Ohio's HB 6 energy bill authorizes $300 million in annual surcharges on utility ratepayers, primarily to fund four struggling coal and nuclear power plants. The bill also relaxes the state’s renewable portfolio standard (RPS) and loosens energy-efficiency standards.
With more lenient RPS and energy-efficiency requirements, the state could be left without adequate incentive to spur clean energy growth.
Opponents of HB 6 are working to put the law to a statewide vote. To get a referendum on Ohio's 2020 ballot, they would need to collect around 250,000 signatures within 90 days of the law's passage.
In July, the state of Ohio passed its HB 6 energy bill, which authorizes $300 million in annual surcharges on utility ratepayers, primarily to fund four struggling coal and nuclear power plants. The bill also scales back the state’s clean energy targets. It relaxes the state’s renewable portfolio standard (RPS) — now requiring 8.5% renewables in renewable portfolios by 2026 rather than the previous 12.5% by 2027 — and loosens energy-efficiency standards, requiring a 17.5% energy use reduction between 2008 and 2027, instead of the previous 22%. The law also creates a $20 million annual fund for a set of existing Ohio solar projects.
Lobbied for by the utility companies that own the plants in question, the bill has prompted outcry from clean energy and climate advocates. Vox’s David Roberts called it “the most counterproductive and corrupt piece of state energy legislation I can recall in all my time covering this stuff.”
Local economic impacts weighed heavily in debate on the bill. Supporters framed their arguments around protecting jobs associated with the nuclear plants. Meanwhile, the Powering Ohio project has argued that continued growth in clean energy in the state can attract $25 billion in investment and create 20,000 jobs.
Now that HB 6 has been signed into law, what changes might it bring for stakeholders in the industry? What can be done to continue to promote growth in renewables in Ohio?
A Market Poised to Change
Ohio gets only 2% of electricity from renewables, but utilities had been meeting RPS benchmarks before the passage of HB 6, according to the Natural Resources Defense Council’s Daniel Sawmiller. Now, that progress could stall.
“Ohio just took a giant step backwards,” said Dick Munson, director of regulatory and legislative affairs at the Environmental Defense Fund. “We’ve been seeing state progress toward innovation and clean energy over the past couple years, and Ohio just decided on a massive scale that they want to subsidize the old, the dirty, and the uneconomic.”
Prior to the passage of HB 6, Ohio had been in the “middle of the pack” when it came to state policy support for renewable energy, according to Munson. “You were beginning to see more and more investment in the state on clean energy and efficiency,” he said.
Some argue that, with loosened RPS and energy-efficiency requirements, the state will be left without adequate incentive to spur clean energy growth.
“By Ohio rolling back those requirements, it’s going to push investment in renewables, and specifically solar, out of the state into neighboring states, such as Pennsylvania and Illinois,” said Matt White, head legal and regulatory officer at IGS, a utility company headquartered in Dublin, Ohio that provides residential and commercial solar services.
HB 6 strikes solar-specific RPS requirements entirely. According to White, solar renewable energy credits were trading for about $25 per megawatt-hour (MWh) pre-HB 6, and IGS expects their price to drop to between $5 and $10.
“What that does is that it takes a lot of that modest incentive that Ohio previously had to develop solar away,” White said. Meanwhile, neighboring Pennsylvania has instituted an in-state requirement for solar, and nearby Illinois is investing more in renewables programs, he said.
“It’s just simple math,” White said. “Investment dollars are going to go to the states that are increasing their incentives and away from the states such as Ohio that are reducing the incentive.”
And it’s not just the loss of standards that will impact the state’s clean energy landscape, Munson said. The added ratepayer funds being channeled to coal and nuclear will make the market tougher for all competing power sources. The law also reduces energy-efficiency targets to a level most utilities have already met, though utilities can still choose to offer voluntary efficiency programs.
“I think it’s going to be hard for Ohio to attract investment and jobs in innovative energy technologies,” Munson said.
A spokesperson for Ohio Governor Mike DeWine didn’t respond to requests for comment on the bill.
For its part, IGS doesn’t expect a major hit to its bottom line from HB 6, but the company will cope by shifting its solar business away from Ohio and into other states where it operates. Not everyone in the market sees HB 6 as a hindrance, though.
“I think solar can stand on its own,” said Zach Wieber, co-owner of Icon Solar, based in Milford, Ohio. Wieber disapproves of the bailouts for coal and nuclear generation, but thinks the state would be better off without mandated renewable requirements or subsidized energy in any form.
“I don’t think [the bill] is going to hurt the renewable business at all in Ohio. It might actually spur it, because people are going to be angry now that they’re going to be forced to pay a fee,” he said.
By relaxing RPS standards, Ohio is dialing back on a tool with a track record, though. Research suggests that RPS have been at least a partial driver of 56% of renewables built in the country since 2000.
In the wake of HB 6, EDF’s Munson said he isn’t optimistic that any pro-renewable energy measures will come from the Ohio’s legislature or Public Utility Commission.
HB 6 itself may end up coming up for one more vote, however. Ohio law allows voters to overturn state laws via referendum. To put HB 6 on the 2020 ballot, opponents of the energy bill would need to collect around 250,000 signatures within 90 days of its passage. That effort is underway, but faced an initial setback in August when Ohio’s attorney general rejected organizers’ proposed petition language.
If opponents succeed in getting the measure on the ballot, environmentally minded liberals and subsidy-wary conservatives could unite to sink the law, Crain’s Cleveland Business reported. The implementation of any bill subject to a referendum is also stayed until voters weigh in.
Munson sees the referendum effort as the best way to promote continued clean energy progress in Ohio.
“In my mind, it number one gets rid of a horrible bill,” he said, “but what it also does is change the dialogue back to the fact that Americans — and in this case, Ohioans — really want to look toward the future, want cleaner technologies, want more innovation in their energy sector.”