Four Midwest states rank among the top in the nation for making it easier for corporations to gain better access to wind and solar, according to a report released Tuesday by Advanced Energy Economy.
The report lists the top 11 states that are “above average” when it comes to clean energy resources available as well as having large industrial energy loads, which includes Indiana, Michigan, Minnesota and Ohio.
The report makes six policy recommendations that would make it easier for large energy users in those states to access renewable energy, a growing trend among corporations globally.
“If we unleash the ability of corporate America to make its own energy-purchasing decisions and move toward renewables, these states stand to gain the most,” said J.R. Tolbert, AEE’s senior director of state policy.
U.S. corporations have been steadily adopting sustainability goals that can be met with in part with renewable energy. Declining costs of wind and solar — as well as the energy cost-cutting potential of energy efficiency — are also helping to drive this trend.
Whether corporations have access to renewables depends on whether they can shop around for electricity or states have programs in place that encourage distributed generation, the report says. If states do operate in regulated electric markets, “green tariffs” should be available for corporations to purchase renewable energy credits, the report adds.
“It’s definitely more difficult to do a power-purchase agreement in a (regulated) state than a competitive one, but there is nothing standing in the way of that happening,” Tolbert said.
An example of this took place in Michigan within the past year as Nevada-based Switch Communications Group sought a location for a new data center. The company worked out an agreement with its utility, Consumers Energy, to have 100 percent of its energy needs met by renewables.
However, given Michigan’s 10 percent cap on who can participate in electric choice, advocates called this a “one-off” deal that signaled a need for more comprehensive policies that address corporate access to renewables.
Across the Midwest, corporations are seeking to boost their renewable portfolios even as states like Michigan and Ohio appear to be moving away from policies that promote the advanced energy sector.
“As you look across the Midwest, these four states reflect the tremendous opportunity that is associated with greater access to renewable energy,” Tolbert said. “There is a policy opportunity to unleash that in these states. If states take the right action, I’m convinced we’ll see corporate America really drive the renewable energy market in those states.”
Policy recommendations
According to AEE, 3.1 gigawatts of new renewable energy capacity was under contract with purchasers in 2015. The report also cites a PricewaterhouseCoopers survey from last month that said 72 percent of corporations were “actively pursuing” advanced energy purchases.
For the 11 states listed, the AEE report makes six specific policy recommendations that would enable companies to buy electricity from large, offsite clean energy projects as well as distributed energy projects. The recommendations involve renewable energy tariffs from utilities; “back-to-back” power purchase agreements; direct access tariffs; raising size limits on distributed generation projects; allowing for third-party ownership; and allowing for virtual or aggregated metering.
Robert Strong, general counsel for the Association of Businesses Advocating for Tariff Equity in Michigan, said his organization is pushing for Michigan to expand its electric choice program. The 10 percent cap on a utility’s load restricting who can participate in the choice program has left thousands of Michigan electric customers in a queue.
Meanwhile, groups like ABATE and other business advocates say proposed legislative changes to the choice program would actually limit participation even more by putting restrictions on alternative energy suppliers.
Strong said one solution might be opening the choice market to more customers if they are pursuing only renewable energy.
“That’s a legislative fight right now,” Strong said.
Indeed, the AEE report’s two main proposals — expanding opportunities to buy renewables on the market and expanding opportunities for distributed generation — have been fiercely opposed by major investor-owned utilities.
Tolbert recognizes that such policy changes come with trade-offs, but that states’ economies would be better off as a whole by making it easier for large energy users to access renewable energy.
“There are very real benefits states can get from taking advantage of corporate purchasers. There is also an opportunity for private investment and new energy infrastructure to both make the grid more resilient … as well as provide new economic development opportunities,” Tolbert said. “The question for legislators and regulators is: Do they want to utilize private investment to help strengthen the grid and create new jobs, or are they more concerned with helping maintain the status quo for utilities in some states?
“There’s an opportunity for the market to really drive renewable energy development — that’s something legislators of all stripes should be able to get behind.”