More than 60 witnesses testified before the Ohio Senate Energy and Natural Resources Committee in opposition to Senate Bill 320 and a call to reinstate the RPS. SB 320 would introduce a voluntary compliance requirement for utilities that would, in essence, act as a de facto continuation of the current RPS freeze.
The Statehouse chamber was standing-room only. Testimony stretched for more than three-and-a-half hours of witnesses expressing their opposition. Each witness was given two minutes to speak. Senator Troy Balderson is the chair of the committee. Ranking minority member Lou Gentile and the bill’s author, Senator Bill Seitz were the two most active senators in asking questions.
Seitz was oftentimes combative. He would ask routinely why wind and solar could not stand on their own without any government intervention. There were times he would roll his eyes or make demonstrative movements expressing his displeasure. Our response to this is that governments have always subsidized industries they wanted to succeed while the industry was in its infancy and to cut support once the industry stood on its own. To name just one, the Internet was largely created in Boston at MIT in the 1960s and subsidized by the United States government department of defense.
Why would electric utilities be worried about solar subsidies? They really have no reason to complain since they are the second most subsidized industry in America, receiving billions of dollars in tax breaks per year, mainly due to paying a miniscule 3.7% effective tax rate. The US electric utility industry is estimated to be worth $370 billion. The US solar industry is estimated to drive around $40 Billion in revenue for 2016. Why is Goliath worried about David?
What did we learn from this session?
There were certain themes expressed from a variety of constituents in their testimony:
Consumer Choice – For nearly 100 years, there was only one choice in how to get your electricity – however it was provided by the utility company. Independent-minded people, in particular, farmers, were very interested Tuesday night in the choice of how to produce their own electricity. The RPS would make it more affordable for them to go with renewable energy.
Wind setback law - The wind setback rule that was enacted in HB 483 effectively destroyed the wind industry in Ohio, making it uneconomical for large capital projects. The wind setback issue has not been addressed since. A whole litany of people urged the committee to include language for the wind setback law into SB 320.
Environmental concern – Ultimately the driving force behind the original RPS, the environmental concern fell on deaf ears. The Senators were concerned with whether renewable energy could economically compete with fossil fuels and one day stand on their own. Nothing more.
Jobs – College students were concerned the industry would not grow enough to provide them adequate jobs. There were several engineering and science-based members of the college class.
SRECs – The SREC market is currently down to an all-time low of $8. With the reinstatement of the RPS, the market will rebound and make solar a better investment. Solar customers want a better pay-back on their investment. Solar companies want to sell more systems and product. Enough said.
Uncertainty – Renewable energy companies want to know with a degree of certainty what the market will look like over the next few years. This was what the original RPS promised back in 2008 to start to grow the solar industry. If businesses knew they could count on the RPS requirements being met, they could make capital investments and hire additional staff to grow their business.
Outlook on the Bill
There was a meeting attended by members of the solar industry representing manufacturing, advocacy, and installation after the senate hearings ended. The meeting was attended by insiders on the issue. The upshot? It is difficult to gauge whether SB 320 will pass the senate or not. It is in the best interests of the solar and wind industries for SB 320 to be defeated and the original RPS would be reinstated. In this scenario we would see the return of the SREC market which would make solar a better financial value for current and future solar energy system owners.
Solar and policy insiders are cautiously optimistic that SB 320 will be defeated and the RPS reinstated. However, they are just as pessimistic about SB 320 passing the Senate and going into law. In short, nobody, not even Statehouse insiders know what is going to happen and how the legislature is going to vote. Either way we will know by early next week, possibly by Tuesday, what the outcome will be.