Delaware legislature approves 40% renewable energy goal
DOVER – A bill to push Delaware’s renewable energy mandate up to 40% by 2035 flew through both sides of the state legislature in less than two January weeks, and now awaits the signature of Gov. John Carney who has said he will sign it.
Senate Bill 33, introduced by Senate Environmental & Energy Committee Chair Stephanie Hansen, largely picked up the expansion effort left behind in last year’s retirement of longtime State Sen. Harris McDowell, the original writer of the state’s Renewable Portfolio Standard (RPS) Act 15 years ago.
The RPS creates a competitive market for utilities to acquire a certain percentage of their retail electricity from renewable sources, including wind and solar, each year. Those utilities can either generate electricity from renewable sources themselves or purchase credits from other such producers.
Currently, the state’s lone regulated electric utility, Delmarva Power, is required to acquire 25% of its energy from renewable sources by 2025. The Delaware Electric Cooperative and municipal utilities are encouraged to voluntarily meet the same standard, and most have made significant investments, but are not legally required to do so.
SB33 cleared committee hearings and floor votes in both the State Senate and House of Representatives, along largely partisan lines of 13-8 and 29-12, respectively.
The bill was passed with some haste to help mediate a running court case that pits the Delaware Department of Natural Resources and Environmental Control against the Division of the Public Advocate over how much state ratepayers are subsidizing renewable energy costs. While Public Advocate Drew Slater, who advocates for ratepayers in utility cost and service cases, claims that those subsidies have risen to as much as 19% of a ratepayer’s monthly bill, DNREC argues the figure is about 3%.
The major discrepancy is the introduction of costs for the Bloom Energy incentive deal, which added a surcharge to Delmarva ratepayers for the company to bring jobs and its energy production to Delaware. Critics have decried the 21-year deal that lasts until 2033 – and currently costs customers about $8 a month – given to the company that didn’t produce as many jobs as once promised and whose technology relies on cheaper, but non-renewable natural gas.
DNREC contends that the Bloom cost, approved after the RPS was established, should not be factored into the annual subsidy limit imposed by the renewable energy law along with other costs like transmission.
SB33 changes the state’s cost cap provisions from a percentage provision, which became an issue with the subjective positions on what to consider, to an alternative compliance payment (ACP) system. Now renewable energy credits will be capped at a cost of $25 while solar renewable energy costs will be capped at $150. Should the market cost of credits rise above those levels, Delmarva will pay the ACP cap and not be required to buy the market-rate credits.
“We’re going to go into more of a market-based cost approach as opposed to percentages which has created a lot of uncertainty and led to legal challenges,” Slater explained in a Jan. 19 Senate committee hearing.
While some Republican lawmakers voiced concerns over whether the ACP system would be effective in containing costs, a Delmarva Power cost estimate analysis of the proposal found that ratepayers would be paying about a quarter of what they currently pay to subsidize renewable energy. That’s largely due to expiring long-term power purchase contracts and cheaper available technology today.
David Stevenson, the director of the Center for Energy & Environment at the Caesar Rodney Institute, a conservative Delaware-focused think tank, testified that the ACP was too high to effectively protect ratepayers though.
“I want to know why we should trust this new cost cap when we couldn’t trust the old one. Secondly, the new cost cap ACP at $150, when we’re currently getting [SRECs] for $10, is no protection at all,” he said.
During the fast-paced consideration of SB33, the primary criticism of the bill was that it didn’t go far enough. Representatives with the Sierra Club, Citizens Climate Lobby, American Clean Power Association, Mid-Atlantic Renewable Energy Coalition, Delaware Electric Vehicles Association, Green Building United, Delaware Solar Energy Coalition, Delaware Energy Service Coalition, Center for the Inland Bays, League of Women Voters, and others, all called on lawmakers to increase the target to at least 50% by 2035 and speed up the implementation of the benchmarks rather than wait until 2026.
Andrew Gohn, director of Eastern state affairs for the American Clean Power Association, noted that 10 states have committed to sourcing more than 50% of their electricity from renewable energy sources by 2030 and five states and the District of Columbia have set 100% clean energy goals. Gohn said that Delaware’s RPS has the second least ambitious target of East Coast states, ahead of only North Carolina, and passing SB33 would only push it ahead of one other state.
DNREC Secretary Shawn Garvin cautioned those looking to compare Delaware’s goals to other states, some of which define “clean energy” differently, such as allowing nuclear energy subsidies as part of their calculations which Delaware does not.
“We will continue to look at and revisit the number, but 40% seems to be the number that folks could live with [in discussions last summer],” he told the Senate committee.
While Delaware will reduce its greenhouse gas emissions by converting more of its power production to renewable sources, it may not lead to dramatic growth in “green energy” jobs. As the Delaware Business Times reported last year, Delmarva Power reached its state-mandated renewable energy goal in 2019-20 largely by buying power from out-of-state projects.
While it purchased about 25% of all its renewable energy from four wind farms in western Maryland, Pennsylvania, and North Carolina, only about 7% of its renewable energy came from solar projects in Delaware, including the Dover Sun Park project, the Dover White Oak project, the Delaware Terraform project, and more.
Ann Kirby, of Green Building United Delaware, a green building and sustainability nonprofit education provider, noted that advancing the RPS’s goals sooner could help convince investors and property owners to back local solar projects.
“There are some 500 Delawareans currently working in the solar industry in our state. Don’t underestimate the impact renewable growth can have on our economy. Del Tech has students studying energy and solar and expect employment opportunities,” she told state senators.
That was a point supported by Dale Davis, president of the Delaware Solar Energy Coalition, who said that he wanted to see the target goals start increasing next year “so we can start adding new jobs now rather than waiting until 2026.”