Renewable Energy Policy Series: Ohio SB 221

CDFS-4001
Community Development
Date: 
10/19/2010
Eric Romich, Extension Educator, Community Development, Ohio State University Extension, Wyandot County

The future of renewable energy in Ohio appears bright. The ever increasing demand for energy, the desire to decrease dependency on fossil fuels, environmental concerns, and green energy job creation are all factors driving the development of alternative energy. In addition, state legislation has recently established policy requirements that will also stimulate the future development of alternative energy in Ohio.

While Advanced Energy Portfolio Standards are relatively new to Ohio, governmental policy has been driving renewable energy development for decades. For example, the rapid growth of renewable energy in Germany has often been referred to as a model of how governmental policy can foster the renewable energy development. In the early 1990s, the German government launched a comprehensive series of promotions for renewable energy, which has since been augmented with additional legislation and policy actions to increase renewable energy use. As a result of these policy pressures, Germany has facilitated the rapid growth of renewable energy generation, helping them to attain a leading position in many aspects of renewable energy use (Runci, 2005).

As history has shown, energy policy can serve as a catalyst for renewable energy development. As a result of SB 221, many believe Ohio's energy industry is about to undergo a major fundamental change. When considering the existing renewable energy drivers combined with new legislative policy, it is evident that alternative energy will be a vital component of Ohio's energy matrix for years to come.

Ohio Senate Bill 221

In July of 2008 SB 221 was enacted to encourage the development of alternative, renewable, and energy efficiency activities in Ohio. Several of the key alternative energy requirements outlined in SB 221 include Alternative Energy Portfolio Standard, Energy Efficiency Standards, Solar Ready Schools, and Greenhouse Gas Emission Reporting Requirements.

Advanced Energy Portfolio Standard

The Advanced Energy Portfolio Standard requires that 25% of all kilowatt hours produced by investor-owned electric distribution companies must be generated from alternative energy resources by the year 2025. Alternative energy resources include both advanced energy resources and renewable energy resources. Advanced energy resources are defined as any method, modification, or replacement of equipment that increases the electric generation output of an existing facility without increasing the carbon dioxide emissions of that facility. Renewable energy resources are defined as energy created by using rapidly and naturally replenished sources which are virtually inexhaustible (Ohio Revised Code 4928.66, 2008). Examples of renewable energy resources include but are not limited to: wind, solar, geothermal, hydroelectric, ethanol, and biodiesel.

Of the 25% alternative energy resources targeted by the year 2025, half or 12.5% of that alternative energy requirement must be generated from renewable energy resources. Furthermore, Ohio is one of the few states in the U.S. that has a renewable portfolio standard that includes a specific requirement set aside for solar generation. This solar set aside targets one-half percent solar energy generation by the year 2025. As outlined in SB 221, Figure 1 illustrates the annual renewable energy benchmark requirements as a percentage of total energy generated by investor-owned utility companies.

In addition, there is an in-state requirement for the renewable energy tier of the Advanced Energy Portfolio Standard. The in-state requirement stipulates that of the 12.5% renewable energy generated, one half of that energy must originate from facilities physically located in Ohio (Ohio Revised Code 4928.66, 2008).

Figure 1. Renewabl​e Energy Resource Benchmark
Year
Renewable Energy
Solar Energy
2009
.25%
.004%
2010
.5%
.010%
2011
1%
.030%
2012
1.5%
.060%
2013
2%
.090%
2014
2.5%
.12%
2015
3.5%
.15%
2016
4.5%
.18%
2017
5.5%
.22%
2018
6.5%
.26%
2019
7.5%
.3%
2020
8.5%
.34%
2021
9.5%
.38%
2022
10.5%
.42%
2023
11.5%
.46%
2024
(and each calendar year after)
12.5% .5%
Source: Ohio Revised Code 4928.64

Advanced Energy Portfolio Compliance

The Public Utilities Commission of Ohio (PUCO) will monitor compliance with the Advanced Energy Portfolio Standard on an annual basis. A system of credits known as Renewable Energy Credits (REC's) has been developed to validate and track the amount of renewable energy generated in a given year. One REC is equal to one megawatt hour of power generated. Utility companies are able to buy, sell, or trade Renewable Energy Credits in order to meet compliance requirements (Ohio Revised Code 4928.65, 2009).

Figure 2. Exa​mple: Renewable Energy Credit Calculation

The PSEG Wyandot Solar Project is an 83.9 acre 12 MW solar generation facility. This is Ohio's largest solar facility with an annual estimated solar electrical production of 17,300 MWh/year. The Renewable Energy Credit (REC) calculation for this project would be as follows:

17,300 MWh/year = 17,300 REC/year

However, it is important to recognize that not every renewable energy project will qualify to generate REC's that comply with Ohio's Renewable Energy Portfolio Standards requirements. In fact, in order for a renewable energy project to produce RECs it must first be certified as a renewable energy generation facility by the Public Utilities Commission of Ohio. The application form and affidavit are available on the PUCO website at puco.ohio.gov/puco/index.cfm/puco-forms/renewable-energy-resource-generating-facility-application-for-certification/#sthash.38cldUDO.dpbs (Public Utilities Commission of Ohio, 2015).

During an annual review if the PUCO board determines that a utility was under compliance, it is to impose a monetary penalty in the form of an alternative compliance payment. Alternative compliance payments may not be passed on to ratepayers, and will be deposited into a renewable energy investment fund to assist in financing future renewable energy projects (Public Utilities Commission of Ohio, 2010).

Energy Efficiency Standards

In addition to alternative energy generation sources, SB 221 also addresses energy efficiency programs. In order to remain in compliance, investor owned utilities may implement projects such as demand response programs, as well as transmission and distribution infrastructure improvements to reduce line loss of energy.

This section of SB 221 requires utilities to be proactive in implementing energy efficiency programs to attain a reduction in energy consumption from 2009 to 2025. Policies for peak demand reductions are addressed as well. Electric distribution utilities are obligated to implement peak demand reduction programs designed to achieve a 1% reduction in peak demand in 2009 and an additional .75% reduction each year through 2018. In 2018, the legislation shall make recommendations to the general assembly regarding future peak demand reduction targets (Ohio Revised Code 4928.66, 2008).

Similar to the Advanced Energy Portfolio Standard, the PUCO board must conduct an annual review to ensure utilities are in compliance with the Energy Efficiency Standards. If it is determined minimum requirements are not attained, a penalty will be applied. All revenues collected from penalty fees will be directed to the state's advanced energy fund to assist in financing future renewable energy projects.

Solar Ready Schools

The Solar Ready Schools program was established to ensure new school facilities being constructed in the state of Ohio are capable of accommodating the eventual installation of roof top photovoltaic solar systems. SB 221 requires the Ohio School Facilities Commission to adopt and administer rules pertaining to standards for solar ready equipment in school buildings. The rules should include standards regarding roof space limitations, shading and obstruction, building orientation, roof loading capacity, and electric systems. However, in the event good cause can be justified, the school district may request a waiver from the Ohio Schools Facility Commission (Ohio Revised Code 3318.112, 2008).

Greenhouse Gas Emission Reporting Requirements

To the extent permitted by federal law, SB 221 requires the PUCO to outline and adopt regulations establishing greenhouse gas emission reporting requirements, including participation in the climate registry, and carbon dioxide control planning requirements. These regulations will apply to all current and future generating facilities emitting greenhouse gases located within the state of Ohio.

Conclusion

The pre-existing renewable energy drivers such as desire to decrease dependency on fossil fuels, environmental concerns, green energy job creation, and increasing demand for energy will continue to advance the development of renewables. In fact, the global demand for energy is positioned to grow, as it can be directly related to large scale population growth trends in emerging economies, such as China and India, who will be seeking out alternative sources of energy to support growth trends and fuel economic development.

In the global aspect of the alternative energy industry, Ohio SB 221 is just one small example of how legislative policy can assist in driving the development of alternative energy projects. As a result, Ohio can expect to expand on renewable energy generation, minimizing the state's carbon footprint, and fostering the growth of a new and exciting green economy.

Additional Resources

Bibliography

  • Ohio Power Siting Board. (2008, May 1). Ohio Power Siting Board. Retrieved March 2, 2010, from Ohio.gov—Power Siting Board: opsb.ohio.gov
  • Ohio Revised Code 3318.112. (2008, July 31). LAWriter—Ohio Laws and Rules. Retrieved March 2, 2010, from 3318.112 Standards for solar-ready equipment: codes.ohio.gov/orc/3318.112
  • Ohio Revised Code 4928.65. (2009, July 7). 4928.65 Using renewable energy credits. Retrieved March 2, 2010, from LAWriter—Ohio Laws and Rules: codes.ohio.gov/orc/4928.65
  • Ohio Revised Code 4928.66. (2008, July 31). 4928.66 Implementing energy efficiency programs. Retrieved March 2, 2010, from LAWriter—Ohio Laws and Rules: codes.ohio.gov/orc/4928.66
  • Public Utilities Commission of Ohio. (2010). The Public Utilities Commission of Ohio—Agency Overview. Retrieved March 2, 2010, from Ohio.gov—Public Utilities Commission: puco.ohio.gov/emplibrary/files/media/Publications/Brochures/PUCO%20Agency%20Overview.pdf (no longer available online)
  • Runci, P. J. (2005, January 17). Renewable Energy Policy in Germany: An Overview and Assessment. Retrieved September 3, 2010, from Overview and Assessment: globalchange.umd.edu/data/publications/PNWD-3526.pdf
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