilities against any government requirements.
In a statement emailed to Utility Dive, Consumers Energy touted its recent commitments to cut emissions and boost renewable energy.
“We are working hard to develop that long-term plan, which will lay out our vision for the best electric generation mix for Michigan’s future,” the utility said. “We do not need a legal mandate to do the right thing for our customers.”
DTE Energy didn’t provide a comment.
Renewable advocates are not convinced by the current corporate actions and commitments on clean energy.
We just feel that the market alone is not going to be enough when utilities have a tremendous amount of influence...I think RPS is an accountability tool to make utilities respond to the market for renewable energy.
Executive Director for the Great Lakes Renewable Energy Association
“We just feel that the market alone is not going to be enough when utilities have a tremendous amount of influence,” said John Freeman, executive director for the Great Lakes Renewable Energy Association, one of the groups pushing the mandate.
Freeman noted that without the mandate, utilities could wait years before investing in technology and resources to cut emissions.
"I think RPS is an accountability tool to make utilities respond to the market for renewable energy."
Nevada promises a fight at the polls over two energy initiatives. One, a measure seeking to establish retail energy choice; the other expanding the state's Renewable Portfolio Standard after the governor vetoed legislation that would have done so last year.
In 2016, voters passed a measure that would amend the state’s constitution to allow consumers to pick their power suppliers. This was sparked in part by notable exits from incumbent utility NV Energy's service by gaming and tech companies, such as MGM Grand, Vegas Sands Corp. and Switch.
Now the measure is up for a final vote this fall, after passing the first round of votes in 2016, setting the stage for potential chaos should the state find itself grappling with a new, and somewhat deregulated, energy economy.
To compound that, another ballot measure seeks to amend the state constitution and would compel utilities to provide 50% of their power with renewable energy resources by 2030 — an aggressive target on par with leading states such as California.
Again, Steyer has backed the initiative, which is being led on the ground by the group Nevadans for Clean Energy Future. According to the Nevada Independent, Steyer described Nevada as the “Saudi Arabia of solar energy in the United States.”
It’s unclear how the state's largest utility, NV Energy, will react. The utility has made notable shifts, investing more in renewable energy since a notorious battle that gutted its net metering policy in 2015 — which ended up being reversed by legislators a year later. That same year, Gov. Brian Sandoval (R) also vetoed a bill that would have expanded the RPS to the same target on the ballot initiative.
NV Energy did not respond to a request for comment on the initiative.
Environmental groups like Western Resource Advocates have remained neutral over the energy choice initiative, but endorsed the RPS one. Robert Johnston, a senior attorney for the organization, said in a statement, “With the significant progress we have already made in developing our first-class solar and geothermal resources, Nevada is well-positioned to meet the “50% by 2030” goal.”
But what’s at stake is how much impact the RPS initiative would have on the future of renewable energy should Nevadans choose to pass energy choice.
Arizona is the final state with a 2018 ballot initiative to expand its RPS. Like Nevada, the measure would amend the state constitution to require utilities to provide 50% of renewable energy by 2030. Arizona is at an interesting crossroads, however, when it comes to renewable energy.
A competing proposal from the Arizona Corporation Commission, would have utilities reach 80% clean energy generation by 2050 — a proposal that includes a carve out for nuclear. Unlike previous fights over renewable energy mandates and expansion, these proposals are more of a fight over how fast to increase renewable energy, rather than one over whether or not to invest in more at all.
"My sense is that, if Arizonans are given the opportunity to vote on a 50% renewable energy standard, [they will.]” said Kris Mays, a former ACC Chairman and current professor at the Arizona State University. “I would also say that I think people are aware that Arizona's RPS hasn’t been updated in more than a decade."
The ballot initiative, also backed by Steyer, has already ruffled feathers. Arizona Public Service, the biggest utility in the state, has admitted to funding an opposition group, the Arizona Republic reported. While APS has not officially endorsed the ACC proposal, the carve out for nuclear, lacking in the ballot initiative, could prove more attractive to them.
I think if the utility had put forward IRP plans that promoted cost-effective renewable energy, this ballot measure might not have been necessary.
Former ACC Chairman
In a statement to Utility Dive, APS said, “This ballot initiative is apparently one of many that its financial backers are filing around the country this week, and we have many questions about the actual language."
ACC Commissioner Andy Tobin, who proposed the 80% clean mandate, also called for a cost-analysis for all proposals on the table, including the ballot initiative. Though if voters pass it, the Commission will have to ensure utilities comply — and it could be a messy political fight, the kind Arizona is used to seeing over renewable energy.
However, Mays said it doesn’t have to be an either/or decision.
“I don’t think they are mutually exclusive,” Mays said, adding, “I actually think they fit side-by-side nicely.” Tobin’s plan, for instance, could ensure decarbonization efforts take place while the RPS initiative could set some intermediate goals for utilities.
“I think if the utility had put forward IRP plans that promoted cost-effective renewable energy, this ballot measure might not have been necessary,” Mays added.
Politics aside, the proposed mandates themselves fit squarely within a trend of states expanding these standards. California, Oregon, New York and Hawaii have led the way with ambitious renewable energy targets, but other states are catching up.
“The goals that are being proposed [have] pretty quick, aggressive timelines, but at the same time, with the falling costs of renewable energy, they are more realistic than they would have been five to 10 years ago,” Energy Innovation’s O’Boyle said. The states with the ballot initiatives “pretty much have already met their renewable energy standards or close. It’s time to update them.”
However, O’Boyle notes that mandates might not be the best way to encourage renewable energy growth anymore, not with prices falling as swiftly as they have. The trick now, he says, is to figure out how to align the RPS to achieve broader goals, such as decarbonization.
“The role of the RPS is definitely diminishing,” O’Boyle said. “I don’t think it’s as important as it used to be to have supply-side type of policies because the cost dynamics have so fundamentally shifted in favor of renewables... At a certain point, instead of creating renewable energy targets, you have to say ‘what are the goals of that RPS — is it decarbonization?’ We don’t need to focus as much on the right percentage of renewables. What is more important is what are the goals of the standards we are setting.”
A previous version of this article misidentified Kris Mays' current place of employment. The article has also been clarified to say that Western Resources Advocates endorses the RPS ballot proposal in Nevada, but is neutral on energy choice.
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