Monday, May 19, 2014

REPEAL, OVERHAUL, or just plain KILL the Illinois RPS

Yes, the Illinois Renewable Portfolio Standard sucks wind.  There. I said it.  It's beyond merely fixing.  From a consumer’s standpoint there are several issues where the Illinois Renewable Portfolio Standard is an offensive piece of legislation.  Let’s look at the RPS requirements for 2014.  In 2014 ComEd at Ameren ratepayers are mandated to buy 8% of its energy from “clean” renewable sources.  That sound noble and virtues but the devil is in the details. 

 75% of renewable energy must come from wind energy.
1.5% of renewable energy must come from solar generation.
0.5% of renewable energy must come from Distributed Generation (rooftop solar or small wind turbines owner by households).

What about hydroelectric?

Hydorelectric gets to go pound sand.  The Illinois Renewable Energy Standard barely recognizes hydroelectric as “clean” energy.  Clearly, this standard was written to favor wind energy with 75% of the energy mandated to come from wind.  Existing hydroelectric dams can compete for the existing 25% (after solar gets it’s 1.5%) but new hydroelectric projects and upgrades to existing hydroelectric generation cannot be applied to the RPS. 

Why do Illinois legislatures oppose hydroelectric?  Could it be because big wind energy opposes hydroelectric?

Next, the Illinois RPS does not consider total “clean” energy generated in Illinois.  The Illinois RPS only considers “clean” energy procured through the Illinois Power Agency.  Never heard of the Illinois Power Agency?  Before the Rock Island Clean Line I hadn’t heard of this obscure government agency either.  It’s kind of like a quasi-government agency/corporation whose sole purpose is to procure renewable energy for ComEd and Ameren customers. 

 There are two ways the IPA procures “clean” energy.  First Renewable Energy Credits can be purchased to verify the energy produced by wind turbines was “used” in Illinois.  Second, at the behest of Governor Quinn, 20 year Power Purchasing Agreements are signed to buy the wind at a flat rate.  Thi flat rate is far above the current market price. 

Michael Skelly of Clean Line Energy Partners LLC once explained it best to a renewable energy club at Harvard.  Politicians are far from experts in marketing energy.  Politicians want to sign these long term agreements at rates favorable to the big wind corporations when market prices are at their highs.  When energy prices are at their highs, politicians panic and wind companies are more than happy to oblige. 

 Third, distributed generation is accountable for only 0.5% of the RPS.  Or 0.04% of the 8%.   This is pathetic.  If legislatures were considering what is best for Illinois with a long term energy policy favorable to ratepayers, Illinois would be mandating 4% come from distributed generation (privately owned rooftop solar). 

 With Illinois RPS mandating 75% come from wind energy and minimum acknowledgement towards distributed generation, the RPS is contributing to the negative pricing problem faced by baseload generators.  Currently Exelon has a disagreement with wind generators.  Exelon sees wind corporations producing energy when the price is so low a company who profits on the market price cannot compete.  Wind corporations are still able to profit because they are profiting from the federal subsidy of the Production Tax Credit and there wind corporations don’t really care about the market price because they already have a sweetheart deal with the Illinois Power Agency. 

 So the total market for baseload generation and deregulated market is decreased by 8% with the RPS and over production of wind energy in times of low demand drives the market price down further.  While many energy generation companies fear distributed generation and consider it an evil, baseload generators need to start thinking of distributed with net metering as their friend. Household generation through solar panels will cut the total demand, but even with net metering, Distributed Generation will never cause the negative pricing problem created by wind energy. 

 Energy demand peaks during the day.  Solar panels generate energy during the peak hours.  Wind corporations generate much of its energy during the night when demand is at the lowest and creates the negative pricing.  If Illinois had less wind energy in its RPS and more reliance on generation created by homeowners with solar panels on their roof, price volatility would be reduced and baseload generators would be facing less risk.

 Think about it Exelon.  Net Metering is your friend as much as wind is your enemy.  ComEd would have far better public relations promoting distributed generation than opposing wind generation profits through the RPS and PTC. 

 Finally, Illinois Renewable Portfolio Standard is promoting eminent domain for transmission projects to supply wind energy to meet the 75% requirement.  As time goes on the Illinois RPS mandates 18.75% wind energy by 2026.  To meet this mandate, wind companies are requesting for more transmission.  This means more easements for the wind industry and more eminent domain where land rights are taken for wind companies to profit. 

 Wind companies can say what they want.  The Illinois RPS encourages eminent domain to advance and profit the wind industry.  This is not a virtue Illinois legislatures should be promoting.   While “clean” energy has its virtues, eminent domain for transmission projects is not a road we should be traveling. 

 There is talk of overhauling the Illinois RPS.  Great idea.  To overhaul it right, wind energy needs to be shown the door.  Heck, Illinois would be better off having an RPS that promotes Distributed Generation with Net Metering.  Illinois would be better off that considers total “clean” generation produced in Illinois versus total consumption.  Close to a third of Illinois wind generation is “exported” to the TVA.

 Renewable Portfolio Standard’s are clearly the creation of the wind corporations to create a demand where little or none exists.  We can do better.  Let’s start with repealing the RPS and starting over.  Springfield can create something that's more ratepayer friendly.

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