Policy Documents

Research & Commentary: Illinois Renewable Portfolio Standard

June 23, 2014

In August 2007, the Illinois General Assembly enacted legislation creating a Renewable Portfolio Standard. The statute requires Ameren and ComEd to acquire 25 percent of their electricity generation from qualified renewable sources by 2026. Within the 25 percent requirement, 75 percent must be produced from wind and 6 percent (starting in compliance year 2015–16) must be produced from solar photovoltaics.

Supporters of the RPS argue the mandates will lead to the creation of “green” jobs and decrease pollution, while resulting in only marginally higher electricity prices. However, they have little evidence suggesting the mandate will actually improve the environment. Wind and solar technologies produce power intermittently, requiring fossil fuel generators as back-ups. These systems produce more pollutants when used as backup power sources than when they are used as main power sources.

According to a study from the Beacon Hill Institute at Suffolk University, businesses and residents in Illinois will pay an additional $4.5 billion for electricity from 2014 to 2026 because of the Renewable Portfolio Standard. It will increase the cost of electricity by $574 million for the state’s consumers in 2026 alone. Illinois’ electricity prices will rise by 4.77 percent by 2026. Under the compliance schedule, Illinois should have had 5 percent compliance in 2010, but figures from the Energy Information Administration suggest at most 2.4 percent of electricity generation qualified under the mandate.

By 2026, the RPS is expected to “lower employment by a likely 8,000 jobs, reduce real disposable income by $793 million, and increase the average household electricity bill by $36 per year; commercial businesses by an expected $364 per year; and industrial businesses by an expected $36,125,” according to a Beacon Hill Institute study.

Illinois’ renewable power mandate has and will continue to push up electricity prices, hurting consumers and the state’s economy. This regulation will hit low- and middle-income Illinoisans the hardest, as even fewer job opportunities will be available to unemployed workers as investment moves to other states with healthier business climates. Policymakers should better monitor the utilities’ RPS compliance reports for additional cost increases and seek to freeze or, ideally, repeal the state’s renewable power mandate.

 

The following documents provide additional information about renewable portfolio standards.

Ten Principles of Energy Policy
http://heartland.org/policy-documents/ten-principles-energy-policy
Heartland Institute President Joseph Bast outlines the ten most important principles for policymakers confronting energy issues, providing guidance to help withstand ongoing changes in markets, technology, and policies adopted in other states, supported by a thorough bibliography. 

Study: Illinois’s Renewable Energy Standard No Help to State’s Economy
http://heartland.org/policy-documents/study-illinoiss-renewable-energy-standard-no-help-states-economy
The Beacon Hill Institute at Suffolk University analyzes the economic repercussions of the Renewable Portfolio Standard in Illinois, finding the RPS will increase the cost of electricity to consumers and reduce business opportunities and job creation.

The Status of Renewable Electricity Mandates in the States
http://heartland.org/policy-documents/status-renewable-electricity-mandates-states
The Institute for Energy Research analyzes the practical effects of renewable electricity mandates, finding states with mandates have on average 40 percent higher electricity rates than those without such mandates.

Policy Tip Sheet No. 11 Illinois Renewable Energy Mandate
http://heartland.org/policy-documents/policy-tip-sheet-no-11-illinois-renewable-energy-mandate
This Heartland Institute Policy Tip Sheet outlines the fundamental problems of renewable energy mandates in Illinois and recommends an alternative.

Study of the Effects on Employment of Public Aid to Renewable Energy Sources
http://heartland.org/policy-documents/study-effects-employment-public-aid-renewable-energy-sources
Researchers at King Juan Carlos University in Spain found each “green job” created in Spain cost about $750,000. Electricity rates would have to be increased by 31 percent to account for the additional costs of renewables. 

Study: Consumers Unwilling to Pay More for Renewable Energy
http://news.heartland.org/newspaper-article/2013/07/21/study-consumers-unwilling-pay-more-renewable-energy
Relatively few consumers are willing to pay extra for renewable energy offered under voluntary “green” pricing programs, according to a report from the Institute for Energy Research.

Wind Farms vs. Wildlife
http://heartland.org/policy-documents/wind-farms-vs-wildlife
Clive Hambler, lecturer in biological and human sciences at Oxford University and a trained zoologist specializing in species extinction, describes how wind turbines can wreak havoc on wildlife.

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the Environment & Climate News Web site at http://news.heartland.org/energy-and-environment, The Heartland Institute’s Web site at http://www.heartland.org, and PolicyBot, Heartland’s free online research database, at www.policybot.org

Whether sending an expert to your state to testify or brief your caucus, hosting an event in your state, or simply sending you further information on the topic, Heartland can assist you. If you have any questions or comments, contact Heartland Institute State Government Relations Manager Logan Pike at lpike@heartland.org or 312/377-4000.