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Time to Strengthen Next Generation Energy Act

May 07, 2013 By Yingxin Ye, Undergraduate Research Fellow

Rising global energy demand, paired with declining costs for renewable energy technology, make now a good time to seriously consider expanding Minnesota’s renewable energy standards (RES).

Bloomberg New Energy Finance reports lower prices for renewable energy could lead to three times more investment in the industry. In addition, the United Nation’s International Energy Agency (IEA) forecasts global energy demand, driven primarily by population and economic growth in developing nations, will rise by over 50 percent between 2010 and the year 2030.

Minnesota has no coal, natural gas, or oil to offset global demand. Even if we did, it wouldn’t drive down our costs much because these resources are typically priced for a global market. We do, however, have a natural hedge against rising demand that wouldn’t be impacted by global pricing: wind and the sun.

Minnesota is already on a good path toward more energy independence, but could perhaps be doing more. The 2007 Next Generation Energy Act set an RES for Minnesota utilities of 25 percent renewable by 2025 (30% by 2020 for Xcel Energy). Now that some utilities are on pace to exceed that goal, a broad coalition of faith, labor and environmental organizations are calling for an expanded RES of 40 percent renewable by 2030. Current Minnesota House legislation offers the most aggressive RES path.

A diversified energy portfolio can make certain there is a more resilient supply and more stable price for energy in Minnesota. Currently, more than 50% of Minnesota’s energy is generated by coal, and there is also an overreliance on the potential for natural gas. These fuels volatile pricing will contribute to further unstable energy costs, which makes Minnesota’s overall economic forecasting even more difficult. This answer lies in a moderated but stable price, not rock-bottom pricing with volatile swings. Thus, Minnesota needs a more diversified energy portfolio to keep our state economy healthy.

Solar power, for instances, matches the peak energy demand in daytime. That’s why it’s critical Minnesota also include an increased solar standard in RES legislation, which the House plan does by calling for solar to account for four percent of renewables. “Adopting more solar renewable energy and improving battery technology could be long-term solutions for the problem of renewable energy,” suggests Minnesota 2020 Fellow Salman Mitha. Battery technology is important because, according to Xcel energy, high demand times stretch into early evening, when the sun isn't as strong and Minnesota’s most readily available renewable source, wind, generates less juice.*

Together with solar power, wind energy can provide a stable energy supply to the market. “Improving electricity storage is one of the most critical problems needed to be overcome by the renewable industry,” says Mitha.

Increased standards should work to ramp up research and development and investment in Minnesota’s green energy industry, which saw an initial boost with the 2007 Next Generation Energy Act.

More than 100 companies, spread across a dozen Minnesota counties, are involved in the wind-related supply chain. More than 30 counties, most rural, have active wind farms or evolving projects.

Although Minnesota slipped to seventh in the wind power industry rankings, it is still one of the nation’s wind energy leaders. Minnesota should build on this success by creating a wider energy portfolio.

When it comes to solar energy, $1 million invested can create up to 14 jobs, according to the Political Economy Research Institute at the University of Massachusetts. Wind and solar also offer relatively quick turnaround from planning to operation, lasting several months to a few years compared with “coal, nuclear, and even natural gas energy generation projects [that] take 5 to 10 years from initial proposal to the point where a shovel finally hits the ground,” according to Solar MN, an industry group with broad environmental community support.

A diversified energy portfolio is not just a smaller carbon footprint, but also more sustainable from an economic perspective. It’s time to take advantage of this growing and quickly evolving sector.

*An earlier version of this story suggested that Minnesota energy demand is highest at night. The updated version more accurately reflects that high energy demand stretches from the afternoon into evening.

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