Economic Impacts, Policy, and the Future of Renewable Energy in Ohio

Jul 26, 2018 | News, Newsletter |

Gilbert Michaud, PhD,
Assistant Professor of Practice,
Ohio University

What is the future of renewable energy technologies, such as wind and solar, in Ohio?  Amidst the range of arguments and policy debates ever in front of the state’s legislature and policy making bodies, what strategies are forthcoming, and how does that impact the energy generation mix?

A first point of interest is the fact that Ohio uses the 7th highest amount of electricity in the country, so there is a great deal of consumption in the state that needs to be met with various generation assets.  There has been a gradual shift in the generation portfolio from fossil fuel generation such as coal-fired power plants, to a lot more natural gas facilities with the hydraulic fracturing (i.e., fracking) boom in the eastern part of the state, but also large-scale wind and solar facilities starting to develop.  Despite this shift, Ohio is definitely still a coal state, particularly considering the legacy of this industry in the Appalachian region.  In 2015, Ohio had a total generating capacity of over 28,000 megawatts (MW), which consisted of about 53% from coal, 37% from oil & gas, 1.6% from wind, and 0.4% from solar (with the remaining 8% coming from other sources, such as nuclear, biomass, and hydro).

However, when investigating these trends over time, one can better see this shift, even if it is in its relative infancy.  For instance, from 2010 to 2015, coal generation in Ohio has declined at an average rate of -9.5% per year, while oil & gas, solar, and wind generation grew at rates of 28%, 34%, and 149% per year, respectively.  Some have cited increased regulations (e.g., U.S. EPA’s Clean Power Plan), changes in consumer demand, and number of other factors for this shift, but, regardless, organizations such as electric utilities have been planning for the future by investing dollars into other generation technologies.  For instance, AEP Ohio, the state’s largest investor-owned electric utility, has announced plans to phase out 1,500 MW of production from three coal-burning units located in their Conesville and Cardinal plants, with total retirement occurring by 2030.  They have also announced a plan to install 400 MW of solar energy capacity in the state over the next few years, with the Appalachian region as a site preference for these installations.  Dayton Power & Light is also decommissioning some of their coal plants in Adams County, and, as a general statement, utilities across the state start to invest more in renewables.  Local governments have also started to invest in renewables, such as solar, from Athens (195 kilowatts (kW) on municipal water treatment system), to Cuyahoga County (4 MW site on former landfill), and many others.

Another important angle to consider is the economic development impacts of this activity.  With regard to jobs, there has been an upwards slope in employment metrics in the oil & gas and solar energy industries over the past few years.  Ohio’s wind employment has fluctuated quite a bit with the setback law that increased the minimum distance required between a wind turbine and the nearest property line for all newly-zoned projects, but has a gradual upslope as well.  Coal jobs, conversely, have been declining, specifically at the rate of 17% per year from 2013 to 2016.  In 2016, 2,349 people worked in the coal industry in Ohio, while there were 2,589 in wind and 5,831 jobs in solar – so nearly four times the amount of people working directly in the wind and solar industries than coal.  The wind and solar industries in Ohio, taken together, contribute well over $5 billion dollars to the state’s economy, which actually outpaces the coal industry and even the state’s large oil & gas industry during this fracking boom.

From a policy perspective, Ohio has relatively strong net metering laws, which is the mechanism for crediting renewable energy owners for electricity added to the grid.  The Renewable Portfolio Standard (RPS) issue has been rather complex, with a freeze that was implemented in 2014, and a lot of back and forth deliberation since then, so that has been a barrier to the increased deployment of renewables.  Other U.S. states have also been dealing with these policy issues for years, but are also now trying to answer newer questions, such as whether to adopt energy storage portfolio standards and how to access capital.  The 21st century energy questions are now focusing on concepts such as microgrids, grid reliability & resiliency, firm attraction efforts around renewables, and many others.

It will be interesting to see what the future of renewable energy generation looks like in Ohio.  The Public Utilities Commission of Ohio (PUCO) (the government agency that regulates the rates and services of public electric utilities) is slated to release a report this fall around their recent PowerForward project, which talks about advancements in technology, energy generation mixes, innovation, grid modernization efforts, and many other items.  This will tell much about the future of renewables in Ohio, which have already made strong strides in terms of installed capacity over the past decade.  Across the U.S., renewable energy jobs have provided net job gains, and have a higher economic impact per MW than coal and oil & gas generation when formally modeled.  The State of Ohio has a robust network of research universities, who also play a very important role in offering objective quantitative research that will help yield policy decisions and chart the energy generation path forward in the state, as well as clarify the role of renewables.  There are both challenges and opportunities looking to the future for renewable energy in Ohio considering the current assets, political battles, technical considerations, etc., but it is through attention, education, and collaboration that the state can make smart and strategic decisions about its generation portfolio.

 

You can reach Gilbert Michaud at michaudg@ohio.edu or (740) 597-9085.

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