Policy Documents

Research & Commentary: Wisconsin Renewable Portfolio Standard

March 12, 2014

In 1999, Wisconsin implemented a renewable portfolio standard (RPS) mandate requiring electric cooperatives and investor-owned utilities to obtain from renewable sources 2.2 percent of the electricity sold to customers, by 2012. In 2006, former Gov. Jim Doyle increased that standard to 10 percent by 2015. Renewable sources eligible for the RPS include solar, wind, geothermal, fuel cells using renewable fuels, biomass, landfill waste energy, tidal and wave energy, and small hydropower (less than 60 megawatts capacity). Although most of Wisconsin’s renewable electricity generation comes from hydropower, the state also gets some from biomass (mostly wood and wood-derived fuels) and wind.

Supporters of the RPS mandate argue Wisconsin’s percentage requirement is too low, especially compared to neighboring states, and should therefore be increased. They also claim this would help establish a long-term “energy plan” for Wisconsin and create jobs.

A March 2013 joint report by the Wisconsin Policy Research Institute and Beacon Hill Institute found that in 2016, the current RPS mandate will increase the average household electricity bill by $25 per year, the average commercial business bill by $200 per year, and the average industrial business bill by more than $15,000 per year. The researchers found electricity will be 2.4 percent more costly in that year than it would be without the RPS mandate—a total cost of $208 million.

As to the claim of RPS mandates leading to job creation, the researchers argue such assertions fail to consider the opportunity costs created by higher energy prices, stating instead they result in a net loss for the state, specifically 1,780 fewer jobs for Wisconsin’s economy in 2016.

Wisconsin is home to many energy-intensive industries such as forestry, metal-casting, transportation, and food production, which are hit hard by the RPS. Rolling back the Wisconsin RPS, instead of increasing it, would help attract business investment, create jobs, and make energy more affordable for consumers. Wisconsin should not mandate the use of certain types of energy. Instead it should encourage the development of economically competitive energy sources through non-distorting regulatory and tax policies.

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. 

The Status of Renewable Electricity Mandates in the States
http://heartland.org/sites/all/modules/custom/heartland_migration/files/pdfs/29330.pdf
The Institute for Energy Research analyzed the practical effects of renewable electricity mandates and found states with mandates have on average 40 percent higher electricity rates than those without such mandates. 

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. 

How Less Became More: Wind, Power and Unintended Consequences in the Colorado Energy Market
http://heartland.org/policy-documents/how-less-became-more-wind-power-and-unintended-consequences-colorado-energy-marke-0
Bentek Energy, LLC, a leading energy markets information company, evaluates the “must take” provisions of Colorado’s Renewable Portfolio Standard, which forces coal plants to accommodate the intermittency of wind power by “cycling” generating units. The report finds the requirement results in inefficiency and produces significantly greater emissions. 

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 the extent to which wind turbines kill wildlife. 

U.K. Study: Renewable Fuels Kill Jobs
http://news.heartland.org/newspaper-article/2011/03/14/uk-study-renewable-fuels-kill-jobs
A 2011 study by Verso Economics, a UK-based economic consultancy, found renewable power killed 3.7 jobs in Great Britain for every “green job” created. The UK’s “renewable obligation” cost the country an additional $2.3 billion in 2009–10 when all economic costs, including electricity prices, were considered. 

Five Things CEOs Are Worried About in 2014
http://blogs.wsj.com/five-things/2014/01/03/5-things-ceos-are-worried-about-in-2014/
A Wall Street Journal article on the five things CEOs are worried about that are outside their control in 2014 lists “Keeping Energy Costs Under Control” as number one. The information was polled from the Wall Street Journal CEO Council, a group of 33 CEOs, some from the country’s biggest companies. 

Why Is Renewable Energy So Expensive?
http://www.economist.com/blogs/economist-explains/2014/01/economist-explains-0
A brief but explanatory essay in a January 2014 blog post for The Economist states countries with the most renewable power generation also have the highest electricity prices, and government efforts to abate this problem have been unsuccessful. The author notes high electricity prices may force many manufacturers to set up in less “green” countries, which “might mean citizens end up consuming more carbon, through imports.” Such unintended consequences make the construction of more gas-fired power stations a superior strategy for cutting greenhouse gas emissions without raising electricity prices, the author concludes. 

A Global Transition to Renewable Energy Will Take Many Decades
http://www.scientificamerican.com/article.cfm?id=a-global-transition-to-renewable-energy-will-take-many-decades
Writing for Scientific American in January 2014, scientist and policy analyst Vaclav Smil notes, “[in the] U.S. and around the world, each widespread transition from one dominant fuel to another has taken 50 to 60 years.” However, Smil writes, there are plenty of reasons to want to reduce dependence on fossil fuels, beyond greenhouse gas emissions, but current environmental policies “have been dismal.” Smil suggests the best way to foster an energy transition is to “avoid picking energy winners,” because such policies distort all-important investment and price signals and impede economic progress. 

The Economic Impact of Wisconsin's Renewable Portfolio Standard
http://heartland.org/policy-documents/economic-impact-wisconsins-renewable-portfolio-standard
Wisconsin's current Renewable Portfolio Standard law will raise the cost of electricity by $208 million for consumers in 2016 and lower employment by an expected 1,780 jobs, according to this March 2013 joint report by the Wisconsin Policy Research Institute and Beacon Hill Institute.

 

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.

If you have any questions about this issue or The Heartland Institute, contact Heartland Institute Policy Analyst Taylor Smith at tsmith@heartland.org or 312/377-4000.