What’s Next for Ohio’s RPS?

Oct 19, 2018 | News, Newsletter

By Gilbert Michaud, Ph.D.
Assistant Professor of Practice, Ohio University

Justin Riley
Voinovich Research Scholar, Ohio University

 

 

While, taken as a whole, many in the State of Ohio may not know about the debate surrounding its renewable portfolio standard (RPS), this policy is a crucial part of the state’s efforts to grow its clean energy industry and protect its environment.  What is this, and what’s next for Ohio’s RPS?

An RPS is a state-level legislative mandate that orders regulated electric utilities to have a certain percentage of their generation portfolio made up of renewable resources by a certain date.  Various technologies, such as wind, solar, biomass, and geothermal, may count toward an RPS.  Some states even implement ‘carve-outs’ or ‘set-asides’ which require an explicit percentage from a specific technology.  Renewable energy credit (REC) markets can also develop as a byproduct of RPS policies, allowing distributed energy investors to sell the credits from their systems to the utilities to comply with an RPS, forming an effective financial incentive for investment in renewable energy.

The State of Ohio enacted its RPS policy in 2008, with a 12.5% renewable energy goal (by either generation or procurement) by 2026, and a 0.5% solar energy carve-out.  This was passed under Democratic governor Ted Strickland and a Republican-dominated legislature.  However, in 2013, Ohio passed Senate Bill 310, which ‘froze’ this RPS from 2014 to 2016.  Among other reasons, such as party politics, the freeze was enacted to allow legislators to better study the standards to understand the best path forward, forming an Energy Mandates Study Committee.

In December of 2016, as the freeze was set to expire, the Ohio Legislature passed House Bill 554, which would have made participation in the RPS voluntary until 2021, due to a number of costs the Energy Mandates Study Committee attributed to the RPS.  However, Governor John Kasich vetoed this bill, effectively ending the RPS freeze.  At the time, a report from the National Renewable Energy Laboratory (NREL) suggested that RPS adherence is generally a net gain for Ohio’s economy, contrary to the committee report.  In particular, it predicted that adhering to a state RPS would cost $31 billion, while generating $97 billion in health and environmental benefits and $161 billion from reductions in greenhouse gas emissions.

However, deliberation about the state’s RPS did not end there.  In April of 2017, yet another bill, House Bill 114, was introduced to the Ohio Senate after being passed 65–31 by the House.  This bill revisited the RPS and intended to make it a voluntary goal for the rest of its lifetime.  A newer iteration of House Bill 114 emerged in May of 2018, which scaled down from the voluntary standard to reset the mandated RPS figure at 8.5% by 2022.  The bill is under consideration in an Ohio Senate committee, but Governor Kasich maintains that he will veto any bill which would reduce the RPS.  As a result, its ultimate fate is likely to bleed into the next legislative session and lie on the results of the 2018 gubernatorial election between Republican Mike DeWine and Democrat Richard Cordray.

To speculate, it seems likely that DeWine’s platform, which only mentions the word environment when talking about business environment and calls for “curbing excessive taxation and burdensome regulations,” may clash with the RPS structure.  On the other hand, Cordray’s platform notes that “Ohio is tragically missing out on the clean energy revolution,” perhaps suggesting a more favorable environment for those in favor of Ohio’s RPS.  Of course, the fate of RPS also depends on the makeup of the state legislature, as there is the possibility of either a veto-busting majority in both houses, or one of the two chambers lacking a majority to pass the bill regardless of the governor.  For the most part, Republicans (who currently control both houses) oppose, and Democrats support, the RPS, which is generally consistent with their respective platforms.  However, it should be noted that in the House vote for House Bill 114, four of the 65 yeas were Democrats, and three of the 31 nays were Republican, so party lines are not completely solid on this matter.

At any rate, it is obvious that Ohio’s energy policy, and the RPS issue in particular, will remain a hot button issue during this gubernatorial election season.  As many academic studies have shown RPS mechanisms to be strong drivers of renewable energy growth in states, many have suggested that the Ohio RPS revival could be a net gain through job creation and other economic development metrics for the state.  Opponents note that RPS may increase electricity rates and impede on electric utility business operations, such as meeting consumer demand with various, new renewable assets on the grid.  We will find out more in November, and beyond, what is next to come in the Ohio RPS saga and which gubernatorial candidate and strategies will shape the future direction of energy and economic development in the state.

You can reach Gilbert Michaud at michaudg@ohio.edu or Justin Riley at jr518415@ohio.edu.

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