The state Focus on Energy program will target its renewable energy funding toward biomass and biogas technologies, leaving fewer dollars available for wind energy and solar projects.
The Public Service Commission set a funding level of $10 million a year to provide incentives for renewable energy projects. But most of the 2012 budget has been committed to projects that were awarded incentives last year.
As a result, less than $3 million remains available to be awarded this year.
The commission decided to allocate three-fourths of funds to biomass and biogas projects and one-fourth to wind and solar.
The commission decision came after a review of the renewables program by the new vendor that operates the Focus on Energy program.
Supporters of renewable energy had been urging the commission to allow more funding for renewable projects after funding for renewable energy was suspended by Focus on Energy last year.
The funding suspension took place because of heavy demand for incentives from companies looking to add renewable energy.
Phil Montgomery, the commission’s chairman, said in a statement that placing an emphasis on biomass and biogas is important for the state’s agricultural and forest products industries.
“The new mix in the Focus on Energy program recognizes where our state’s strengths in renewables are,” he said.
But an advocacy group representing renewable energy installers and developers said the new policy unfairly penalizes wind and solar.
Focus on Energy runs energy-efficiency and renewable-energy programs statewide that are overseen by the PSC. About $100 million in annual funding comes from electricity ratepayers through a surcharge on electric bills, with 10% of it targeted for renewable programs.
The Focus on Energy program provides saving for energy customers, delivering $2.30 in saving for every $1 spent, a Legislative Audit Bureau report last year found.
Energy-efficiency projects deliver more saving than renewable energy projects, so the commission set that return of investment – 2.3-to-1 – as a benchmark for the program going forward.
The decision was praised by business groups shortly after the commission’s meeting on Friday.
“Ratepayer funds are not unlimited, and we appreciate the PSC’s efforts to improve the bang for the buck,” said Todd Stuart, executive director of the Wisconsin Industrial Energy Group, a group representing large factories.
Renew Wisconsin, an advocacy group that helped steer the formation of Focus more than a decade ago, issued a statement Monday critical of the PSC decision. The new policy penalizes wind and solar by promoting sources of energy that result in air emissions, Renew said.
“Even under the best-case scenario, solar and small wind will see a significant reduction of incentive support,” said Michael Vickerman, director of policy at the nonprofit. “Whether intended or not, the PSC’s funding formula effectively picks winners and losers going forward. Although state law directs the PSC to place a higher priority on noncombustible renewables than on combustibles, this policy does the reverse.”
In an interview, Don Wichert of Renew Wisconsin said his group and others involved in the renewable-energy sector were not consulted when Focus on Energy and the PSC developed the technology-scoring process that favored biomass and biogas.
The PSC may be overlooking the fact that prices to install solar panels are falling significantly and that biomass and biogas projects are becoming harder to justify with the price of natural gas at a 10-year low, Wichert said.
The PSC commissioners said Focus on Energy was committing too much money to renewable energy instead of energy efficiency in recent years, which Montgomery and Commissioner Ellen Nowak said were threatening to undermine the cost-effectiveness of the entire Focus program.