After the Pandemic, Kentucky Can Rebuild the Economy and Create Jobs by Investing in Clean Energy

The coronavirus pandemic will leave in its wake an urgent need to rebuild state economies. In Kentucky, building out the state’s huge potential for wind and solar power can play a major role – but only if state leaders seize the opportunity and if its elected representatives in Washington support extension of the federal tax credits for wind and solar. 

Nationwide and in Kentucky, the clean energy industry is being hit hard by the pandemic-triggered economic crisis. A BW Research Partners analysis found that the U.S. clean energy sector lost more than 100,000 jobs in March – 1,500 of them in Kentucky. Before the pandemic, Kentucky employed nearly 40,000 people in the energy efficiency, renewables and energy storage sectors, according to Clean Jobs America 2020, a report from the environmental entrepreneurs coalition E2.  

The Kentucky power sector is overwhelmingly dominated by coal. In 2019, coal provided 73 percent of the state’s electricity, followed by natural gas at 21 percent. Hydro power generated 5 percent of Kentucky’s electricity, solar power generated only 0.1 percent, and the state has no utility-scale wind power at all. According to the Solar Energy Industries Association, Kentucky ranks 45th among the states in installed solar capacity.

The state has few renewable incentives and no mandates to guarantee renewable development, including no statewide renewable energy standard. Yet the cost of new utility-scale wind and solar development is now competitive with existing coal-fired power plants, and the Energy Information Administration, or EIA, projects that by next year, renewable generation will likely surpass coal generation nationwide.

Why have renewables had such a hard time gaining traction in the Bluegrass State? Because despite the U.S. coal industry’s death spiral, in Kentucky, coal is still king.

Coal-mining-related jobs in the state fell by over 20 percent last year, but Kentucky is still the fifth-largest coal producer in the nation. In fiscal year 2019, the industry generated almost $93 million in state revenue. 

In 2015, when the Environmental Protection Agency proposed a rule to cut carbon pollution, the state passed legislation that prohibited replacing coal with renewables or energy efficiency. According to E&E News, the law was inspired by the American Legislative Exchange Council, a conservative “bill mill." In an op-ed for the Lexington Herald Leader, U.S. Senate Majority Leader Mitch McConnell – Kentucky’s most powerful politician – urged states to defy the EPA and not implement the “extreme” rule.

The consequence of relying on aging and increasingly expensive coal plants shows in Kentuckians‘ monthly utility bills. According to the EIA, in 2018, the average monthly electricity bill in Kentucky was $123.57, almost 17 percent higher than in California, the leading solar state, and about 13 percent higher than in Iowa, where more than 30 percent of electricity is powered by wind.

Kentucky has two main state policies for supporting development of renewables.

Its net metering law allows homeowners who install solar panels or other renewable technology to sell excess power back to utilities. Enacted in 2004, the law was revised last year and is under review by the state’s Public Service Commission, which will determine the level of compensation for utility customers.

The state also offers incentives for businesses to purchase renewable power through electric utilities. Solar developers have been attracted to Kentucky primarily by the Kentucky Municipal Energy Agency, a co-op of 10 publicly owned utilities.

That leaves an extension of the federal investment tax credit for solar as the other critical policy component in Kentucky’s renewable power development equation. An extension of the production tax credit for wind could also be a primary driver of the state’s significant wind potential.

Kentucky’s technical potential for wind, rooftop solar and utility-scale solar is more than 2.4 million gigawatt hours – enough to power the state for 34 years, based on electricity generated in state in 2019. Technical potential is not economic potential, but build-out of even just a fraction of Kentucky’s technical potential for wind and solar would dramatically shift the energy mix and be a powerful economic engine.

Between mid-March and mid-April, the coronavirus pandemic forced about 400,000 Kentuckians – a fifth of the state’s civilian labor force – to file for unemployment.

The continuing closure of coal plants is also triggering the loss of jobs and local communities’ tax base: Two Kentucky coal plants, which supply a fourth of the state’s coal-fired power, will shut down this year.

Nationwide, there are already nearly three times as many renewable power sector jobs as in the conventional coal, natural gas and nuclear power sectors. Solar installers and wind turbine technicians have been projected to be the fastest growing jobs in the U.S. by the Bureau of Labor Statistics. Kentucky should look to Colorado, where Xcel Energy is replacing lost jobs at a coal plant with renewables and energy storage. 

It’s time for Kentucky to seriously reconsider its energy policy. When the pandemic passes, economic recovery could get a major boost from policies that embrace – rather than shun – renewable power. The state’s leaders, both at home and in Washington, should grab the opportunity to bring good-paying jobs back. Congress should go big with investments in clean energy, and few states could gain more from that initiative than Kentucky.

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