ACES Low for the Solar Industry?

Analysts wading through the American Clean Energy and Security Act (ACES) have plenty of concerns about whether it has enough teeth to be an effective climate bill. But what does the bill look like for renewable energy providers?

“A lot of us in the solar industry are actually pretty worried about it,” says Matt Cheney, CEO of Renewable Ventures, a Fotowatio company that owns and operates renewable energy and energy efficiency projects.

Their cause for concern is two-fold.

First, what started out as a strong renewable electricity standard (RES) in the ACES bill has been heavily watered down. It currently would require utilities to get 20 percent of their power from renewable sources by 2020, but 8 percent of that could be achieved through energy efficiency. Utilities that don’t comply will have to pay a fee, but according to Cheney, that fee is lower than the non-compliance fees charged by the 28 states with their own renewable portfolio standards (RPS) in place.

“In this scenario, it could be more affordable for utilities to just pay the non-compliance fee,” Cheney says.

A weak federal RES could also deter states from setting their own stronger standards.

“Thankfully, it’s set up in a way that the federal RES won’t supersede the state RPS, but we’re still fearful about the effect it could have,” says Cheney. “Really, the RES in this is almost unnecessary unless it matches current best practices or is forward thinking. To put out something that’s less than what the states already have doesn’t really do anyone any good.”

The bill has won praise from the Solar Energy Industries Association, which released a statement claiming ACES would stimulate the deployment of solar energy by allocating carbon allowances for renewable energy and energy efficiency, applying triple renewable energy credits (RECs) for distributed generation including solar, and including solar water heating systems under the label “energy-efficient systems”.

However, other renewable energy advocates who have dug through the nearly 1,000-page bill have determined that the carbon credits that could come solar’s way thanks to the bill’s cap-and-trade legislation would actually amounts to very little.

Those carbon credits are another cause for concern. The Breakthrough Institute’s preliminary analysis of the bill found only 12.2 percent of cap-and-trade revenue going to renewable energy — and since the bill lumps clean energy with energy efficiency, that money gets divided among several industries. Polluting industries, on the other hand, would receive nearly 60 percent of the money generated in a carbon market.

“It’s basically saying that by virtue of having polluted you now have the right to pollute in the new cap and trade program,” Cheney says.

Renewable energy producers would actually lose out on cap-and-trade because they don’t pollute.

Cheney illustrates this with an example:

“Say you own a coal-fired power plant that has been in operation for 10 years and I build a wind farm across the street and the grid no longer needs your power.

"A wind farm is, by nature, not a polluting tech, but even if my wind energy puts your coal plant out of business, you have these pollution rights, and you’re laughing all the way to the bank because you can sell those rights on the open market.

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