A new Indiana Chamber of Commerce Foundation study explores the direction the Hoosier state needs to take to power its economic future. Powering Indiana’s Economic Future, conducted by global energy and infrastructure analysis firm London Economics International, looks at five potential scenarios for the evolution of Indiana’s electricity power sectors and offers recommendations on how to accomplish those goals.
Chamber President and Chief Executive Officer Kevin Brinegar says the state has not had a comprehensive energy plan since 2006 and believes the study can serve as the basis for the development of a new plan.
Brinegar says it is critical that Indiana, as the most manufacturing-intensive state in the country, pays close attention to its energy needs.
“Our reliance on coal just in the last 10 years has gone from 90% for powering electricity, which is one of the highest in the country, down to 59%; a big change, although we’re still 21% higher than the national average,” said Brinegar. “The study outlines five sort of alternative paths that Indiana can go down and outlines the advantages and disadvantages of those. Everything from staying the current the course to total deregulation to distributed energy and other things…ultimately, it probably will combine some of those paths together to develop a thoughtful, strategic energy plan for Indiana.”
The study shows Indiana’s average electricity rates have increased 2.9% per year from 2010 to 2019 and are growing faster than the national average. Additionally, affordability is declining and reliability is lower than the national rate.
Greg Ellis, vice president of energy and environmental policy for the Indiana Chamber, says there were several reasons for the rise in rates.
“It was kind of like the perfect storm for Indiana,” said Ellis. “The regulations on environmental controls – the power plants in Indiana had to either put some additional environmental controls on to control carbon or they had to find another source to generate. Along with those two things, most of Indiana’s power plants were aging out. So the utilities had to determine, you know, ‘Do we fix this? Do we build another one like this? Do we go another route?'”
However, Ellis says that because Indiana has made many investments in infrastructure, the study shows the state is in a better place compared to its neighbors, which haven’t made similar investments.
One of the five alternative paths outlined in the study is the use of distributed energy resources (DERs), which include rooftop solar, wind, battery storage, and more. The others, according to the study, include:
- Enhanced status quo: Traditional utilities would remain the primary engine of new investment in the sector but would be subject to a regulatory regime with an increased incentives approach.
- Baseload preservation: This would incorporate the enhanced status quo, but would also require utilities to include in their IRPs an assessment of plans for life extension and efficiency improvements at existing coal and nuclear stations.
- Aggressive decarbonization: This would include all elements of the enhanced status quo and DER-centric pathways, as well as require Indiana to set a specific year to target reaching net zero emissions across the economy.
- Competitive wholesale market: This would include elements of the enhanced status quo and DER-centric pathways, except that IRPs would be discontinued, utilities would be required to unbundle their generation portfolios, and competition would be introduced at both the wholesale and retail levels.
The study highlights advantages for Indiana, including its location, overall resource potential, strong in-state analytical capabilities, and flexibility due to a high proportion of industrial usage.
Brinegar says the study has already been shared with Governor Eric Holcomb’s office as well as members of the Indiana General Assembly.
“We’re going to use this (study) as sort of our guiding star for our public policy advocacy with respect to energy to remind them of not only where we’ve been, but where we need to go as a state and, as we plan our energy future, to help our companies, particularly our manufacturers, be as competitive going forward,” said Brinegar.
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