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House Hearing: Shapiro Administration Supports Expanding Alternative Energy Portfolio Standards; Renewables Lower Energy Costs; Increase Grid Reliability; More Work Needed To Improve Gas Reliability

On December 11, DEP told the House Environmental Resources and Energy Committee the Shapiro Administration supports expansion of the Alternative Energy Portfolio Standards to increase renewable energy generation, authorization of a community solar program and expanding energy storage in the Commonwealth.

Other witnesses said expanding renewable energy would reduce energy costs, avoid increasing over-reliance on natural gas and its price spikes, improve electric grid reliability, is needed to keep Pennsylvania competitive and generate business investment and jobs.

The PA Manufacturers’ Association opposed expanding renewable energy, saying it was an environmental “disaster,” “threat to public safety,” a “danger to American national security,” an “abuse of Pennsylvania ratepayers,” and “a disgrace on labor and human rights.”

The comments came during a hearing on House Bill 1467 (Otten-D-Chester) that would expand the mandate for renewable energy under the Alternative Energy Portfolio Standards to 30% by 2030, including specific solar energy targets from 1% in 2024 to 4% by 2031, and authorize a community solar program.

Here’s a quick summary of some of the comments made at the hearing.

David Althoff, Director of DEP Energy Programs Office, began by saying, “Today we can say that the AEPS was successful at achieving its 18 percent goal of all retail sales being provided by Tier I and Tier II resources by the envisioned goal of May 2021. This outcome was uncertain and maybe even doubted when the policy was first debated.

“The past 17 years have now proved that the market will respond, and Pennsylvania can increase its percentage of alternative energy via legislative mandate—even with geographical limitations.”

Solar Energy Today In PA

“For example, let’s look at the current scope and scale of grid-scale solar development in Pennsylvania--

-- There is currently approximately 306 megawatts (MW) installed capacity from twelve operating projects.

-- We have just recently surpassed 1 gigawatt (GW) of installed solar capacity in Pennsylvania that has been certified by our AEPS administrator.

-- There is approximately 17 GW of capacity in development from roughly 440 projects that are currently seeking approval from the transmission operator, PJM, to connect to the grid.

Of these 440 projects, 120 have received an interconnection agreement from PJM to sell electricity into the grid and are at different phases of the design, permitting, and construction process.

-- There are over 500 MW of grid scale projects identified as “under construction” in the PJM Queue.

-- These 440 projects in development represent over $19 billion in investment potential (to build and operate) and an estimated 55,000 jobs over 10 years.”

Forward-Looking Energy Policy

“Pennsylvania, again, needs to craft a forward-looking energy policy—and in shaping that policy we can learn from the lessons of past energy policy--

-- Consider increasing the percentages of electricity consumption from alternative energy resources. Neighboring states took notice of Pennsylvania’s forward-looking policy and have surpassed us. Over time, this trend will continue and accelerate, reducing the demand for all forms of Pennsylvania electricity exports, if we do not act to update the AEPS.

-- Authorized community solar program. Enabling community solar as a way to provide Pennsylvanians with greater access to local sources of electricity without needing to rely on large-scale infrastructure or to pay for constructing an energy system at their home or on their property.

-- Mitigate the risks and value the flexibility and potential for energy storage. We can work to improve the diversity and resiliency of our electrical grid by introducing the use and preference of available and soon-to-be-available storage technologies combined with intermittent resources such as solar and wind.”

“Combining solar with behind-the-meter battery backup can mitigate impacts relative to supply and demand ramping on the distribution system, particularly on circuits with higher concentrations of solar electricity generating systems.”

Keep PA Competitive

“In closing, it is imperative that the General Assembly act to keep Pennsylvania competitive in the regional electrical generation marketplace.

“As we approach the twentieth anniversary of the pathbreaking AEPS legislation, there is a growing need to reform and update its standards to ensure that Pennsylvania has access to a plentiful supply of different sources of reliable power.

“As Governor Shapiro has made clear, we are proud to be an all-of-the-above energy state.

“The AEPS ensures that we are true to that description and that all sources of power have an opportunity to thrive here.

“This matters because Pennsylvania does best when we are not overly reliant on a single form of generation.

“That was the reason for the original AEPS in 2004 and now is the time to build on its success and to go farther.

“Finally, the market is ready and historic opportunities available through the federal Inflation Reduction Act will help to build and develop clean energy projects in our communities and re-establish Pennsylvania as a diverse energy leader.”

Support For House Bill 1467

In response to a specific question from Rep. Martin Causer (R-Cameron), Minority Chair of the Committee, on supporting House Bill 1467, Althoff said, “I believe that the [Shapiro] administration does support this bill.

“As I said, this bill has a lot of attributes, which we, as the Energy Programs office of DEP, supportive of, especially the 30% by 2030 goal and the specific carve-outs related to the different types of solar that could be deployed as a part of the tier one renewable standard.”

Click Here for a copy of DEP’s written testimony.

Sharon Pillar, Pennsylvania Solar Center, “We strongly support the passage of House Bill 1467 to expand the tier one goals of the AEPS [Alternative Energy Portfolio Standards] so that Pennsylvanians can take advantage of our most abundant natural resources, the sun and the wind.

“We applaud the committee for exploring the benefits of updating this important economic and energy policy. The lack of action by previous administrations and legislatures on this critical issue is needlessly costing Pennsylvanians billions of dollars each year.

“The cost of doing nothing grows larger every single day.”

Natural Gas Price Volatility Burdens Ratepayers

“The current energy scenario is shifting the high cost of natural gas volatility to Pennsylvania ratepayers to shoulder the burden.

“The only solution to this problem is to increase renewable energy, energy storage, and energy efficiency, and I guess demand side and energy management.”

Lack Of Energy Diversity

“The lack of diversity in Pennsylvania's electricity mix for which natural gas dominance is predicted to comprise 70% by 2030 is contributing to alarming electricity price increases already.”

[Note: PJM noted Pennsylvania’s generation fuel mix as of December 31, 2022 was-- Natural Gas- 23,136 MW; Coal- 9,438 MW; Nuclear- 9,076 MW; Hydro- 2,372 MW; Oil- 2,167 MW; Wind- 466 MW; Waste-242 MW; Solar- 70 MW;

“According to the Pennsylvania Public Utility Commission, 2022 rate increases ranged from 35% to 56% across all major electric distribution companies-- quote, "Fueled in large part by shifts in supply and demand for natural gas."

“We urge you to consider the benefits of diversifying the Commonwealth's electricity generation portfolio by increasing renewable energy resources to insulate electric ratepayers from volatility in the energy markets, to stabilize electricity rates, and to lower consumer energy bills.”

Lack Of Action Putting PA At Competitive Disadvantage

“In addition, the lack of action on the AEPS to date has put Pennsylvania at a competitive disadvantage as other states, as Mr. Altoff [Director of DEP Energy Program Office] mentioned, are reaping the benefits of renewables with their more attractive policies.

“And in fact, Pennsylvania is now 50th in the nation for the percent growth in renewable energy since 2013 because of the lack of action on the AEPS. And new federal programs for renewables and energy storage authorized by the Inflation Reduction Act, or the IRA, are an enormous growth opportunity.

“But Pennsylvania is losing out to neighboring states with more competitive renewable energy goals as investors seek to maximize their return on their investment and attract the most talented workers to other states

“We also support House Bill 1467 because it provides credit incentive for utility scale, community solar, and distributed solar, which is essential to grow these various market segments appropriately with the least compliance cost.”

Renewables Reduce Electricity Rates

“Each of these sectors is important in reducing electricity rates to all Pennsylvanians, and they have very unique opportunities in the different markets.

“So utility scale offers the largest opportunity to reduce rate pair costs because they can generate the largest amount of electricity at the cheapest cost.

“And now it is the cheapest price of energy on the grid.

“And by replacing more renewables onto the transmission grid, wholesale pricing is suppressed for all ratepayers across the board, whether they have solar or not.

“Community solar, of course, is another opportunity to expand access to inexpensive electricity options, particularly for those who can't install on their own property.

“And 1467 establishes a community solar program that is not now permitted in the state, and provides an incentive that's congruent with all other alternative resources, so treats it the same as other resources.

“While the PA Solar Center supports community solar, we feel it must be passed in tandem or part of the AEPS expansion in order not to further harm the current credit market for other solar and other renewable markets.

“A strong AEPS is needed to create a robust community solar program as well. And then thirdly, distributed solar allows homeowners, nonprofits, farms, businesses, municipalities, schools, and industry to generate electricity onsite to reduce their electricity bills.”

Growing New Jobs

“Distributed solar reduces transmission and distribution congestion and line losses as onsite renewable energy directly serves local electricity needs, and it has the largest opportunity to grow jobs.

“And in fact, research shows that moving to just 10% solar by 2030 would result in more than 60,000 direct jobs and thousands of people working in supporting industries.

“Renewable energy is an important and necessary component in controlling and reducing rate pair impacts on rising energy prices by diversifying our energy mix.

“The state must prepare for the modern energy economy in order to take full advantage of new technologies of the 21st century grid, and to provide new energy economy jobs to our citizens and to create energy security and reliability.”

Click Here for a copy of the Pennsylvania Solar Center written testimony.

Andrew Williams, Sol Systems, said his company has “customers in 59 counties across Pennsylvania and was an early pioneer of Pennsylvania’s renewable energy industry by providing homeowners and small businesses the ability to monetize solar renewable energy credits (SRECs).”

“Solar provides a relatively weather-agnostic domestic energy source that provides local employment opportunity together with critical revenue streams for local communities and landowners.”

Cheapest Form Of Electric Generation

“In terms of specific technologies, the cost of solar power, which is already the cheapest form of electricity production, is expected to continue its downward trajectory.”

“Capturing this once-in-a-generation opportunity relies on a stable, favorable business climate like Pennsylvania has historically provided to myriad energy sectors.”

Need Predictable Business Policy

“Investors and businesses look to invest in states with predictable, long-term, and growing clean energy markets; the leveling off of the current standard sent a clear signal that Pennsylvania is no longer open for business in the fastest-growing energy sector.

“This is a mistake for Pennsylvanians across the Commonwealth.”

“Passing House Bill 1467 will not only expand and diversify the Commonwealth’s electricity generation capacity, but it will create new economic and jobs opportunities.

“Maintaining a robust and competitive renewable energy market will allow Pennsylvania to maintain its status as a net energy exporter and a leader in global energy security.

“It is essential to start now to develop a broad and diverse energy strategy for Pennsylvania.

“One that values the benefits of all electric generation types to grid reliability, but also considers key aspects like energy security, consumer protection, environmental harm, and regional competition.

“We have the tools we need now; we just need action from this committee and others to help chart the future path.”

Click Here for a copy of Sol Systems written testimony.

Walker Adams, Leeward Renewable Energy, introduced his compaying by saying, “LRE has operated utility-scale wind projects in Pennsylvania since 2006.

“LRE operates two wind projects in the Commonwealth: the Allegheny Ridge project in Cambria and Blair Counties, in operation since 2007, and the Bear Creek project in Luzerne County, in operation since 2006.

“Having been in operation for nearly two decades, these wind projects have become part of the fabric of their communities and the Commonwealth’s energy supply.

“These projects contribute vital tax dollars to their communities and sustain long-term jobs across the industry’s supply chain.”

“As an energy exporter, the Commonwealth’s energy sector is an economic engine.

“From the construction of the first turbines in the state more than 20 years ago, Pennsylvania’s wind industry has now grown to power nearly 350,000 homes annually.”

Renewables A Job Generator

“The broader clean energy sector— including solar and storage—supports nearly 10,000 Pennsylvania jobs, $4 billion in private capital investment, and pays $9.5 million each year to rural landowners that host clean energy projects on their property.

“Recent research found raising the AEPS to 30% would increase renewables deployment in Pennsylvania 40 – 50% more by 2035. This will translate to billions of dollars in new capital investment for the Commonwealth.”

Renewables Reduce Energy Costs

“Consumers will also benefit from the expansion of wind and solar power through decreasing wholesale electricity costs and peak demand shaving.

“As PJM’s Event Analysis and Recommendation Report following Winter Storm Elliott shows, wind generation met and exceeded its commitments to PJM, supporting the electric grid’s stability with reliable low-cost electricity.

“Further highlighting wind generation’s consumer benefits, Berkeley National Laboratories concluded that wind output in the PJM region reduced wholesale prices by 24% during maximum net-load hours.

“Furthermore, PJM is forecasting a reserve margin shortfall by 2030 and has emphasized it is critical that we bring more generation facilities online to avoid future resource adequacy issues.

“By raising the AEPS, the Commonwealth has an opportunity to encourage the further buildout of renewable energy and capitalize on a growing portion of what is estimated to be a $26.5 billion dollar market nationally by 2030.”

Diversification Of Energy Sources Benefits PA

“By encouraging the diversification of generation resources, Pennsylvania will facilitate the continued buildout of renewable energy, decrease wholesale electricity prices, increase investment in Pennsylvania, and foster grid stability.

“Raising the AEPS is a win for Pennsylvania’s energy producers, consumers, and the electric grid.”

US - PA Sourcing Of Solar Panels & Glass

In response to a question about its solar energy projects, Adams said Leeward has an exclusive contract with First Solar in Ohio for the use of US made solar panels for its projects and “those panels are the sole panels that we use on all our projects.”

“And First Solar has also recently announced the build-out of a wide-scale facility for glass manufacturing in Pennsylvania to use the Vitro Architecture Glass facility.

“[They] received $93.6 million in investment from First Solar to modernize its plant in Meadville, Pennsylvania to manufacture glass for those panels.

“And it's estimated that's going to generate over $1 billion in sales for Vitro moving forward.

“So those unique investments from partners like First Solar help to power both American energy infrastructure and Pennsylvania's energy infrastructure.”

Click Here for a copy of Leeward Renewable Energy written testimony.

Asim Haque, PJM Interconnection, provided an overview of the transition of electric generation to clean energy and the impact it is having on the PJM electric grid and issues they see coming in the future.

“We're not going to take a position on this bill. We're here to serve as a resource and a lot of the information that is provided in this slide presentation should hopefully be information that you can take and utilize to your benefit as you are creating policy.”

Gas Pushed Out Coal

“We've already been through a major transition from coal to gas, so it used to be a really predominantly coal fleet and you've seen natural gas take up quite a bit of that share.

“So we've already seen sort of that transition and we continue to see primarily coal resources leave the system for economics and environmental reasons, thereby reducing emissions, continuing to reduce emissions.”

“The net result being we're concerned about sort of having a supply crunch by the end of this decade.”

Increase In Demand

“The first trend is an increase in demand. Demand in PJM has been relatively flat for a number of years.

“We are going to see an increase in demand due to the concepts of electrification, but also major proliferation of data centers, which are huge, huge consumers of power across the footprint.”

Resources Leaving System

“The next trend is we are seeing quite a few resources leave the system.

“Many of them, we'll call them our policy-based retirements, not necessarily in the state of Pennsylvania, but we've got quite a few states that have advanced policy that are pushing resources out of the system, sort of, before the end of their economic useful life.

“And we also have some economic retirements to be fair.”

Haque described reforms PJM has adopted to get energy projects through its que faster to avoid a mismatch between increasing demand and generation leaving their system.

“We are hopeful that that power finds its way onto the system. We are very hopeful because it could help cure this sort of mismatch between supply and demand that we are seeing. So we want these resources to find their way onto the system.

“I think we're a little nervous. We're a little nervous.”

“About 44,000 megawatts of [generation] resources that found their way through the generation interconnection queue but have not interconnected… or have not put steel on the ground, excuse me, for reasons like supply chain, financing, state and local sighting concerns across the footprint.”

More Work Needed To Increase Natural Gas Reliability

“The [PJM] system really struggled during Winter Storm Elliott this past Christmas and we had lost a lot of generating resources on Christmas Eve, Christmas day due to cold weather and winterization issues.”

[Note: PJM testified at other hearings 70% of the electric generation it lost during the storm was natural gas-fired. Read more here.]

“We have taken strides since winter Storm Elliott to try and ameliorate that issue.

“There's still quite a bit of work to be done in the sort of gas, electric coordination space. That's sort of utility industry jargon where they just operate on different spheres and trying to get them to coordinate themselves is a bit of a challenge.”

“One is an immediate term issue, which is making sure that facilities are winterized.”

“The North American Electric Reliability Corporation [and] others [are] pushing hard to make sure facilities are winterized.

“The supply demand mismatch is something that we're going to see later on in this decade. Again, we are going to push hard to try and get as many of these projects as we can studied and out of the generation interconnection queue and then it's up to others.”

Click Here for a copy of the PJM Interconnection slide presentation.

Jeff Mauk, Ceres, introduced his group by saying, “Ceres is a nonprofit sustainability organization working with businesses in Pennsylvania and across the U.S. to pass policies, including clean energy and energy efficiency solutions, to achieve our collective climate goals.”

He noted Ceres and a related organization Business for Innovative Climate and Energy Policy Network footprint in Pennsylvania, including Danone, DSM, Eaton, General Mills, IKEA, Kellogg Company, L’Oréal, Mars, Microsoft, Nestlé, Siemens, and Unilever.

“Ceres is supportive of the goal of achieving 30% clean energy by 2030 as proposed by House Bill 1467, as well as supporting additional policies that would create jobs and address pollution from electricity, transportation, buildings, and industry.”

Employers Want Access To Clean Energy

“Pennsylvania’s largest companies and employers want access to clean energy. Twenty seven of Pennsylvania’s 40 largest employers have renewable energy or energy efficiency goals.

More than 90 companies with a presence in the Commonwealth have committed to being powered by 100% renewable energy.”

“Establishing increased goals for clean energy production will help companies better manage risk, promote long-term profitability, safeguard the resilience of their supply chains, and allow them to better meet the growing demands of their customers and investors – who increasingly demand greater sustainability and climate action.”

“Governor Shapiro has also called for increasing Pennsylvania’s clean energy goal to 30% by 2030. Now is the time to prioritize growing the clean energy economy.

“Passing legislation to codify the 30% by 2030 goal, as well as other clean energy priorities, will attract new investment, encourage innovation, save homeowners and businesses money on their energy bills, and ensure environmental benefits for all Pennsylvanians.”

Click Here for a copy of the Ceres written testimony.

David Taylor, PA Manufacturers’ Association, said his organization opposes House Bill 1467 for five reasons--

-- An environmental disaster: “A state mandate requiring 30% of all electricity be produced by solar panels would be an environmental disaster because the low yield, intermittency, and fragility of that technology would require an impossibly large footprint that would destroy natural habitat, threaten groundwater with excessive runoff, and cause a disposal crisis.”

-- A threat to public safety: “House Bill 1467 is a threat to public safety because it will destabilize the electric grid and increase the probability of blackouts.”

-- A danger to American national security: “Maximizing domestic energy production is crucial to achieving energy independence for the United States, strengthening our domestic economy, and empowering U.S. global leadership. Anything that suppresses domestic energy production weakens America.”

-- A disgrace on labor and human rights: “For all of the differences between Democrats and Republicans, liberals and conservatives, labor and business, I hope we could agree on this much: No American worker should ever have to compete with slave labor and no American consumer should ever be exposed to slave-made goods in the U.S. marketplace.”

-- An abuse of Pennsylvania ratepayers: “In reporting year 2022 there was a 0.5% solar mandate in place. According to the Public Utility Commission, the cost of compliance, passed on to Pennsylvania ratepayers, for the 0.5% solar mandate was $28.65 million.”

“If House Bill 1467 were to be in effect today, this legislation requires a 30% solar mandate, an increase of 60-times the current standard. At current compliance prices, without accounting for inflation eight years from now, this would cost Pennsylvania ratepayers $1.8 billion, per year.”

Click Here for a copy of the PA Manufacturers’ Association written testimony.

Written Comments

The Committee received additional written comment in support of the bill from--

-- Philadelphia Solar Energy Association

-- PA Solar & Storage Industries Association

-- Advanced Energy United

Video Of Hearing

Click Here to watch a video of the hearing.

Rep. Greg Vitali (D-Delaware) serves as Majority Chair of the House Environmental Committee and can be contacted by calling 717-787-7647 or sending email to: gvitali@pahouse.net. Rep. Martin Causer (R-Cameron) serves as Minority Chair and can be contacted by calling 717-787-5075 or by sending email to: mcauser@pahousegop.com.

NewsClip:

-- StateImpactPA - Rachel McDevitt: Analysis Says Federal Clean Energy Dollars Are Flowing Into PA, But Results Remain To Be Seen

Related Articles Related To Agenda:

-- Senate Hearing: Wholesale Electricity Prices Too Low To Support Coal, Natural Gas Power Plants In Market; Natural Gas Reliability Issues Will Continue [PaEN]

-- Senate Hearing On Electric Grid Reliability: Natural Gas Continues To Have Reliability Problems; Renewables Aren’t Coming Online Fast Enough; Energy Office To Be Proposed [PaEN]

-- PJM Interconnection Reports Higher Percentage Of Natural Gas-Fired Electric Generation Outages Than Originally Thought During Winter Storm Elliott - 70% [PaEN]

-- New NERC Winter Reliability Assessment Finds Elevated Risk Of Blackouts In Extreme Weather Conditions; Natural Gas Supplies Still Vulnerable To These Conditions With 'Devastating Consequences' [PaEN]

-- PJM Interconnection Formally Files Changes To Electric Capacity Market Rules With FERC Based Largely On Unreliability Of Natural Gas-Fired Power Plants During Winter Storm Elliot [PaEN]

-- Federal Energy Regulatory Commission, NERC Final Report On Winter Storm Elliott Says Legislative Action Needed To Establish Reliability Rules For Natural Gas Infrastructure [PaEN]

-- S&P Global: Federal Inquiry Finds Same 3 Causes Driving U.S. Electric Generation Outages In Extreme Cold - Reliability Of Natural Gas System Remains A Concern [PaEN]

-- PUC Again Reminds Consumers Of Dec. 1 Price Changes: Natural Gas (+149% to -64.2%); Electric (+18.8% to -25.7%) [PaEN]

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