Sacrificing renewables promised reduced prices for customers; but now could end up raising the bill for Ohioans.
Ohio’s electrical market structure has long been based on market forces such as varying supply and demand, rather than by political regulation. But recently, moving away from an economy driven, market based structure, to one driven by political whims, has not benefited OH ratepayers. The result of this style of decision making has caused a change of heart on a previously supported energy initiative. Ohio’s recently elected conservative Senate, along with Gov. John Kasich, agree that renewables are too expensive to continue funding.
On June 13, the Senate passed Senate Bill 310 and effectively froze Ohio’s Renewable Portfolio Standard (RPS) and immediately halted all projects that solar developers and investors were working on. Not only did the construction of solar arrays freeze, but the prices of Solar Renewable Energy Credits (SRECs) associated with solar electricity production also plunged. Prices went from a prosperous and positive-trending $70/SREC to $30/SREC, and have not rebounded since. The SREC market in Ohio was not the sole victim of a market freeze; it also knocked the value of surrounding States’ (Indiana, Kentucky, West Virginia, Virginia and Michigan) market prices.
The decision to cut renewables led many to ask whether Ohio had electricity rates at heart, or the promotion of status-quo: coal and natural gas. Opposition to SB 310 was widespread from companies and organizations such as the Sierra Club, Advanced Energy Economy – Ohio, the Ohio Environmental Council, Ohio Partners for Affordable Energy, the Ohio Manufacturers’ Association, Honda, and several others. Moreover, the state currently employs 3,800 throughout the solar value chain alone. However, their voices were not strong enough to overcome the Senate’s decision to freeze renewables.
Now, just months after the Ohio RPS freeze, American Electric Power (AEP) filed a proposal with the Public Utilities Commission of Ohio (PUCO) to increase customers’ charges by $2 per month to protect the profitability of its coal plants – a price dramatically higher than RPS cost impacts. If the Ohio PUC approves the $2 dollar hike on customers’ bills it will represent the States’ persistence to move away from renewable energy development. In weighing each side of this issue, whether it be supporting renewables or conventional electricity production, a decision will result in an increased cost for the consumer.
Sol Systems does not anticipate a change the legislative decision nor changes in the SREC market in Ohio from SB310, but will continue to monitor the decisions made by regulators in regards to renewable energy promotion.
About Sol Systems
Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for 165MW and over $600 million of distributed generation solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. It has over $300 million in assets under management as of September 2014. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments and project acquisition, to debt financing and SREC portfolio management. For more information, please visit www.solsystemscompany.com.