Pennsylvania Passes State-Wide Clean Energy Bill

Pennsylvania’s legislature approved SB1030, the Alternative Energy Portfolio Standards Act. Under the bill, 18 percent of Pennsylvania’s energy will come from alternative sources by the year 2020. This brings to 16, the number of states that now have renewable portfolio standard (RPS) legislation that requires a certain amount of power generated by the utilities to be derived from renewable energy sources such as wind, solar, and others.

The bill does set precedent for being the first statewide RPS to include a fossil fuel component, but in the context of Pennsylvania as a strong coal state, industry sources say the mild fossil fuel components were small concessions meant to give the bill legislative legs. The bill divides the requirements into two tiers: Tier 1 sources include solar, wind, low-impact hydro (below 50 MW per project), geothermal, biomass, biological and coal-mine methane, and fuel cells. Tier 2 sources include waste coal, distributed generation systems, demand-side management, large-scale hydro, municipal solid waste, wood byproducts, and integrated combined coal gasification technology. One of the major highlights of the bill is its mandatory component for solar. By the year 2020, the new legislation is likely to have catalyzed as much as 860 MW of new solar photovoltaic (PV) capacity, according to the Solar Energy Industries Association (SEIA). That’s enough to power about 300,000 average homes in Pennsylvania, and likely to have a considerable multiplier effect on solar industry jobs in the state. The legislation will also establish a consistent state-wide policy for solar interconnection and net metering similar to standards in New Jersey and New York, which greatly simplify the process for solar PV projects to be approved and connected to the grid. Wind power, as one of the most cost effective forms of commercial renewable energy, will likewise get a substantial boost from the new bill. The wind power industry has been plagued on the national level by inconsistent federal support of an important tax credit, the wind power Production Tax Credit (PTC). “These are the types of medium and long term policies that really help offset the stop and go cycle of the PTC over time,” said Christine Real de Azua Assistant Director of Communications, American Wind Energy Association. The combined aspects of wind turbine production and project construction can also offer a significant jobs and manufacturing boost — particularly at a time when many manufacturing operations are looking overseas to lower costs. Spain-based Gamesa, a major wind turbine manufacturer, has already announced earlier this year that it would be opening a facility in the state. Governor Edward Rendell has not yet signed the bill, but he has been a staunch supporter all along and is most certain to sign it within the next 10 days. In fact, it was largely through his leadership that the bill moved ahead relatively quickly within the state’s legislature. “Governor Rendell really picked up and decided to do the legwork,” said Colin Murchie, Director of Legislative Affairs for SEIA. “There was not a lot of opposition, but a lot of distractions. The governor put it on the calendar.” Adding this most recent legislative win for renewables to those already won in nearby New York and New Jersey is likely to help foster a regional market in much the same way that California acts as a major regional market for renewables in the west. Approximately 80 percent of the U.S. solar market is based in California because of the state’s similar RPS coupled with generous incentives. Statewide, environmentally-oriented organizations are also behind it. “Pennsylvanians should be proud of the legislators who fought for this groundbreaking legislation,” said John Hanger, President and CEO of Citizens for Pennsylvania’s Future (PennFuture), a prominent statewide public interest association. “Thanks to them, we have the first clean energy standard bill passed by a coal-producing state, and stronger legislation than New Jersey, Maryland and New York.” The Pennsylvanian legislation is not without its critics, however. Citizen Power, a regional energy advocacy organization which helped author an earlier renewable energy bill (SB 962) that failed to gain legislative traction, spoke out against this bill for its concessions to fossil fuel, in particular. “We kept hearing: ‘this is a coal state’ and ‘you have to compromise’, but there’s a point when the line is crossed and more harm than good is being done,” said David Hughes, executive director of Citizen Power. Citizen Power also claimed the clean energy requirements would be rendered optional for the utilities and that large amounts of cheap, existing power (like hydroelectric dams) will fill up the requirements, leaving little room for new wind power. Colin Murchie, Director of Legislative Affairs for (SEIA), doesn’t think the legislation will cause utilities to forsake renewable energy. Murchie explained that the state’s Public Utilities Commission (PUC) could lower the requirements on the utilities only under extremely rare circumstances — such as an excessively high implementation cost, a utility bankruptcy or other unlikely and uncommon scenarios. This is traditionally known as a Force Majeure, an “act of god” provision, and not a flexible option to be exercised casually. Muchie also explained the beneficial side of some of the fossil fuel projects – beyond helping to propel the legislation forward. For example, the bill includes provisions for methane/natural gas recovery projects that would tap the potent greenhouse gases from mining operations. These gases, a normal byproduct of many of Pennsylvania’s mining operations, are released directly into the atmosphere with roughly 20 times the detrimental effect of carbon dioxide, another well known greenhouse gas. AWEA’s Real de Azua echoed Murchie’s sentiments. “It’s better to have something that works, than to have deadlock,” Real de Azua said. “Overall the state is transitioning towards clean energy, and that’s the full benefit.” In terms of hydropower and the various fossil fuels crowding out more benign technologies, Murchie said the percentage requirements spoke for themselves. – The bill requires that within two years suppliers must source at least 1.5% of their generation from Tier 1 sources, which increases 0.5% a year thereafter, up to 8%. – The Tier 1 requirement contains a mandatory solar component of 0.0013% for years 1 – 4, 0.0203% for years 5 – 9, 0.25% for years 10 – 14, and 0.5% thereafter. – The Tier 2 requirement is 4.2% for years 1 – 4, 6.2% for years 5 – 9, 8.2% for years 10 – 14, and 10% thereafter.

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