In the Midwest, policy is transforming our energy system, economy, and environment. From North Dakota to Nebraska, we’re making clear-eyed investments that drive down the long-term cost of electricity while creating jobs and reducing air pollution. One of the key drivers? A policy tool called a renewable energy standard (RES).
SETTING THE STANDARD
An RES is a law which requires or encourages utility companies to produce a portion of their electricity from solar, wind, and other renewable resources. The policy usually includes incremental targets which increase over time. For example, a state could require utilities to increase their renewable generation by five percent each year over five years, ultimately resulting in 25 percent renewable power overall. Every state in the Midwest region now has an RES in place; all but one was adopted through bipartisan legislation; Missouri’s RES was approved by voters on the ballot.
According to the Governors’ Wind Energy Coalition—a bipartisan group of 23 governors working to promote wind power—the RES is “a market based policy, using competition to drive down technology prices and move technologies to maturity—all at the lowest cost. It motivates action by the private sector, by creating a market opportunity for project developers to pursue. The government’s role is to set the standard that will be met by utilities and project developers.”
More than 35 U.S. states have used a mandatory or voluntary RES to achieve a variety of policy goals.
- diversify the energy supply, stabilizing prices and reducing risk to consumers
- increase domestic U.S. energy production and develop production in states that lack fossil fuel resources
- create jobs and economic development opportunities in manufacturing and deployment, especially in hard-hit rural areas
- reduce air pollution and other environmental impacts
OVER THE LONG TERM
Renewable energy standards set long-term direction for energy development, giving guidance to regulators, utilities, power plant developers, investors, manufacturers, and even training programs. The policy also enables long-term planning for infrastructure. The Midwestern grid operator, known as the Midcontinent Independent System Operator, approved more than 3,500 miles in new transmission projects in 2011, specifically to enable the fulfillment of RES targets in the region. This marriage of state energy policy with regional transmission planning was a big breakthrough and became the basis for a national order from the Federal Energy Regulatory Commission, known as Order 1000. The order establishes regional utility planning to help integrate renewable energy into the system, expand the grid, and incorporate public policy goals such as renewable energy standards.
CASE STUDY: MINNESOTA AS A LEADER
In 2007, the Minnesota Legislature and then-Governor Tim Pawlenty passed one of the strongest renewable energy standards in the nation. The bipartisan policy required Minnesota’s utilities to generate at least 25 percent of their power using renewable sources by 2025 (30 percent by 2020 for Xcel Energy), with benchmarks along the way.
According to the American Wind Energy Association, as of April 2014, Minnesota now has nearly 100 wind projects online, with more than 2,100 wind turbines (making Minnesota fifth in the nation) producing enough electricity to power more than 840,000 average Minnesota homes. Minnesota is already recognized as a national leader in the wind energy industry, and wind power now generates more than 15 percent of Minnesota’s electricity.
The economic benefits of Minnesota’s strong RES are impressive. The policy directly boosted investment in wind—to date, the wind industry has invested nearly $6 billion in the Minnesota economy. This means more jobs in areas like operations, maintenance, construction, and manufacturing. Currently, the wind industry supports more than 1,000 jobs across the state. The industry also produces millions of dollars in lease payments to local farmers and increases the tax base for local communities. For example, more than $42 million has been paid in production tax payments to Minnesota counties, cities, school districts, and townships since 2007. Using more wind also means we’re sending less of our money to other states in order to purchase coal (Minnesota has no coal of its own).
The wind industry also requires manufacturing facilities to produce products for the wind industry, everything from the blades of the turbines to the raw components like fiberglass and steel. According to the American Wind Energy Association, Minnesota now has 19 facilities that manufacture materials for the wind industry. By enacting the strong RES in 2007, Minnesota attracted capital that helped grow nation-leading businesses like Mortenson Construction, Blattner Energy, Barr Engineering, and Anderson Trucking Service. A July 2014 New York Times article gave the RES credit for creating an industry that not only builds and maintains wind turbines, but transmission lines throughout the state.
But Minnesota’s RES has produced health as well as economic benefits. Wind-powered electricity generation doesn’t emit any mercury, carbon, or air pollution. As a result, more than five million metric tons of carbon emissions are avoided annually in Minnesota—this is like taking more than 900,000 cars off our roads, helping to lower costs associated with respiratory diseases like asthma. Wind also doesn’t require the massive amounts of water that coal-fired power does. Wind projects in Minnesota save nearly two billion gallons of water per year.
All of Minnesota’s utilities are on track to meet or exceed the RES ahead of schedule. According to data from the National Renewable Energy Laboratory, wind power is capable of meeting more than 24 times Minnesota’s current electricity needs. The logical next step would be to increase the RES in order to broaden and build on the success of the 2007 law. This would create even more jobs, further boost local economic development, and protect Minnesota for future generations.
Minnesota could sit back and let competitors catch up—or leverage its economic momentum for even great gains. In the last five years, costs of wind have fallen 58 percent, while costs of solar have fallen 78 percent. There’s never been a better time to invest in renewable energy and the jobs it can create.