Renewable Energy Portfolios May Lead to Stronger State Economies

 

Opponents of renewable energy claim that adoption of a portfolio weakens a state’s economy [1, 2]. They support this claim with calculations of the effects of increased electric rates on economic activity.  Although the level of rates used in these calculations are subject to question, this particular issue is beyond the scope of this note.

Their procedure is to treat increases in electric rates as taxes and insert them into a computer program that predicts the effect of state-tax increases on economic activity. The resulting predictions extend a decade, or more, into the future and cannot be verified by hard data. It would be more reasonable for the opponents to attempt to calculate present-day harm. After all, more than half the states have renewable-energy portfolios (and half of these have been in effect for more than ten years [2]). If renewable energy impedes a state’s economy, there should be evidence to demonstrate it.

The State Coincidence Index (SCI [3]) provides an opportunity to compare states. SCI is a recognized indictor of the strength of a state’s economy; it has been used by renewable-energy opponents [2], who, surprisingly, did not compare states with, and without, portfolios. I used SCI data to evaluate the strength of the recovery by comparing increases from September 2009 (the bottom of the recession) to December 2015 (latest data available). The result was that the economies of states with portfolios grew an average of 19.6%, while those without grew almost one percent less (18.8%). Since the difference in averages is small and the variation among states is large, it is safer to conclude that portfolios do no harm and may do some good. It is satisfying to use a tool recommended by opponents to disprove their case.

Also on this blog: : Renewable Energy has Little Impact on a State’s Economy (November 3, 2015): Renewable Energy Does not Hurt Economically (September 16, 2015)

Sources:

[1] Energy and Environmental  Legal Institute, True Cost Of Renewable Portfolio Standards, http://eelegal.org/policy-2/, accessed 24 March 2016

[2] Randy T Simmons, et al. Renewable Portfolio Standards: Ohio, April 2015, http://emsc.legislature.ohio.gov/Assets/Testimony/72015-dr-ryan-yonk-report.pdf

[3] Federal Reserve Bank of St. Louis. Coincident Economic Activity Index for the United States (29 Jan 2016) https://research.stlouisfed.org/fred2/series/USPHCI

Proposed Ohio Wind Farms

Revised 31 Jan 2017

If all goes according to plan, Ohio will build eight more wind farms in the next five years. According to Electric Power Monthly for Jan. 2017 we now have 433 MW. The planned farms will almost quintuple that number giving wind about one-eighth of Ohio’s electricity.

FUTURE OHIO WIND FARMS

Name County MW On-Line Ref.
Amazon Paulding 100 2017 (a)
Scioto Ridge Hardin 189 2017 (b)
Buckeye I & II Champaign 200 2017 (?) (c)
Long Prairie Van Wert 450 2018 (d)
Icebreaker Cuyahoga (offshore) 20 – 30 2019 (e)
AEP Unknown 500 2021 (?) (f,g)
 Exelon Seneca  200  ?  (h)
DPL Unknown Less than 300 2022 (i)
Total   About 1900  

References:

(a) Amazon to build wind farms in NW Ohio, Columbus Dispatch, 20 Nov. 2015

(b) Amazon to build second wind farm in Ohio, The Columbus Dispatch, November 1, 2016

(c) everpower, Buckeye Wind Project, Champaign County, OH http://everpower.com/buckeye-wind-project-oh/

(d) Commissioners meet with wind farm representatives, Times Bulletin, 3 Feb 2016

(e) LEEDCo Vision and Timing http://www.leedco.org/icebreaker/vision-timeline, accessed 2 April 2016

(f) AEP renewable-power proposal ambitious, costly, Columbus Dispatch, 16 Dec. 2015

http://www.dispatch.com/content/stories/business/2015/12/16/fresh-power-up.html

(g) AEP wants to hear from wind developers interested in big Ohio projects, Columbus Business Journal, May 13, 2016

http://www.bizjournals.com/columbus/news/2016/05/13/aep-wants-to-hear-from-wind-developers-interested.html?ana=RSS%26s=article_search

(h) Exelon to build its first commercial wind farm in Ohio, Platts, 21 June 2016

http://www.platts.com/latest-news/electric-power/louisville-kentucky/exelon-to-build-its-first-commercial-wind-farm-21772944

(i) DP&L AGREES TO INVEST IN CLEAN ENERGY; SIGNALLING AGREEMENT TO RETIRE STUART AND KILLEN COAL PLANTS, Sierra Club Press Release, 30 January 2017