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US States Killing Renewable Energy Mandates Due To Shale Revolution

Christopher Martin Bloomberg News

More than half the states with laws requiring utilities to buy renewable energy – including Arizona – are considering ways to pare back those mandates after a plunge in natural gas prices brought on by technology that boosted supply.

Sixteen of the 29 states with renewable portfolio standards are considering legislation that would reduce the need for wind and solar power, according to researchers backed by the U.S. Energy Department. North Carolina lawmakers may be among the first to move, followed by Colorado and Connecticut.

The efforts could benefit U.S. utilities such as Duke Energy and PG&E as well as Exxon Mobil, the biggest U.S. oil producer, and Peabody Energy Corp., the largest U.S. coal mining company. Those companies contributed to at least one of the lobby groups pushing the change, according to the Center for Media and Democracy, a Madison, Wis.-based nonprofit group. It would hurt wind turbine maker Vestas Wind Systems and First Solar Inc., which develops solar farms.

“We’re opposed to these mandates, and 2013 will be the most active year ever in terms of efforts to repeal them,” said Todd Wynn, task force director for energy of the American Legislative Exchange Council, or ALEC, a lobby group pushing for the change. “Natural gas is a clean fuel, and regulators and policymakers are seeing how it’s much more affordable than renewable energy.”

Hydraulic-fracturing technology opened aging reservoirs for natural gas drilling, driving prices down about 72 percent from their record 2005 high. That’s making more expensive wind and solar power projects harder for utility regulators to justify, according to ALEC and its allies, which include the Heritage Foundation in Washington.

“The shale revolutions are not just having ramifications politically and economically in the U.S. but also around the world,” said Michael Liebreich, chief executive officer of Bloomberg New Energy Finance. “In 17 years, not that far away, we could reach peak energy use. This is not generally accepted.”

Killing support for renewable-energy policies threatens sales at companies from wind-turbine makers General Electric and Siemens to SolarCity Corp., the San Mateo, Calif.-based rooftop energy developer.

The push at the state level replicates efforts in Washington. Opposition from Republican lawmakers delayed the extension of a federal tax credit for wind power, prompting Vestas, the biggest turbine maker after GE, to fire 10 percent of its workforce at two Colorado factories.

“There haven’t been any outright repeals yet, but we’ve seen some watering-down,” said Justin Barnes, senior policy analyst at the North Carolina Solar Center. “Activity against renewable portfolio standards has been increasing in the past year. Their arguments are mostly on cost.”

The Raleigh, N.C.-based research group is supported by the Energy Department and operates the DSIRE database of state incentives.

U.S. investment in renewable power and energy efficiency fell 54 percent last year to $4.5 billion as government support waned, according to data compiled by Bloomberg. The level may slip again this year if states dilute their requirements, which have pushed utilities to contract power from renewable providers and scale-back use of coal- and natural gas-fired generation.

ALEC wants to repeal state mandates, arguing that the free market is a better way to determine the most cost-effective source of power, Wynn said. It typically drafts model legislation for state lawmakers to use as a blueprint when drafting bills, including the Electricity Freedom Act, which was published in October.

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