A recent study by the MacIver Institute shows Wisconsin’s ambitious effort to get an increasing amount of its electricity from renewable-energy sources has led to greater power costs and has failed to create a significant number of jobs.
According to the study, titled “Wisconsin’s Renewable Portfolio Standards Economic Promises Fall Short,” Wisconsin’s renewable-energy mandate (REM) is projected to cost consumers $472 million in higher electricity costs in 2016. The study also claims higher electricity prices due to the state’s REM cost approximately $1 billion in lost economic activity statewide every year, and employment levels were found to be 7,000 to 10,000 below what they would have otherwise been without REM, even after accounting for a small number of “green” jobs created.
Early Advocate of REM
Wisconsin was one of the first states to adopt an REM, approving its first plan in 1998. Known as the “25 by 25,” the law called for 25 percent of Wisconsin’s electricity to come from renewable-energy sources by 2025. The law was altered in 2006 to require Wisconsin’s utilities to derive 10 percent of their electricity from renewable energy (primarily wind and solar power) by 2015. Under modified law, utilities are required to maintain those levels indefinitely.
Proponents of the plan, led by then-Gov. Jim Doyle (D), expressed confidence the state’s REM would bring huge economic benefits. The MacIver study quotes Doyle in his final State of the State Address in 2010, when he said, “Clean energy technology and higher-end manufacturing are Wisconsin’s future. … We have more than 300 companies and thousands of jobs in the wind industry.”
Exaggerated Job Claims
The MacIver study shows those job promises have gone unfulfilled and other renewable-energy job figures have been exaggerated.
For example, Wisconsin Wind Works (WWW), a consortium of manufacturers representing the wind industry in the state, created a database purporting to show thousands of new wind jobs created, but when MacIver researchers checked the numbers, they found the database counted jobs unrelated to wind power in its tally. For instance, the database counts 6,000 jobs created by Rexnord Industries, a supplier to the wind industry, but a Rexnord official told the MacIver News Service the company has only 1,500 employees in Wisconsin, and only five of those jobs are tied directly to the wind industry.
MacIver found the WWW database counted 7,632 jobs said to have been created by eight statewide manufacturers who supply materials to the wind industry, but MacIver’s investigation could only identify 31 jobs at those companies directly tied to wind energy.
High Price for Minimal Job Growth
By 2014, Wisconsin’s utilities had succeeded in meeting the requirements of the 2006 REM —one year ahead of schedule. According to the MacIver report, this was achieved by raising the retail price of electricity for residential, commercial, and industrial customers. The law allows utilities to pass on the cost of compliance with the REM to ratepayers with permission from the Public Service Commission.
“The results of this study should come as no surprise,” said Dan Simmons, vice president for policy at the Institute for Energy Research. “Mandating expensive and unreliable sources of electricity generation will only increase the cost of power.
“These schemes also hurt job growth, because increasing the cost of energy harms overall economic growth,” said Simmons.
Isaac Orr, a research fellow at The Heartland Institute, which publishes Environment & Climate News, worked for Wisconsin state Sen. Frank Lasee, who sponsored a law allowing electricity generated by hydropower plants in Canada to count toward meeting the state’s REM.
“It allowed the state to access a more affordable source of renewable energy as a ‘work around’ to a full repeal, which has had the benefit of reducing the cost of the REM to consumers and businesses,” Orr said. “The modification to the Wisconsin REM, counting hydropower towards the REM, could be used as a model for states where full repeal or a freeze are not politically possible.”
Bonner R. Cohen, Ph.D. ([email protected]) is a senior fellow at the National Center for Public Policy Research.
Chris Rochester, “Wisconsin’s Renewable Portfolio Standards Economic Promises Fall Short,” MacIver Institute for Public Policy, July 2016: https://heartland.org/wp-content/uploads/documents/wisconsin_renewable_report.pdf