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This spring brought a double blow to Virginians who want to see the commonwealth develop its considerable renewable energy resources. First, Spanish wind giant Gamesa canceled plans to install a test offshore wind turbine that would have been the first in the nation and made Virginia a key player in the new offshore wind industry. Then in May Invenergy, the biggest wind company in North America, announced it would delay its proposed wind farm near Roanoke, Virginia, until at least 2015.

Congressional inaction on renewing the production tax credit, set to expire at the end of this year, gets much of the blame for the slowdown in the American wind industry. But as Invenergy made clear in its statement, Virginia has another hurdle: the state’s lack of a mandatory renewable energy standard (RPS).  This is a problem Governor McDonnell and legislators should resolve before we drive away more business.

Indeed, reports show that renewable energy projects like wind turbines and solar panels could provide tens of thousands of jobs for Virginians and create millions of dollars in new economic development.  But Virginia’s renewable energy law actually prevents this from happening. Instead, it encourages utilities to buy renewable energy credits from out of state and from activities that add no electricity to the grid.

Instead of a mandatory RPS like most states, Virginia has a voluntary RPS that gives utilities the option of making more money by including renewable energy. The costs of meeting the goals are passed through to ratepayers, so utilities don’t have to spend their own money; and as a reward for meeting the goals, participating utilities can charge ratepayers extra “basis points.” So our voluntary RPS means utilities get a windfall, and customers get a (mandatory) rate increase.

When this statute was passed in 2007, supporters hoped it would spur development of new renewable energy sources in the Commonwealth. It has not achieved that goal. Dominion Virginia Power revealed last fall that it is meeting the RPS targets primarily with renewable energy certificates (RECs) from out of state, none of them from wind or solar energy, and none from projects built in the last decade. Dominion bought these RECs because they were cheap. Yet, having met the letter of the law, Dominion will now collect an extra $38 million per year from its ratepayers as its reward.

Our RPS is an expensive failure. It charges ratepayers tens of millions of dollars every year but doesn’t deliver economic opportunities, new jobs, lower greenhouse gas emissions or cleaner air and water here in Virginia. The voluntary nature of the law, paradoxically, makes it expensive for ratepayers, but allowing it to be met with out-of-state certificates from old dams, trash and wood is the real scandal.

Partly in response, this year the legislature created two new categories of Virginia RECs, including RECs for university research on renewable energy. But though these RECs would come from Virginia, they add no renewable energy to the grid, and the legislation did nothing to exclude the old out-of-state RECs. Rather than solve the problem, this legislation makes it even less likely that utilities will invest in Virginia wind and solar.  

Only a serious reform of the RPS will result in wind and solar development--which is surely the only excuse for charging ratepayers extra under our “voluntary” law. A mandatory RPS modeled on Maryland’s or North Carolina’s laws would give ratepayers better bang for the buck, but a voluntary RPS could produce real investments in wind and solar if it simply made them a condition of the reward utilities reap for participating.

At a minimum, then, RPS reform legislation should include:
•    A “Virginia Made” requirement to incentivize renewable energy projects here in the Commonwealth, bringing the job and health benefits to the people who are paying for the program;
•    A provision ensuring that most of the energy used to meet the goals will come from projects built after 2007, when the statute was enacted, so the RPS will be a driver of new projects; and
•    A provision calling for at least some of the energy to come from wind and/or solar projects, to create a market in Virginia for these industries.

Of these, the first is politically the easiest to pass, but only the third achieves the goal of adding wind and solar. Without it, the statute is a meaningless waste of money, and the utility incentives should simply be repealed. This doesn’t mean repealing the RPS itself; utilities could still choose to comply with the statute’s stated goals and would be compensated for their additional costs for doing so. We would simply give up the pretense that utilities are doing something so extraordinary and so difficult that they deserve a huge bonus payment for achieving it.

But it is worth trying to make the RPS meaningful. With all three reforms in place, utilities would be looking for Virginia wind and solar projects to invest in. Maybe then, we won’t lose the next Gamesa or Invenergy.

A version of this article originally appeared as an op/ed in the Richmond Times-Dispatch.

Originally posted to Power for the People on Tue Aug 28, 2012 at 11:00 AM PDT.

Also republished by Virginia Kos.

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