Will Indiana stick with coal or embrace renewables? Energy task force to decide next week

Source: By Sarah Bowman, Indianapolis Star • Posted: Tuesday, November 17, 2020

Historically, Indiana is a state built on coal. It has been both one of the top producers and consumers of coal across the country — and is a state that still generates more than half of its energy from the fossil fuel today.

But where will Indiana’s energy come from in the future? That’s exactly what the state’s 21st Century Energy Task Force is trying to figure out.

The General Assembly created the task force during the 2019 legislative session to explore the impact that emerging technologies and a transition away from fossil fuels might have on Indiana’s energy system. It also is meant to identify policies focused on affordability and reliability of electricity.

The group — which is made up of legislators and governor-appointed experts in the field — has met nine times over the last year and a half. It now has one meeting remaining to nail down its final report and recommendations, which are due by Dec. 1.

The task force chairmen declined to speak with IndyStar: Co-chair Rep. Ed Soliday, R-Valparaiso, said he was not available for an interview, and co-chair Sen. Eric Koch, R-Bedford, said he is “reserving comment until the report is issued.”

Many stakeholders have applauded the task force for tackling such a complex issue, going so far as to describe it as an opportunity to position Indiana as a leader in the energy transition.

That said, some of those same people as well as some task force members are concerned the group’s report won’t live up to such ideals — citing various topics left out of the discussion and what they feel is the rushed process to write and approve the report.

“The failure of the task force up to now is to be so focused on one issue or question of baseload generation rather than taking a more holistic and broader view of the energy landscape,” said task force member Rep. Matt Pierce, D-Bloomington. Baseload power provides the minimum needed electricity for the system, and it often comes from coal-fired plants.

Former Sen. Mark Stoops, also a Bloomington Democrat, takes his criticism a step further.

“Unfortunately, I believe, the purpose of the task force was to try to make the case that utilities shouldn’t move away from coal and fossil fuels,” said Stoops, who served on the task force until two months ago after announcing his retirement from the legislature. That belief is somewhat driven by efforts during the last two sessions to slow the transition to cleaner energy sources, he added.

The Indiana Coal Council, which provided testimony to the task force about the reliability and benefits of coal, did not respond to IndyStar’s request for comment.

The task force and report’s conclusions remain to be seen, but everyone is watching to see what it will mean for Indiana’s energy future.

‘Fixated on Reliability’

Soliday outlined early during task force meetings what he believes are the five pillars of energy generation: reliability, resiliency, affordability, stability and sustainability. The group was charged with finding the balance between the categories.

But Kerwin Olson feels that work has weighed heavily toward just one.

“It seems the task force is fixated on reliability, only because they don’t like where the utilities are going or they are unfamiliar with it and therefore they are uncomfortable,” said Olson, the executive director of the consumer advocacy group Citizens Action Coalition. He is referring to several utilities that have announced plans to retire their coal power plants in the coming decade and transition to renewable generation.

A reliable energy system is one that has enough electricity and the ability to deliver it to meet customers’ needs.

Pierce said it’s his impression that the task force chairs are operating on the assumption that “everyone will get rid of their baseload power and then at times when renewables can’t be used, that we will be left without power.”

He said the sense is the legislature needs to put in place policies to keep that from happening. But he said he asked the groups that manage power in the state and region — the Indiana Utility Regulatory Commission and the Midcontinent Independent System Operator — if that’s the case.

“I’ve asked that if the legislature did nothing, could we wake up in the future and not have the power to meet our needs,” Pierce said. “They didn’t think so.”

The IURC and MISO made several presentations to the task force, and said they have processes in place to monitor and manage utility decisions that could affect reliability.

The group heard from MISO that about 30% of energy on the grid can come from renewables without issue. Beyond that is when some new processes and tools might need to be implemented for a long-term perspective, according to JP Carvallo, a Governor-appointed task force member who works in the electricity markets and policy group at the Lawrence Berkeley National Laboratory.

Still, that’s some time away as Indiana is at less than 10% renewables, according to the U.S. Energy Information Administration. Soliday said during Thursday’s meeting that Indiana’s “door is open to renewables” and other task force members said they embrace the resource. But the group wants to put accountability measures in place now to maintain reliability as renewables grow.

Rep. Ethan Manning, R-Denver, said he believes renewables are increasingly reliable with the ability to predict the weather and continuing advances in storage technology — adding they should be encouraged. But he said he still believes there are challenges to integrating renewables onto the grid and scaling them up to replace the amount of electricity the state currently gets from fossil fuels.

“For me personally, reliability is absolutely No. 1,” the task force member said. “I’m agnostic when it comes to how our energy is generated, as long as it meets our needs.”

That feeling doesn’t hold for everyone, however. Several economic development officials said companies they are trying to recruit are increasingly looking for renewables. Many of Indiana’s industrial energy customers — including Subaru, Cummins and Steel Dynamics — said they want more of their energy to come from sustainable sources.

The state’s major industries and manufacturers use a lot of energy, so cost and affordability is important, according to Joseph Rompala, on behalf of INDIEC, or Indiana’s Industrial Energy Customers. They also need continuous energy for their processes, so reliability is important, he added.

“And because it has become very, very clear with signals from customers, corporate boardrooms and investors that looking toward sustainability is equally important,” Rompala said.

He said he hopes the task force can find the sweet spot, and not pursue any one priority, such as reliability, at the detriment of affordability and sustainability.

‘Delaying the energy transition’

According to Pierce, Stoops, Olson and others, it’s what the task force hasn’t discussed that is even more notable. Among that list is climate change, energy efficiency, and distributed energy resources or customer-owned generation.

“Whenever a task force member brought up climate change or one of those other topics, it was brushed off” by task force leadership, Stoops said.

“How can we have an energy task force without thorough discussion of climate change and the fact that it’s an important factor and one of the reasons why the task force should be focused more on renewables than gas and coal?” he added. “Climate change threatens the resiliency of our energy system.”

Resiliency is the ability of the electricity system to respond to high-impact external events such as cyber attacks, storms and floods, wildfires, etc.

Soliday made it clear early on in the task force that climate change wasn’t going to be discussed. He’s also said that topics such as energy efficiency and distributed generation would be taken up next summer, but not during the course of the current task force.

“We aren’t talking about the energy transition if we aren’t talking about these things,” Olson said. “Without those things, it seems to me we are talking about not obstructing the energy transition, but certainly delaying it.”

Energy efficiency is using less energy or eliminating energy waste. It can be a powerful — and inexpensive — tool to decrease energy usage and grid congestion, Olson said, which helps to increase reliability and stability. While the state already has some efficiency programs in place, they can be bolstered and amplified, he said.

Distributed generation is the generation of power near to where it will be used, such as solar panels on roofs, rather than being transmitted from large, centralized facilities. Though the level of distributed generation in Indiana is still low, research shows that it will continue to be a growing energy source.

During Thursday’s meeting, the Indiana Chamber of Commerce said a report it  produced has found distributed generation is coming. It recommends that work to determine how these resources fit into the system should begin now, said Greg Ellis, chamber vice president of environmental and energy policy.

That is echoed in a recent order from the Federal Energy Regulatory Commission, which allows distributed energy sources to compete in the energy markets — capitalizing on the growth of such generation resources that will be added to the grid.

These sources can increase affordability, by expanding competition, FERC found in its analysis. It also will enhance reliability and flexibility on the grid to pull from different resources.

Laura Arnold, who leads the group Indiana Distributed Generation, said it goes back to ecology 101: “When you look at the stability of biological systems, you know that diversity is stability.”

Pierce said he is skeptical that there will be a meaningful discussion of energy efficiency and distributed generation next summer. Even if there is, he said, it will be too late: “How can we talk about Indiana’s energy future without taking this into account?”

Manning said he agrees these are “absolutely” part of Indiana’s energy future, but he felt it was OK to set them aside until next summer to focus on energy at the utility level. “We have enough to discuss just for that,” he said.

Still, Ahmad Faruqui — a California-based economic and energy analyst who provided testimony to the task force on these topics — said they can’t be too busy to look at these things. He said he was told at the time he spoke that the task force was more focused on reliability over everything else.

“That’s been the MO of too many task forces over the years, they have had their head in the sand,” Faruqui said. “It will shape the future of Indiana, and they don’t want to say they are too busy to deal with the future that’s taking shape in front of their eyes.

“It’s coming and we cannot stop it,” he added, “we have to encourage it.”

‘An incredibly rushed process’

Part of the problem, according to a few task force members, has been the process.

Task force members did not have much input into which topics were discussed or which speakers were brought in, according to Pierce, who said that was left up to the chairs. While he felt there was a good variety of presenters, he would have liked to have heard from more people on the above mentioned topics.

Olson said there also was a lack of speakers and experts in public health and the environment, and little to no opportunity for the public to weigh in on the process.

One of the main frustrations for Jesse Kharbanda, executive director of the Hoosier Environmental Council, is the absence of a report by the IURC, Lawrence Berkeley Lab and Indiana universities. As part of the legislation that created the task force, the IURC was tasked with producing a comprehensive study of the statewide impacts of energy transitions on rates and electricity generation.

The commission delivered that report, which looks at the current and future state of things in Indiana, in August. But the more than 300-page report had yet to be discussed by the task force before Thursday’s meeting — the group’s second to last.

Kharbanda felt that’s not much time for such a comprehensive document.

“I was a bit baffled, would be the right word,” he said. “I would have made that the priority as soon as meetings reconvened in September, but now they are not going to have time to unpack the policy implications from the report.”

He and other stakeholders also worry there won’t be enough time to produce the final report. Also during Thursday’s meeting, various stakeholders were invited to present on what they would like to see in the report. There now is one meeting left: Nov. 19. The report is meant to be finalized and approved then.

“This feels, in short, to be an incredibly rushed process,” Kharbanda said.

Soliday said task force members should receive the report on Monday or Tuesday. It likely will focus on growing renewables while balancing reliability, and also encourage the General Assembly to look at securitization, which allows customer-backed bonds to help pay off coal assets in favor of renewables.

“I am concerned it will not be enough time to digest the proposed report and then to discuss and negotiate what it ought to say,” Pierce said. He thinks that means it’s likely the report won’t include many specific recommendations.

“There is the opportunity where it could be a very comprehensive report that offers meaningful conclusions and recommendations,” Pierce said. “But thinking it might just be very generalized with general goals.”

That’s what worries Stoops. The looseness leaves some skeptical that the report could be used to support legislation that might prop up the coal industry, on the guise of reliability, he said. The Coal Council proposed a potential plat at Thursday’s meeting that would require certain amounts of energy come from coal in a controlled phase out over 15 years.

That follows HB 1414 during this year’s legislative session, which delayed the closure of coal plants for a set amount of time, and was authored by task force co-chair Rep. Soliday. The year before, a bill that would have placed a moratorium on new energy projects — namely renewable energy projects — narrowly failed.

Stoops no longer is on the task force, after retiring. The same is true of Sen. Jim Merritt, R-Indianapolis. They have been replaced on the task force by Sen. J.D. Ford, D-Indianapolis, and Sen. Mark Messmer, R-Jasper, respectively.

“I was not for this task force at first,” Merritt said. “But during the last two years, I think they’ve got the foundation set for a robust approach to energy over the coming years.”

Just depends what approach the task force takes, everyone has said. That will become clear in the next two weeks.

Call IndyStar reporter Sarah Bowman at 317-444-6129 or email at sarah.bowman@indystar.com. Follow her on Twitter and Facebook: @IndyStarSarah. Connect with IndyStar’s environmental reporters: Join The Scrub on Facebook.

IndyStar’s environmental reporting project is made possible through the generous support of the nonprofit Nina Mason Pulliam Charitable Trust.