At the end of July, Ohio House Bill 6 was signed into law by Republican governor Mike DeWine. While HB6 is undeniably a step backwards for renewable energy in Ohio, it shines a new light on the role of the Green Banks movement in lowering consumer costs and increasing clean energy investment across the country. In fact, Ohio may soon be home to one of the newest additions to the Green Bank movement, as Cuyahoga County has begun taking initiative to explore the creation of a Green Bank.
The bill HB6, seen by many as a bailout for a set of non-competitive generation facilities including two nuclear plants and a pair of large coal units, will also reduce Ohio’s renewable energy and energy efficiency standards. The Renewable Portfolio Standard (RPS) in Ohio, previously requiring 12.5% renewable power by 2026, was reduced to require a mere 8.5% renewable power by 2026 without a solar carve-out.
Part of the way RPS policies work to incentivize clean energy at the state level is that they allow renewable energy projects to generate renewable energy credits (RECs) for each unit of power they produce and sell those credits on an established market. The revenue they receive from REC sales helps improve the project economics. In Ohio, the reduction of RPS standards led to the almost immediate collapse of the state’s REC market, which had been recovering steadily over the past year. After the bill’s passage, RECs in the state lost 80% of their value, striking a major blow to the economics of renewable energy projects in Ohio, where many solar, wind, and efficiency projects already struggle to develop.
Green Banks’ role is to improve the economics of renewable energy projects by lowering their cost of capital, a function that takes on even greater importance in markets that experience this type of setback. The financial tools and offerings provided by Green Banks can make the difference that allows private investors to put capital into a project and get it off the ground.
The debate over HB6 also highlights Green Banks’ role in lowering consumer costs. HB6 explicitly raises energy costs, adding surcharges to customer bills which will transfer about $200 million per year directly from ratepayers to the non-competitive generating facilities. Proponents and detractors of the bill have debated whether this cost is offset by the “savings” of slashing the state’s RPS, but in either case the bill uses ratepayer dollars to subsidize non-competitive generation. Green Banks are focused on the exact opposite: investing in competitive projects that can match or undercut grid power on price. Once up and running, these projects save money directly for families and provide low-cost power to the grid.
HB6 is a setback for renewable energy, but the US can’t afford to slow down investment. Fourteen state and local Green Bank institutions across the US have built up a track record of success, mobilizing more than three private dollars for each public dollar invested for a total of over $3.6 billion in investment. The National Climate Bank bill introduced in the Senate would provide an unprecedented new source of funding to state and local institutions, while also directly handling large-scale projects that require a greater scope. Cuyahoga County is just one of the latest to take a decisive step down the path to attracting the benefits of the clean energy economy, and joining a larger movement accelerating the clean energy transition.