Clean Energy Options and Economic Development

States looking for corporate investment should provide these clean energy options for commercial and industrial customers.

States looking for corporate investment should provide these clean energy options for commercial and industrial customers.

Half the Fortune 500 companies have committed to reducing greenhouse gas emissions, either through energy-efficiency or using more renewable energy. If states want to compete for their investment, they had better create regulatory environments that are friendlier toward solar and wind energy, contends a new report, the “Corporate Clean Energy Procurement Index.”

That doesn’t necessarily mean giving tax breaks to solar facilities or mandating Renewable Portfolio Standards. But it does mean reforming regulatory structures to make it easier for corporations to procure clean power, states the report, which was backed by the Retail Industry Leaders Association and the Information Technology Industry Council.

Despite relatively slow wind and solar development, Virginia scored 20th nationally for its clean energy options. Virginia made it into the middling ranks through its high score — No. 3 in the country — for the ability of companies to purchase green power through electric utilities. By contrast, the Old Dominion makes it difficult to obtain wind and solar power through third-party agreements or on-site deployment.

“The availability of retail choice is a critical factor for a state’s attractiveness to corporate and other large institutional buyers of RE (Renewable Energy),” states the report. “States that wish to gain the job creation and economic development benefits of corporate RE-powered facilities should encourage their policymakers and regulators to enable customer choice.

In broad terms, the report said that states should pursue five broad strategies for creating more clean energy options:

  1. Remove barriers to corporate deployment of both onsite and offsite renewable installations. “High fees or long processes for interconnection, high standby charges, and other roadblocks meant to discourage distributed generation must not be allowed.”
  2. Support the development of next-generation options to purchase renewable energy through utilities in regulated markets. “The green tariffs currently in existence are first-generation products and could be improved as companies and utilities gain more experience from them.”
  3. Expand energy choice options for commercial and industrial customers in regulated markets. “Policymakers could explicitly authorize third-party [power purchase agreements] and leases for distributed generation, enable community solar programs, and support corporate participation in them.”
  4. Ensure that an adequate market exists for purchasing renewables through both utilities and third-party programs. “States should not choose between setting up utility or third-party markets. Rather they should strive to do both.”
  5. Ensure that renewable energy in both regulated and deregulated markets can scale up rapidly. “Provide as much customer choice as possible, as soon as possible.”

On the positive side, Virginia allows companies to purchase renewable electricity through “green” tariffs, a special utility commission-approved rate structure that permits purchases of green electricity through the utility. The state also allows companies to cut deals directly with Dominion Virginia Power, as Amazon Web Services and Naval Station Norfolk have done. Appalachian Power has submitted a proposal to the State Corporation Commission to provide a green energy tariff.

Less positively, Virginia regulations are less hospitable to companies purchasing electricity through third parties, such as independent power producers, or companies that install their own solar panels and want to sell surplus power back into the grid.

Bacon’s bottom line: Once upon a time, the main “jobs” justification for renewable energy was that it created a lot of construction work. But solar panels require so little maintenance that the number of permanent jobs created is minimal. It is hard to sell renewable energy as a positive for economic-development on the basis of permanent jobs created.

But the rise of the retail and IT sectors as green energy consumers changes the debate. If Virginia wants to attract data centers, warehouses and big box stores, among other types of investment, it needs to provide a broader array of clean-energy options.