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Thursday, December 22, 2016

Midwestern lawmakers green the grid, slightly

Midwestern lawmakers green the grid, slightly

Midwestern state capitals buzzed with energy legislation in the dying days of 2016.
In Illinois, legislators handed out $2.4 billion in subsidies to two nuclear plants, bolstered the state's renewable energy mandates and gave utilities added financial incentive to pursue energy efficiency measures. Michigan lawmakers haggled over how much of the state's power market should be open to competition but ultimately made few major changes. And in Ohio, legislators passed a plan to effectively make the Buckeye State's renewable power standards optional. The measure's fate now hinges on Gov. John Kasich (R), who has voiced his displeasure with the plan.
The net impact of all that paper-pushing: a slightly greener grid in one of America's most coal-dependent regions.
How much credit, or derision, lawmakers can claim is unclear. Coal was already under siege from cheap natural gas in the Midwest. Wind, too, has made inroads — especially in Illinois, where it accounts for the majority of new capacity.
"On the margin, some of the legislation will have an impact," said Travis Miller, an analyst who tracks the power sector at the investment research firm Morningstar. "But these are very large power markets, and at the end of the day, economics are going to drive what type of generation is in the energy mix."
That's not to dismiss the entirety of what lawmakers did, particularly in Illinois. Subsidies for Exelon Corp.'s two nuclear plants make the economic landscape for Dynegy Inc.'s coal plants even more challenging, analysts said. The Illinois Power Generating Co., an Dynegy subsidiary, filed for bankruptcy a few days after the bill passed.
Lawmakers in Springfield, Ill., provided a fix to Illinois' renewable portfolio standard, ensuring an annual budget of $200 million in renewable energy credits. Greens are especially excited that roughly half of that sum will go toward distributed and community solar.
"Illinois will have more wind power and solar energy, as they receive policy support and are increasingly economic in the marketplace," said Howard Learner, executive director of the Environmental Law and Policy Center in Chicago. "The public wants more clean renewable energy, and the public is going to get more clean renewable energy."
The bill also set energy efficiency goals of 21.5 percent and 13 percent, respectively, by 2030 for a pair of distribution utilities, Commonwealth Edison and Ameren Corp. (Energywire, Dec. 2)

Coal's struggle for survival

In Michigan, lawmakers boosted the state's renewable portfolio standard from 10 percent to 15 percent by 2021 (Energywire, Dec. 16).
The bill calls on utilities to provide a more robust analysis of their long-term plans to the Michigan Public Service Commission. Independent power providers will be able to submit bids when utilities file plans for generation projects greater than 225 megawatts. Though the commission is under no obligation to accept those bids, they can use them as a benchmark for rejecting the utilities' plans.
"I think these bills have clarified and reinforced the course we're on, which is a steady move away from coal and a reorganization of power markets toward wind and solar," said Nachy Kanfer, deputy regional director of the Sierra Club's Beyond Coal campaign.
More telling, perhaps, is what the debates symbolize: Baseload power generators, like coal and nuclear facilities, are struggling to compete in markets with stagnant power demand and weak prices.
The dynamic is particularly acute in states like Illinois and Ohio, which boast competitive wholesale power markets.
Illinois lawmakers followed in the steps of New York in giving financial assurances to nuclear plants. Michigan lawmakers ultimately rebuffed calls to either expand or eliminate the 10 percent of its power market now open to competition. Instead, they effectively required independent producers to guarantee their supply.
The fights look set to continue. Ohio utilities are now lobbying lawmakers to re-regulate struggling coal facilities, guaranteeing them a financial return. The Midcontinent Independent System Operator has also proposed reforms to ensure future capacity, in a move analysts say would bolster struggling baseload plants (EnergywireJuly 15).
Utilities' switch to natural gas would likely be even greater if the matter were left to the market, said Paul Patterson, a financial analyst at Glenrock Associates LLC.
"What you're seeing is people having second thoughts about what the outcome will be," he said. "Otherwise, competition will drive out a lot of the generation we have, and we don't like the idea of that happening."

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