Why We Won’t Get An RES, And Why It Might Not Matter For Solar

Last month, Sens. Jeff Bingaman, D-N.M., and Tom Udall, D-N.M., unveiled a bipartisan bill that would enact a 15% by 2021 national renewable electricity standard (RES) in the U.S. Long touted as a crucial component of a solar-friendly national energy policy, an RES has never become a reality, despite being introduced numerous times in the House and Senate over the past few years.

Bingaman's latest RES proposal, known as the Renewable Electricity Promotion Act of 2010, is essentially a reintroduction – with a few technical changes – of the same provisions that have existed in various forms in Congress since 2009, says Christi Tezak, a senior research analyst of energy and environmental policy at Robert W. Baird.

The bill is also likely to follow its predecessors in legislative failure. Just a few weeks after Bingaman's announcement, hope for the RES' passage is already fading rapidly.

‘The chances for enactment are very low this year,’ Tezak says.

‘It's less about the merits of this program. There's very significant legislative support and interest in passing it,’ she explains. ‘This is an issue of timing: election-year politics and a recession that are conspiring against it.’

Even if Congress enters a five-week lame-duck session following its regular adjournment, lawmakers will prioritize an extensive list of other, higher-profile bills over the RES. Moreover, although the 29-cosponsor legislation boasts ostensibly broad bipartisan support, reaching the 60 votes required for its survival in the Senate will be a formidable challenge, according to Tezak.Â

‘There is support in a vacuum, but if there is an issue that is bigger for a particular legislator, that vote is not assured,’ she points out. Many senators who support the general idea of a national RES may be unwilling to vote for this stand-alone bill, because it does not contain additional provisions to address separate programs that also may be seeking to advance in the Senate.

Meanwhile, solar advocacy groups and other renewable energy trade associations that hope to see an RES passed must counter the influence of a large anti-RES lobbying contingent. Businesses and associations that ‘generally oppose clean energy policies’ (representing the oil, mining and electric utilities sectors, for example) spent over $500 million in lobbying and campaign contributions from January 2009 to June 2010, according to an analysis by the Center for American Progress Action Fund, a progressive advocacy organization.

In addition, a competing renewable energy bill introduced by Sen. Lindsey Graham, R-S.C., that would permit nuclear energy and ‘clean coal’ under its RES mandate has begun siphoning likely votes from Bingaman's plan.

While considered more solar-friendly than Graham's proposal, Bingaman's bill has, nonetheless, attracted its share of criticism for its arguably low target of 15% renewable energy.

‘The hope – when we first started talking about an RES early in 2009 – was that the targets would be ambitious and would draw us past the business-as-usual case,’ Tezak says. ‘The Senate amendment does not push us far past business as usual. But it's certainly not negative.’

Comparisons of renewable energy deployment under a business-as-usual scenario and under a projected RES scenario should take into account that an RES is based on the amount of delivered energy each year, she adds.

When electricity demand dropped in 2008 and 2009 due to the recession, many utilities with multiyear contracts did not need to execute new agreements. Following that dip, it will take time to rebuild demand and, thus, require utilities to shop for new sources of generation again, Tezak explains. That ramp-up in new contracts is likely to begin next year.

‘Renewables compete effectively in incremental organic demand,’ she says. ‘As the market naturally grows to need that next 'swallow' of power, the choices are generally natural gas or renewables, and renewables have competed very well.’

Whether or not this RES passes, most businesses in the solar sector remain focused – in many cases, more intently – on other legislative priorities. The U.S. Department of Energy's loan-guarantee program and the Treasury's cash-grant program typically rank as the top concerns for solar businesses, Tezak remarks.

In addition, the individual solar markets continue to be substantially shaped at the state level. Now that 36 states have enacted renewable portfolio standards – many of which are more aggressive than the RES currently under consideration – the policy momentum has helped the solar sector move through its development pipeline.

By and large, Tezak says, the solar market is planning and operating under the assumption that an RES is not arriving anytime soon.

‘If it were to happen, it would be greeted favorably,’ she adds. ‘But as other fundamentals stay strong, the industry continues to reduce costs and state programs grow, there are still plenty of reasons to be keen on this business.’

(Please address all comments regarding this article to Jessica Lillian, editor of Solar Industry, at jlillian@solarindustrymag.com.)

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