A Commentary
by Michael Vickerman, RENEW Wisconsin
February 15, 2010
In the next six weeks the Legislature will make a truly momentous decision on the state’s energy future. Either it can embrace an ambitious 15-year commitment to invigorate the state’s economy through sustained investments in clean energy or decide to coast along on current energy policies until they lapse and lose their force and effect.
Arguably the most innovative feature in the Clean Energy Jobs Act, as it’s now called, is a proposed requirement on larger electric providers to acquire locally produced renewable electricity with Advanced Renewable Tariffs (ARTs). These are technology-specific buyback rates that provide a fixed purchase price for the electricity produced over a period of 10 to 20 years, set at levels sufficient to recover installation costs along with a modest profit. Now available in more than a dozen nations in Europe as well as the Province of Ontario, ARTs have proven to be singularly effective in stimulating considerable growth in small-scale production of distributed renewable electricity.
From what we’ve observed, Focus on Energy and federal incentives (the current mix of financial support) are not sufficient to drive significant installation activity when utility buyback rates are pegged to the cost of operating 40-year-old coal plants. It’s unrealistic to assume that a brand-new farm-sized renewable energy system, regardless of the resource used, can compete head-to-head with central station power plants that have been fully amortized.
However, when existing incentives and tax credits are supplemented with an additional source of financial support, such as higher buyback rates, installation activity picks up noticeably.
Consider the much-vaunted Dane County Cow Power Project, which should be operational before the end of the year. Using anaerobic digestion technology, this Waunakee-area installation will treat manure from three nearby dairy farms and produce biogas that will fuel a two-megawatt generator. This community digester project, the first of its kind in Wisconsin, will be built with private capital and a State of Wisconsin award to support a technology that reduces the flow of phosphorus into the Yahara Lakes. A second digester project is also planned for Dane County.
The key element that makes the financing of this project work is the special biogas buyback rate that Alliant Energy, the local utility, voluntarily put in place a year ago. With the higher rate, the project’s return on investment was sufficient to interest outside investors.
Unfortunately, once this initiative reached its predetermined capacity limit, Alliant discontinued the special biogas rate. This complicates matters for future digester installations, in that the other utilities that serve Dane County, including Madison Gas & Electric, do not offer special buyback rates to customers who generate electricity from biogas.
While voluntary initiatives are laudable, they are too small and sporadic in nature to make much of a dent in converting Wisconsin’s organic wastes into energy. Indeed, unless a policy is adopted statewide that requires utilities to increase their purchases of locally generated renewable electricity, there is no guarantee that Dane County will see a second digester project built.
If we are serious about neutralizing the algae blooms that turn the Yahara lakes green each year, we’ll need to adopt a clean energy policy, including ARTs, that facilitates the development of biodigesters in farm country.
Please communicate your support for this bill by writing letters to your state legislators and to your local newspaper. But time is of the essence — we have only a few more weeks left in this legislative session.
Michael Vickerman is the executive director of RENEW Wisconsin, a sustainable energy advocacy organization headquartered in Madison.