[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
           RENEWABLE ELECTRICITY STANDARDS: LIGHTING THE WAY

=======================================================================

                                HEARING

                               before the
                          SELECT COMMITTEE ON
                          ENERGY INDEPENDENCE
                           AND GLOBAL WARMING
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 20, 2007

                               __________

                           Serial No. 110-12


             Printed for the use of the Select Committee on
                 Energy Independence and Global Warming

                        globalwarming.house.gov





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                SELECT COMMITTEE ON ENERGY INDEPENDENCE
                           AND GLOBAL WARMING

               EDWARD J. MARKEY, Massachusetts, Chairman
EARL BLUMENAUER, Oregon              F. JAMES SENSENBRENNER, Jr., 
JAY INSLEE, Washington                   Wisconsin, Ranking Member
JOHN B. LARSON, Connecticut          JOHN B. SHADEGG, Arizona
STEPHANIE HERSETH SANDLIN,           GREG WALDEN, Oregon
  South Dakota                       CANDICE S. MILLER, Michigan
EMANUEL CLEAVER, Missouri            JOHN SULLIVAN, Oklahoma
JOHN J. HALL, New York               MARSHA BLACKBURN, Tennessee
JERRY McNERNEY, California
                                 ------                                

                           Professional Staff

                     David Moulton, Staff Director
                       Aliya Brodsky, Chief Clerk
                 Thomas Weimer, Minority Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Edward J. Markey, a Representative in Congress from the 
  Commonwealth of Massachusetts, opening statement...............     1
    Prepared statement...........................................     3
Hon. F. James Sensenbrenner, Jr., a Representative in Congress 
  from the State of Wisconsin, opening statement.................     6
Hon. Earl Blumenauer, a Representative in Congress from the State 
  of Oregon, opening statement...................................     7

                               Witnesses

Panel One
Mr. Bill Ritter, Governor of the State of Colorado...............     8
    Prepared statement...........................................    11
    Answers to submitted questions...............................    98
Panel Two
Ms. Nancy Floyd, Nth Power, Founder and Managing Director........    27
    Prepared statement...........................................    30
Mr. Mike Sloan, The Wind Coaliton, Director......................    40
    Prepared statement...........................................    42
Mr. Chris Hobson, Southern Company, Senior Vice President, 
  Research and Environmental Affairs.............................    48
    Prepared statement...........................................    50
Mr. Bob Reedy, Florida Solar Energy Center.......................    65
    Prepared statement and attachments...........................    67
    Answers to submitted questions...............................   107
Mr. Dave Foster, Blue Green Alliance, United Steelworkers, 
  Executive Director.............................................    72
    Prepared statement...........................................    75


           RENEWABLE ELECTRICITY STANDARDS: LIGHTING THE WAY

                      THURSDAY, SEPTEMBER 20, 2007

                  House of Representatives,
            Select Committee on Energy Independence
                                        and Global Warming,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 9:00 a.m., in Room 
2175 Rayburn House Office Building, Hon. Edward J. Markey 
[chairman of the Committee] presiding.
    Present: Representatives Markey, Blumenauer, Inslee, 
Herseth, Cleaver, Hall, McNerney, Sensenbrenner, Walden, and 
Blackburn.
    Staff Present: Morgan Gray and Jonathan Phillips.
    Also Present: Representative Udall of Colorado.
    The Chairman. This hearing is called to order. The emission 
of heat trapping gases from electric power plants is a huge 
source of global warming pollution in our country and around 
the world. If we are to solve this problem, we need to 
transform this process into one that provides us the power we 
need from safe, clean, affordable sources of electricity, 
starting immediately. Right now the combustion of fossil fuels 
like coal, oil, and natural gas produce the majority of U.S. 
electricity, over 70 percent. And it's responsible for about 40 
percent of carbon dioxide emissions. Excluding hydropower, 
renewables make up just 2.4 percent of electricity generation 
in the United States.
    The good news is that the way we generate electricity is 
beginning to change. Last year, over 2400 megawatts of new 
generating capacity were added across the country from wind 
trailing only the new capacity added from natural gas. 
Meanwhile, last year, we added only 600 megawatts of new 
capacity from coal and no additional capacity from nuclear.
    This year, projections indicate that we are going to add 
between 3,000 and 4,000 new megawatts of wind capacity and that 
is big news. This increased use of wind and other renewable 
technologies such as solar, biomass, and geothermal, is due in 
part, to the states that have been taking the lead in requiring 
the production of renewable electricity.
    Across the country, there has been a groundswell of public 
support for changing the way we generate electricity. 
Currently, 25 states and the District of Columbia have put in 
place Renewable Electricity Standards. A state Renewable 
Electricity Standard may vary in how much renewable electricity 
it requires or its definition of eligible renewable projects, 
but all share the same goal, to move our electricity sector 
away from fossil fuels that produce global warming pollution 
and towards clean, renewable technologies.
    That will be the goal of our hearing today. We thank all 
who are going to participate. The Energy Bill was just passed 
in August, adopting an amendment from Representative Tom Udall 
and Todd Platts, working with Congressman Mark Udall from 
Colorado which created a national Renewable Electricity 
Standard requiring that 15 percent of our electricity come from 
renewable sources and efficiency by the year 2020. That was a 
big moment on the House Floor and it portends big things to 
happen before the end of this year. That completes the opening 
statement from the chair.
    I now turn and recognize the Ranking Member of the Select 
Committee, the gentleman from Wisconsin, Mr. Sensenbrenner.
    [The prepared statement of Mr. Markey follows:]

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    Mr. Sensenbrenner. Thank you very much, Mr. Chairman. It 
shouldn't surprise you to know that I support the development 
of renewable energy including wind, solar, biomass, and 
hydroelectric power. Week after week, Republicans on this Panel 
have said that technology provides the only real path to a 
global warming solution. We can't stop using energy, but we can 
develop ways to create energy without releasing CO2. 
It may also not surprise you to know that I voted against 
government regulations requiring power companies to include 
renewable energy as one of its sources.
    So how can I say I'm for renewable energy and then vote 
against requiring it? The answer is simple. Because I firmly 
believe that if we were to find realistic global warming 
solutions, Congress should encourage technological competition, 
but must not pick who wins and who loses. By requiring electric 
utilities to generate a portion of their energy through 
renewable sources, the government is picking the winners and in 
these cases the winners will be certain types of renewable 
sources. The problem with the renewable portfolio is that it 
emphasizes the means and not the ends. After all, the goal is 
to reduce greenhouse gas emissions. And in July, the House 
passed legislation that requires utilities to use renewable 
sources to produce 15 percent of its electricity.
    I am skeptical of most regulation. But this one is 
particularly onerous because it discounts the progress some 
electric utilities have made and only because they use methods 
not favored by certain congressional leaders. One utility that 
would fall prey to this terrible idea is the Southern Company 
and I am happy to welcome Mr. Chris Hobson, the company's 
Senior Vice President for Research and Environmental Affairs. 
Should this bad policy ever become law, utilities that are able 
to meet the renewable standards would presumably produce 15 
percent of its electricity without producing any 
CO2, and that would be progress.
    But not for the Southern Company. As Mr. Hobson will 
testify, 18 percent of the electricity generated by the 
Southern Company today emits no carbon dioxide whatsoever. So 
the Southern Company has nothing to worry about with these 
regulations, right? Wrong. Unfortunately, the Southern Company 
has big worries and so should all of its rate payers with 15 
percent of its electricity generated by nuclear power and 
another 3 percent from hydropower, Southern Company has already 
met the emissions cuts required these proposed regulations seek 
to create. But because the utility doesn't employ the use of 
wind turbines or solar panels, it will be forced to pay 
government fees for its failure to comply. And that will likely 
cost the company a billion dollars a year which will be passed 
on in every rate payers' monthly bill.
    Like all smart energy utilities, the Southern Company is 
researching its renewable energy options, but in the areas in 
the South it serves, are not conducive to many forms of 
renewable energy. The South has simply too much clouds and not 
enough wind, if these regulations come to pass and Southerners 
will literally pay the price for their geographic location.
    Congress should be promoting technological solutions to 
global warming, not picking which technology is its favorite. 
That isn't a path to a solution. It's only a path to higher 
electricity bills. Additionally, I'd like to welcome Governor 
Ritter to the Committee. The Governor is here to talk about 
Colorado's new energy economy and its goals of the 20 percent 
renewable standard. A recent report commissioned by the State 
Legislature shows that Colorado does have an energy economy 
that produces 70,000 jobs, $640 million in tax revenue and adds 
$22.9 billion to the state's economy. Of course, that energy 
economy comes from the oil and gas sector, and I suspect 
renewable energy has far less impact on Colorado. So I'm 
curious to hear how the Governor plans to nurture a new energy 
economy without slowing an oil and gas sector that appears to 
be a foundation to the state's economy.
    I thank the chair.
    The Chairman. The gentleman's time has expired. The 
Governor can only stay until 10 o'clock.
    Mr. Blumenauer. I have no plans to speak longer than even a 
portion of that, Mr. Chairman.
    The Chairman. The gentleman from Oregon is recognized.
    Mr. Blumenauer. Thank you, and I appreciate your admonition 
and I will try and be brief and to the point. But it's just one 
of those rare occasions when I disagree with my respected 
friend, the Ranking Republican Member as when he equated the 
amount of electricity that was consumed by a country as 
progress. Here, I couldn't disagree more with our action that 
we took with the leadership of our friend from Colorado, Mr. 
Udall, you, Mr. Chairman, our speaker, in establishing a 
national renewable portfolio standard.
    We're not about picking winners and losers. We're about 
setting a framework for a broad effort to incent the 
appropriate range of options for generating energy for the 
future. I look forward to hearing from Governor Ritter and our 
friend, Mr. Udall, because part of what they have done is 
create their own renewable portfolio standard, approved 
overwhelmingly by their voters.
    We are in the process of doing this state by state across 
the country. The question is whether the federal government 
will catch up and be able to do it as well. And that is why I'm 
pleased to welcome Nancy Floyd who will be speaking in a moment 
because she, as the founder and managing partner of Nth Power, 
the first venture capital company in the world dedicated to 
these renewable energy technologies, you're going to help 
operationalize it. But I think, as part of her testimony which 
I hope my friend from Wisconsin will have a chance to listen. 
It's inconsistent policies of the federal government have lost 
our lead in areas like wind and solar and we need a full range 
of consistent federal policies like a renewable portfolio 
standard to be able to give the proper incentive.
    I think Florida is still the Sunshine State, but we heard 
some of our colleagues' concern that they couldn't deal with 
solar. I think it's time for us to have a wake up call. I 
appreciate your scheduling this hearing and being able to hone 
in on how we'll accomplish that and I hope I have allowed time 
for the Governor to speak before 10.
    Thank you, Mr Chair.
    The Chairman. Thank you. I would ask the other Members if 
they wouldn't mind that we allow the Governor to testify at 
this time and then we will--when he has completed his 
testimony, have the other Members then make their opening 
statements. And we will begin by recognizing our colleague from 
the State of Colorado, Mark Udall. Mark, along with his cousin, 
Tom, and Todd Platts, its leadership, and the debate which we 
had in the first week of August on the House Floor on 
increasing the national standard for renewables and efficiency 
to 15 percent per year by the Year 2020, he's been a leader 
throughout his entire career going back to the Colorado State 
House on the issue.
    Welcome, Mark, and whenever you're ready, please begin.
    Mr. Udall of Colorado. Thank you, Mr. Chairman. In the 
spirit of assuring that the Governor has plenty of time to tell 
you about the great successes in Colorado, I'd like to ask that 
the full text of my introduction which is noteworthy and full 
of a lot of substance be included in the record and I'll 
shorten my introduction of the Governor.
    The Chairman. Without objection. We'll set aside one full 
textbook for that.
    Mr. Udall of Colorado. Let me just tell you that the 
Governor, he's widely respected and popular in Colorado and 
that's in many ways because during his short time in office, 
less than a year, he's reformed many of our natural resource 
policies which require us to be responsible in how we develop 
and protect our air and our water and our land. He's working 
towards creating a 21st century transportation system which Mr. 
Blumenauer would be very interested in, I know. And he's also 
focused on the statewide health care which, of course, we need 
to do here at the federal level. And he's made a real point of 
making sure that we have the best K through 12 and higher 
education levels.
    But most importantly, he's quickly established the State of 
Colorado as a leader in renewable energy by doubling our 
state's Renewable Electricity Standard.
    In 2004, we were the first voters in the country to 
establish a Renewable Electricity Standard which was known as 
Amendment 37 and we did that in a bipartisan way. I was 
fortunate to chair the committee, the state-wide committee, 
with our Republican Speaker of the House, Lola Spradley. And 
then this year in bipartisan fashion, our legislature doubled 
the RES requirement to 20 percent by 2020, I believe, and 
Governor Ritter signed that into law. So I'm very pleased he's 
here today tell you about the successes in Colorado and what we 
envision for the future, not just in Colorado, but for this 
great country of ours. So it's a real honor to introduce the 
Governor of Colorado, Bill Ritter.
    The Chairman. If you're ready, please begin, Governor.

  STATEMENT OF BILL RITTER, GOVERNOR OF THE STATE OF COLORADO

    Governor Ritter. Thank you, Mr. Chairman, Chairman Markey, 
Representative Sensenbrenner, Members of the Committee, 
Representative Udall, it's really a pleasure to be able to be 
here and be invited to testify, and so I thank you for that. I 
also have read remarks that I would ask to be entered as part 
of the record and I'll make brief remarks in lieu of that.
    I want to offer Congressman Udall a thank you for his 
introduction and also for all the work that he has done that 
relates to Colorado's own energy economy issues and natural 
resource issues. He is a strong partner in our efforts and I 
will talk a little bit about what we call the new energy 
economy. As Representative Udall referenced, we passed 
Amendment 37 by an overwhelming margin, actually in 2004. I 
think at the time, it was the first voter-led initiative that 
established a Renewable Energy Standard.
    It is really about that that I am here to testify here 
today about the efforts that we've made since I have been 
inaugurated as the Governor of the State. But so many of those 
things have their foundation in Amendment 37. It really goes 
back to the conversations we had then, when our largest utility 
in the state came in and really opposed the passage of 
Amendment 37 for many of the same reasons you hear that people 
are against either a federal standard or other state Renewable 
Energy Standards, things like it would cost the rate payers an 
added amount of money that we can't get to the place that were 
set in the standard. We set it at ten percent by 2015.
    When we proposed a bill this year that ultimately was 
passed by both Houses and I signed into law, our biggest ally, 
really our biggest ally was the same utility who had opposed 
Amendment 37. And that's because they found how easy really in 
a sense it was to begin making their way toward the standard 
that was set by the voters initially. Remember it was ten 
percent by 2015. We will get to ten percent by the end of this 
year. So eight years early, we're going to get to that ten 
percent mark in Colorado and we have on-going testimony by that 
utility that talks about in front of our PUC will come in and 
talk about least-cost options as part of our utility 
commission's standard when they're asking how we're going to 
generate electricity. The least-cost options actually include 
the generation of wind as a part of that.
    We have seen that utility come in now and be an ally and us 
resetting the standard at 20 percent by 2020. We passed it 
through both Houses. I signed it into law. That utility, like I 
said, was a partner in that, but our rural electric 
associations initially had been carved out of Amendment 37. 
When we proposed this House Bill 1281 that was our new 
standard, 20 percent by 2020, all but one REA in the state came 
in and again supported our efforts and were, I think, happy to 
do so. So we were able to reset the standard.
    What we've seen is this, and the reason I think to your 
point, Mr. Sensenbrenner, about why we call it the new energy 
economy. We have a very robust traditional energy economy. The 
extractive industries, oil, coal, and gas, they are a big part 
of our economy. But we call it the new energy economy because 
it melds the two things and it has absolutely been significant 
in economic development for us to focus on renewable energy 
economy in tandem with that.
    People who view these two economies as one in lieu of the 
other I think are wrong to do that, especially in a state like 
Colorado where there is robust attractive industry activity, 
industrial activity going on. But we're missing a real 
opportunity prior to our setting the mandate and in since 
setting the mandate, some of the things that have happened have 
been, I think, just fairly significant especially to some areas 
where we needed to add value to the economy, quite frankly.
    In the east, we have wind farms being built. Since I've 
been inaugurated, we've had ground breaking on several 
different wind farms up and down the eastern plains. We have 
one of the largest solar plants in the county being built in 
our San Luis Valley where there is a lot of sun. We have great 
geothermal possibilities. But we've also been able to 
participate in the vertical part of that industry. A Danish 
company built its first manufacturing plant in Colorado, Vesta 
Blades, so it's manufacturing those rotor blades.
    Just recently had another announcement about a company, 
ABA, that is going to co-locate with Colorado State University 
and build manufacturing plants for a thin film photovoltaic. 
Those kinds of things are our ability to take this renewable 
energy economy and create jobs, both in agricultural areas, but 
also in manufacturing areas and to really add value to an 
economy that in many respects, as I said, needed that to 
happen.
    If you think about the consequences environmentally, which 
are all positive, if you think about the things that we do with 
respect to economic development and you add to that the part 
that we can play in over time energy independence as a country, 
we really do believe that it has this great trifecta impact on 
us as a state, certainly, and really on us as a country.
    Finally, I would say this to Mr. Blumenauer's point, with 
respect to what the states are doing. The western governors, 
the national governors, we are paying attention to this issue 
and in many respects when we get together, it is the thing we 
talk about most. Education is right up there, but we talk about 
the things that we are doing as states and it very much has to 
do with the frustration of there not being a federal policy 
that supports us the way we do.
    Finally, I would say this. In a coal-producing state, we 
are also about clean coal. We really believe that this body, 
the federal government, needs to do all they can to incent the 
development of clean coal, both research and technology and 
either production tax credits or investment tax credits. The 
western governors, I think would say it is our number one goal 
as an association.
    So again, thank you so much for the opportunity to be here 
and the opportunity to testify this morning, Mr. Chairman.
    [The statement of Governor Ritter follows:]

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    The Chairman. Great. Thank you, Governor, so much for being 
here.
    Now to the Members, I think in order to accommodate 
everyone, what we'll do is we'll go to a round of three minute 
questioning, because the Governor does have to leave by ten 
o'clock. And if there is time left over, we will just keep 
revolving around the Committee Members with perhaps even a 
shorter period of time so that everyone can have an 
opportunity. So the Chair will recognize himself now for a 
round of three minutes of questions.
    Let me ask you, Governor, about your electricity rates in 
the State of Colorado. How has this move to 10 percent 
renewable electricity affected the rates for your consumers?
    Governor Ritter. I think there's been statements by our 
regulated utility that actually the rates have either--the cost 
of producing electricity has either been brought down by a 
renewable portfolio standard or remained relatively the same. 
We know that there is a difference between the rate at which 
you can buy a kilowatt hour for coal and there's a difference 
between that and something like let's say solar.
    We see the price of solar coming down as the technology 
gets better. Our conversations with people who are involved in 
solar would say that it's coming down pretty significantly. We 
understand that as it relates to coal, if we go to gasification 
or if we find technology that can strip off CO2 at 
scale at the altitude that we have, with the type of coal that 
we have, that that's going to likely increase the price of coal 
and we'll be competitive with solar, but as it stands, 
particularly with respect to wind, wind, natural gas, and coal, 
are there in a place where they're competitive and it has not 
impacted the rates that our consumers are paying. And again, 
the PUC looks at this. They pay attention to this and it was 
something that we very much have paid attention to as we move 
through this renewable portfolio standard.
    The Chairman. Now with regard to the rural parts of 
Colorado, could you talk about the impact that this new 
momentum is having and could have on rural Colorado?
    Governor Ritter. Well, Florida Power and Light is building 
one of the largest wind farms in the northeast part of the 
state, which is part of an opening, a ribbon-cutting last week 
where we put 75 megawatts on line that will produce energy for 
220,000 homes. We already had 108 turbines on land just east of 
that. British Petroleum is building one wind farm and has 
talked about additional wind farms and each time they do that 
imagine if a farmer--there's a place in the Southeast part of 
the state, 108 turbines. They only have 68 acres out of 
production. They can make a choice between either taking a per 
turbine lease where they are paid by the turbine, or they can 
decide that they take a percentage of the electricity produced 
and the cost that----
    The Chairman. If they take a per turbine lease, do you know 
what the average farmer or rancher receives in compensation?
    Governor Ritter. It's my sense it's somewhere around four 
to five thousand. And actually, we're joined by some Coloradans 
here, one of whom has eight turbines on his land. We just 
talked about that. The newest contracts now are giving you the 
alternative of one or the other, and I think maybe it's either 
$3,500 or the cost of the, or the percentage of the electricity 
that's generated and the price that they're earning for that. 
It's one of the two. And so, it is still significant. I mean, I 
know there is a farmer that's getting a $4,000 per lease 
turbine and, you know, if you have 100 turbines on your land 
and you only have 68 acres out of production, it doesn't take 
long to do the math and understand what value you are adding 
not just to that farmer, but to these counties and to their tax 
base and that's very significant for us as a state.
    Governor Ritter. My time has expired. I recognize the 
gentleman from Wisconsin.
    Mr. Sensenbrenner. Thank you, Governor. I am curious about 
the transmission lines siting issues because very frequently 
the places that are best for renewable energies, particularly 
solar and wind are not where the people are. And I have noticed 
that the wind resources appear to be in eastern Colorado. The 
solar resources occur, appear to be in southwestern and south 
central Colorado. I have found in Wisconsin that people don't 
like transmission lines, you know, running through their 
property. How do you plan to deal with that?
    Governor Ritter. Thank you, Mr. Sensenbrenner. There's a 
couple of issues. One was just the availability of 
transmission, because we had always been told, and especially 
during the campaign when I was running because we made 
renewable energy a big thing. They said, you know, an 
impediment is even building the transmission. We went to the 
REAs and we said to them, the Rural Electric Associations, what 
does it take. They said we really need to have bonding capacity 
to borrow against this, and we believe that there's this 
ability on our part to build out the transmission if in fact we 
can get the bonding capacity.
    When I just did this ribbon cutting in the Southeast part 
of the state last week, there are about 12 farmers who are 
involved either in having the turbines or in having some part 
of the transmission lines on their property. Basically, the 
farmers in the eastern plains understand the value to the 
economy of this and in siting for transmission to date has not 
been a problem.
    There was a meeting in the Southeast, the southern east 
most county. It is called Baca County. It's a very small, not a 
terribly big, well-populated county, and 65 farmers showed up 
because they want to understand how they can be a part of this. 
So it has not been a problem for us. I do appreciate the point. 
In the west, we've always had this issue. There are 
transmission lines that run across some places that are 
otherwise not inhabited. And so we had that experience, but we 
I think also understand that with this renewable energy economy 
comes the need on our part to provide the transmission.
    We're talking to other states about a regional transmission 
grid that we think has to be part of our thinking here. But 
again to date, siting wasn't the problem. It was thinking about 
how we pay for it going forward and we did two different things 
that will help us build out transmission.
    Mr. Sensenbrenner. I have one further question relating to 
traditional energy. Xcel Energy is proposing a coal-fired plant 
that uses some pretty significant technology that reduces 
CO2 emissions and sequesters a lot of the other 
ones. Do you support these technologies and would you support 
streamlining the permitting process for those who wish to build 
this plant?
    Governor Ritter. Well, I certainly support the technology. 
I mean, everybody that we speak to around issues of climate 
change will say, and we've had several meetings about this. I 
just met with the Governors of Wyoming, Utah, and West 
Virginia, actually as coal producing states, to talk about 
where we are with respect to the technology and what we need 
from the federal government in either production tax credits or 
investment tax credits.
    I very much support our going forward with research and 
development and providing incentives for not just the research 
and development, for building the projects to scale where the 
technology is proven, both is gassification and stripping off 
the CO2. So I believe it is something that has to be 
a part of our energy portfolio as we go forward, and I would 
very much support the technology.
    As it relates to the permitting process, you know, as long 
as those things that I think are still the responsibility of 
government, air quality, water quality, and even with us a fair 
amount of other issues around land use as long as those things 
are still part of the process and thought about carefully, I 
would support us being able to do that in a quicker fashion.
    The Chairman. The gentleman's time has expired. The chair 
recognized the gentleman from Oregon, Mr. Blumenauer.
    Mr. Blumenauer. Thank you, Mr. Chairman, and I will try to 
atone for jumping the gun here by being short with just one 
question.
    Governor, you may have heard that I am very interested in 
having the federal government be a partner with you by having 
sound, consistent stable policies over time. I'm wondering if 
you have any comment on the impact of if we're successful in 
establishing a renewable portfolio standard nationally, even if 
lower than your 20 by '20, how that would impact your efforts 
to evolve your new energy technologies in Colorado. Does that 
help or would that hinder your efforts?
    Governor Ritter. It is my understanding that any federal 
RPS would take into account what states are doing as well, 
already doing. I have to think that it can only help and here 
is why: states are begging for involvement by the federal 
government to have some kind of a consistent and coherent 
national policy that looks at conservation, looks at 
efficiency, looks at renewable, looks at clean coal, looks at 
what the portfolio is going to be like going forward, but has 
us really speaking with one mind and one voice.
    We've got people from, the Prime Minister of Sweden 
visited, Governor Schwarzenegger, visited Colorado, visited me, 
to talk about what we as a state are trying to do in moving 
forward. I think, you know, as we talk about climate change and 
the issues around climate change that we are best as a country 
when we speak with one voice around something that has such an 
over-arching, an over-arching impact on the rest of the world.
    So I think as it relates to an RPS that's just one part of 
the conversation, but it is terribly helpful in having the 
broad conversation as a country with the rest of the world.
    Mr. Blumenauer. Thank you, and I yield back.
    The Chairman. The gentleman's time has expired. The Chair 
recognizes the gentlelady from Tennessee, Ms. Blackburn.
    Ms. Blackburn. Thank you, Mr. Chairman. Governor, thank you 
for being here and following on with what Mr. Blumenauer said, 
states like mine, Tennessee, are not, when you look at a 
renewable energy portfolio and requirements for different 
states, mine are not good areas for wind and solar. You've 
referenced the Governors Association and the meetings that you 
all and the conversations that you have there. I think we would 
all be interested in what you would see as how to have 
flexibility within some requirements and within that portfolio.
    And I would just like to, Mr. Chairman, ask for the record 
that those recommendations be given to us so that we could see 
what you all, you've referenced some of yours and some of your 
benchmarks.
    I think as we look at applications to the federal level, we 
would enjoy hearing from you to move forward in front of the 
Governors Association.
    Governor Ritter. Actually, thank you very much and I think 
you will see the National Governors Association is making 
energy and energy issues going forward the issue for us to 
discuss this coming year and Governor Pawlenty from Minnesota 
is our chair and has decided that his initiative will be about 
around our energy future and so it is a very helpful discussion 
to have, all the governors in the room and talk about what we 
as a country can do, state by state by state. The western 
governors, Democrats and Republicans alike very much share a 
view about how we as producing states and consuming states can 
really, we think, make a difference with this federal 
conversation by talking about this wide portfolio that we 
should be thinking about and really, I think, looking for 
assistance where research and development is concerned 
regarding clean coal.
    Ms. Blackburn. Great. Let me move on in that vein. I want 
to talk a little bit about the reaction of the public and in 
some of the reading we've done with what you've done, you've 
promoted the establishment of E85 stations in your state. I 
want you to talk for just a minute about the infrastructure and 
if you plan to use pipeline or if you're going to use fuel 
tankers, which I would imagine is what you're going to do for 
that distribution and then how that would affect your 
interstate shipping and road congestion.
    And then also with the production of ethanol in your state, 
as you're looking at that, water resources. We continue to hear 
about the impact on water resources and drought conditions and 
what the impact would be on your corn production and not only 
that, but access to water and water bills.
    You know, as we look at constituents and how they are 
impacted by policy, so many times and even in Tennessee, in my 
area, we've had a serious drought this year and we have seen 
the impact of availability of water, access to water, and then 
the uptake in the bills and I would be interested in how you 
were going to address that. And I yield back.
    The Chairman. The gentlelady's time has expired. If the 
witness would please respond.
    Governor Ritter. Thank you, Mr. Chairman. As it relates to 
E85, we have I think 13 pumps or we had at the beginning of 
this year. GM, General Motors, came in with us. We made an 
agreement to quadruple the number of E85 pumps. So that's a 
corn-based ethanol. What I'll tell you is this. We have 
significant research happening in Colorado. Colorado School of 
Mines, Colorado State University, and the University of 
Colorado formed a collaboratory. We did and the state 
government formed a collaboratory with the National Renewable 
Energy Laboratory.
    I think if you talk to the researchers, most of them would 
agree that while it is important for us to focus on E85 and 
corn-based ethanol as a transition, it is not necessarily the 
fuel of the future. It's not the biofuel of the future, that 
there is a great deal of research going on with respect to 
other kinds of biofuels that may well be the new energy 
economy's fuel.
    However, it is important that we have this idea about this 
transition fuel, this corn-based ethanol, so the public begins 
to become aware of it so that automobile manufacturers begin to 
respond to it. And whether it is a hybrid car or whether it is 
some type of biofuel, we will see. But we know right now that 
corn ethanol is giving us this ability to think about it in 
terms of transmission. We just opened a biodiesel plant made 
purely from sunflower oil in the southwestern part of our 
state. Again, a great economic development for that little 
county.
    Water is an issue in Colorado. We're in an arid state. 
We're at the seventh year of a seven year drought, so we very 
much pay attention to it and I think that's why some of the 
research that's happening as well at those universities and at 
the collaboratory involves drought-resistant kinds of crops. 
Cellulosic ethanol is what a lot of people talk about as part 
of the future, but we're very mindful that these kinds of 
policies do have impact. They have impact on corn prices, which 
in turn have impact on beef prices and we're a cattle producing 
state, so we're watching this all very carefully, understanding 
that this is not a place where you do pick winners and losers.
    We're very much trying to put in place policies that are 
science and technology neutral, but that still inspire us to do 
what we need to do as a country to move in that direction 
around just a biofuel that I think responds to the concerns 
that you address.
    The Chairman. Thank you, Governor. The gentleman from 
Washington State, Mr. Inslee.
    Mr. Inslee. Thank you. First, I want to thank you for your 
leadership in Colorado. Thanks for sending us Mr. Udall. He has 
done a great job for us federally, and we follow Colorado with 
the second RPS by popular vote and we sort of stole the 
playbook from you and we appreciate your efforts on that.
    I want to ask you about feed-in tariffs as an adjunct to 
renewable portfolio. I've been talking with some folks who 
suggested that having a program where you a pay a given amount 
for the amount of energy that is produced from solar or wind 
has some advantages compared to renewable portfolio standard 
for next generation technologies. I've heard some people 
suggest that a renewable portfolio standard is really good for 
sort of the next technology, but really not maybe so good for 
the second, third, or fourth. They may be just a little behind 
as far as the cost of development.
    Do you have any thoughts about that? Some people suggested 
that we ought to look at a feed-in tariff as well to help some 
of those second, third, and fourth generation technologies 
coming on.
    Governor Ritter. Mostly, this in my conversations with wind 
producers, where the technologies have actually gotten much 
better. We are in that next generation of wind production right 
now and we're experiencing that in Colorado with the change in 
the size of the blades and I think the way the turbines are 
working and that happened without a feed-in tariff.
    Likewise, as it relates to solar, we're talking to people, 
the solar producers, about concentrated solar power and that 
being sort of the next generation of solar technology. I myself 
think of feed-in tariffs this way, that if they happen, they 
have to happen at this level, at the federal level, that you 
have to think about it and you really have to develop an 
understanding that as a state, you put yourself in a real hole 
if you try and do it state by state by state, same really, in 
some respects, with other kinds of issues that impact this 
carbon trading as one of those issues that is hard to do even 
region by region but might be workable.
    But respect to fees and tariff, we have not, I have not 
seen how they would incentivize differently than what is 
already happening, these renewable portfolio standards.
    Mr. Inslee. Right, I appreciate that. By the way, we're 
really, at least I'm very excited about solar thermal. You 
know, we've seen there's going to be some announcements next 
week actually about some solar thermal contracts that are going 
to blow people away. I think it would be very exciting for us 
and I will crow about your success and the second version is 
getting to write a book about clean energy called Apollo's 
Fire.
    You didn't get in, but in the sequel, I want to make sure 
you get in it, because of your success. Thanks for your 
leadership.
    Governor Ritter. I appreciate the hopeful mention.
    Mr. Inslee. Yes.
    The Chairman. The gentleman's time has expired. The Chair 
recognizes the gentleman from Oregon, Mr. Walden.
    Mr. Walden. Good morning. Thank you, Mr. Chairman. I want 
to pursue the issue of geothermal. I represent eastern Oregon, 
about 70,000 square miles and I was down at Oregon Institute of 
Technology recently and was told by some folks there and 
elsewhere that up to two-thirds of Oregon's electric energy 
production could come from geothermal sources given that now 
there's technology, you can produce electricity at 163 degree 
water.
    And I'm just curious about how we pursue that geothermal 
and your views on this because a lot of those resources reside 
on public lands, as you know. I don't have to tell you in the 
West or half of my state is under public ownership and it's 
very, very restrictive to get in there. And yet, some of those 
resources may hold great promise for us to have a very carbon 
neutral or carbon offsetting potential for electricity.
    Do you encounter those problems in Colorado and if so, what 
advice could you give this Congress in terms of accessing those 
resources?
    Governor Ritter. The State of Colorado, we believe, has the 
fourth best potential for geothermal of the 50 states and so I 
don't know where we fall.
    Mr. Walden. It's got to be below Oregon. It just has to be. 
[Laughter.]
    Governor Ritter. Well, if you think about it Steamboat 
Springs, Glenwood Springs, all those big cities we named after 
springs we did for a reason because we have such great 
geothermal potential. And so, it's like many other things we 
ask how do we incentivize the building out of that, because as 
far as I know geothermal is not something that we have tapped 
nearly like we've begun to tap wind and even solar and 
something we intend to do.
    We're looking at the possibility of supplying power to our 
Governor's residence with geothermal because the technology is 
there and it is easy enough to tap. The question is how will we 
do it on public lands and I think that that has to be again 
decisions made back here. We have 23 million acres of land in 
Colorado and would very much enjoy, I think, a federal policy 
that incentivizes it the way that we've incentivized wind power 
through the investment tax change.
    I concur, because I think it can be clean energy. I think 
it can be done in an environmentally appropriate way. The 
question is can we get through the hurdles that are in front of 
us and every other sort of energy development or use on federal 
land. The final question I'd have involves this issue of 
biomass and I know having chaired the Forestry Subcommittee, my 
friend and colleague from Colorado, Mr. Udall, is involved in 
forestry issues. Don't you face some severe forest health 
issues, part of which may be driven by increased temperature 
which bring about drought and changed structures? And don't you 
think the federal government should be doing more to allow us 
to get in on the different forests and thin them out quicker 
and replant and restore after fires and use the biomass for 
energy production?
    Mr. Walden. Yes. We really have a serious pine beetle 
infestation.
    Governor Ritter. Yes, I know you do.
    Mr. Walden. Problem in Colorado, very serious, log pole 
pine, they're all about 80 years old and that increased sort of 
the infection rate from tree to tree to tree. As a result, we 
have entire forests that are damaged and infected. And the fire 
damage is elevated slightly right now, the needles have turned 
red, but as those trees fall over in the next 15 to 20 years, 
the fire danger is very much exaggerated and so I've spoken 
with U.S. Forest Department, I've spoken with Mark Ray, the 
Chief of the Forest Service and asked them this question, this 
very question, how can we begin to clear that land and reduce 
the fire danger over time and use the wood for woody biomass to 
generate electricity.
    Governor Ritter. I had some legislation last session that 
we could have gotten that done if we could have gotten it 
through the Senate. Thank you.
    Mr. Walden. Great minds think alike here.
    The Chairman. The gentleman from Missouri, Mr. Cleaver.
    Mr. Cleaver. Thank you, Mr. Chairman. Thank you, Mr. Udall 
for all your work, and Governor, thank you for being here.
    I just have one question and I'm from Missouri and we do 
have RPS put in place voluntarily and it's 11 percent by 2020. 
What chances do you think we have of meeting those goals 
voluntarily? I mean I think the effort put in to establishing 
this was good. People were genuinely interested in trying to 
make some dramatic changes in the way we handle electricity. 
But a voluntary program does not appear, based on what's 
happening so far to have the same amount of juice that a 
government-mandated program would have. So am I off? What do 
you say based on what's happening in Colorado?
    Governor Ritter. Thank you, Mr. Cleaver, and I would have 
to say that our mandate that was voter passed really showed 
that the leadership was coming from the people, but they wanted 
a mandate. They wanted the utilities to have to do this and 
that was three years ago. It was 10 percent by 2015. I suspect 
if we had said voluntarily we would like you to get there, that 
the result would be different than us looking at that 10 
percent by the end of this year and achieving that goal.
    I'm not a person who thinks that across-the-board mandates 
are the right thing, but this is too important a conversation 
for us to not undertake and undertake now because of what we 
face if we don't make the right, I think, transition to clean 
energy and to renewable technologies and conservation and 
efficiency and that's really--part of my point is it's part of 
this other bigger conversation. But some of it has to come 
through mandates I think to force the conversation, but then 
what we found were our biggest opponents became our biggest 
allies when they understood the benefits of getting there.
    I appreciate it and just a moment of privilege, I met 
Representative Cleaver when he was the Mayor of Kansas City. He 
came to Denver and I was a District Attorney and he was a 
wonderful and gifted speaker and helped us in many respects 
form some public policy around responding to violence and it's 
just great to see you again, Mr. Representative, thank you.
    Thank you, Mr. Chairman, for allowing me that point of 
privilege.
    The Chairman. The gentleman's time has expired. The 
gentleman from California, Mr. McNerney.
    Mr. McNerney. Thank you, Mr. Chairman. Thank you for coming 
to see us this morning, Governor. I want to echo some comments 
I've already heard. California has adopted renewable portfolio 
standards and the utility companies resisted it at first and we 
found that once they got on board, they met the goals early and 
we're having to increase our performance standards numbers and 
they're willing to go out after those so it's very common to 
see that sort of behavior.
    I want to thank Mr. Walden for bringing up the comment 
about geothermal energy. It's very effective for some states 
like Colorado, so whatever we can do to help that.
    I have a couple of questions. How large an impact has the 
sales tax exemption on both the production of renewable energy 
and on the state revenues?
    Governor Ritter. The sales tax exemption, Mr. McNerney, was 
just passed in this last session. Actually, there were some 
power purchase agreements where they believe that it was in 
place and there was some question about whether it was or was 
not. It has been a big impact in having, I think, wind 
companies decide to build there going forward because they 
really believe that it can impact the margin sufficiently 
enough that this does become again, remain competitive with 
natural gas and coal. So it was, it has had a big impact on 
decisions.
    We've met with the companies. With the companies that are 
making decisions. Florida Power and Light, I think may well 
have made a decision and went the other way, had we decided not 
to put in place that sales tax exemption in law.
    Mr. McNerney. But you don't have an idea of how that's 
going to impact the state revenues?
    Governor Ritter. Well, no. Not until it's all said and 
done, but what I can tell you so Florida Power and Light is 
putting in, we think it's the second biggest wind farm in 
America and 300 and some turbines and if we go back to the 
price that these farmers earn, the difference it makes, and 
even what we think may be the production that will happen at 
the wind blade manufacturing company in Colorado was a result 
of that, all of those things add just so significantly to the 
economic activity around that, that it's significant.
    Mr. McNerney. Does Colorado have its own production tax 
credits and investment tax credits, state-wide?
    Governor Ritter. It's just the sales tax exemption for the 
manufacturing of equipment that's used to produce renewables. 
That's what we have, sir.
    Mr. McNerney. In the time remaining, could you describe how 
the performance contracting works on state buildings?
    Governor Ritter. Again, the answer is yes, and it's new. I 
can answer how it works, but it's very new for us and we passed 
performance contracting on state buildings and I signed an 
executive order that's a greening of government executive order 
and we will look to the build-out of buildings that create 
energy efficiencies, that create energy conservation as a part 
of it, that meet certain leads standard and we hope at the end 
of the day a leads gold standard for all new state buildings 
and that that will all be part of the performance contract that 
goes on going forward as a result of our executive order and 
the legislation that we passed around that.
    Mr. McNerney. Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired. Governor, 
could you just, as you leave, give us your advice to the other 
states. Give us your advice to the other Governors to the other 
utilities like your utility that initially was hesitant to 
embrace this new vision and this whole concept of NIMY or 
BANANAs, build absolutely nothing anywhere near anybody, what 
has happened in your state, what recommendation do you have to 
other states and utilities in other states?
    Governor Ritter. We're a state for a lot of reasons that's 
very sensitive to climate change. We have two of our three 
biggest industries, tourism and agriculture, that are both very 
closely tied to not just the amount of water that we see or the 
amount of rainfall, but really the kind of rainfall. I mean, it 
matters that the precipitation is snow instead of rain in the 
mountains. And even as it relates to our agricultural industry, 
we are very, very sensitive to rainfall.
    And so, I think that may be one of the reasons that in 
Colorado, a state like Colorado, in the last two years, we've 
seen a 20 point shift in how people think about climate change. 
And that has produced in our state the ability to have this 
really serious conversation about our energy future, both as it 
relates to our production but also as it relates to 
consumption. When we think about our kids and our grandkids and 
we ask the question what is it going to be for them in 25 or 30 
years if we don't make decisions today about our energy future.
    And so that is, I think, providing the impetus for our 
initial Amendment 37 and then the ease with which really in 
many respects the ease in that it was just not great resistance 
from the corners you might have expected the resistance to come 
from. So I think it is important to have the conversation about 
a renewable portfolio in the context of this larger 
conversation about climate change and really about global 
warming and about our responsibility as citizens of the state 
or of the country in doing something to address it.
    And then to say what are the possibilities in this state 
and to have a conversation that looks and borrows experiences 
from other states. But every region in this country has some 
level of renewable energy. Regional transmission grids for 
those states that are concerned about their lack of renewables 
we think a regional transmission grid is absolutely something 
that we must think about in order to respond to the needs of 
those states that feel they don't have sufficient renewables to 
have a portfolio in place like we do in Colorado. But I think 
the most important thing is that we need to do it and we have 
to do it as a part of larger efforts around efficiencies, 
conservation, and clean coal investments, and using natural gas 
as well. It burns less carbons. All that has to be a part of 
our going forward, but if we miss the opportunity around 
renewables, we really miss a significant opportunity to make a 
difference on the environment and I think have a real--miss the 
opportunity for us as a country to do something that can really 
move us towards energy independence at a quicker rate.
    The Chairman. Thank you, Governor. Congressman John Hall 
from the State of New York has just arrived. We promised the 
Governor he'd be out of here in two more minutes.
    Do you have a question you'd like to pose to him in that 
two-minute period?
    Mr. Hall. No, thank you. Just thank you for the work that 
you do and for being here. And I'm sorry I'm late.
    The Chairman. Governor, your testimony was incredibly 
impressive and the state, your leadership, Mark Udall's 
leadership, it's a real beacon for our country and a standard 
that I think we should see for ourselves as a nation as well. 
We thank you for being here today.
    Governor Ritter. Thank you, Mr. Chairman, and I appreciate 
that.
    The Chairman. Thank you, Mark. Now what we agreed at 9 
o'clock was that any Member who wished to make an opening 
statement at this time would be recognized for that purpose. I 
look to the majority side and look for anyone who might seek 
recognition for that purpose.
    The gentleman from New York.
    Mr. Hall. Thank you, Mr. Chairman. I would just briefly 
open by saying that to combat global warming it's clear that in 
addition to dealing with what comes out of our tailpipes, we 
must also address the pollution from our power plants. The 
environmental logic of converting from relying on fossil fuels 
to climate-friendly renewables is clear and compelling. I'm 
proud that my State of New York has been a leader in this 
transformation adopting a 25 percent renewable standard by 
2013.
    I'm extraordinarily eager for Congress to follow suit by 
adopting the House passed RES and sending it to the President 
who I hope will have the good sense to sign it into law.
    I would like to focus my questions today on breaking down 
the false choice between growth and green that some opponents 
of Renewable Energy Standard have tried to put forward and I 
yield back the rest of my time.
    Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired. Will the 
gentlelady like to make an opening statement, the gentleman 
from California? Would the gentleman from Oregon like to 
reclaim the balance of his time?
    Well, then we'll turn to our second panel and it is a very 
distinguished panel. And we will ask each of them to make an 
opening statement of five minutes and then we'll turn to the 
Members of the Select Committee to ask questions of them.
    Our first witness is Nancy Floyd. Congressman Bluemenauer 
has already referred to her incredible resume. She is the 
founder and managing director of Nth Power. Nth Power was one 
of the pioneering clean tech venture capital firms and now has 
$400 million under management. As an active member under E2 
environmental entrepreneurs, Ms. Floyd works to promote 
environmentally-minded, economic development. In the 1980s, Ms. 
Floyd also founded one our country's first wind-development 
firms. We welcome you, whenever you're ready, please begin.

STATEMENT OF NANCY FLOYD, FOUNDER AND MANAGING DIRECTOR OF NTH 
POWER; ACCOMPANIED BY MIKE SLOAN, MANAGING CONSULTANT, THE WIND 
 COALITION; CHRIS HOBSON, SENIOR VICE PRESIDENT, RESEARCH AND 
 ENVIRONMENTAL AFFAIRS, SOUTHERN COMPANY; BOB REEDY, DIRECTOR, 
 SOLAR ENERGY DIVISION, FLORIDA SOLAR ENERGY CENTER; AND DAVE 
    FOSTER, EXECUTIVE DIRECTOR, BLUE GREEN ALLIANCE, UNITED 
                          STEELWORKERS

                    STATEMENT OF NANCY FLOYD

    Ms. Floyd. Great. Thank you very much. It's a pleasure to 
be here, Mr. Chairman, and esteemed Members of the Committee.
    I've been asked in my five minutes to address the current 
investment environment for renewables and what the passage, 
what a national Renewable Energy Standard, how that would 
impact the investment community. And so I have four key points 
to make.
    The first is that renewable energy markets are growing 
explosively. The global market last year grew 39 percent, so 
the market was $55 billion. And that growth is akin to the 
growth of the PC, the wireless and the internet industries 
during their heydey. And the industry is projected to quadruple 
in the next ten years to $226 billion. And this has really been 
driven by a convergence of market factors, kind of a perfect 
storm: resource depletion, aging infrastructure, energy 
security and global warming.
    And the venture capital community and the investment 
community at large is responding to this opportunity. So ten 
years ago when I made my first venture capital investment in 
this sector, less than $50 million was being invested in new 
energy technology companies. Last year, $2.4 billion of venture 
capital, so one out of every ten dollars was invested in clean 
energy. And that number is not slowing down.
    So it's no wonder that clean energy is being touted as the 
growth industry of the 21st century. So in the face of this 
growth, the U.S., I'm sad to say is losing jobs in investment 
capital to other countries. Of the top wind companies globally 
only one is headquartered in the U.S., and that is G.E. Of the 
top solar companies in the world, not one is headquartered in 
the U.S. And I guess to add salt to wound, of the U.S. solar 
companies that have gone public recently, all of them are 
building manufacturing facilities outside the country.
    And a case in point is one of my portfolio companies, 
Evergreen Solar in Westborough, Massachusetts. Evergreen Solar 
took advanced solar technology out of MIT. They built their 
pilot production outside of Boston. And then in response to 
market demand, they wanted to build a manufacturing plant that 
was going to quadruple their output and they wanted to locate 
it next to the market. That was Germany, not the U.S. And I 
know that everybody on this Committee would like to see that 
Evergreen Solar's next major expansion is in this country so 
the jobs stay in this country and that we can increase the 
energy security of this country.
    So a national Renewable Electricity Standard would help 
make that happen because it would create a stable market in 
this country for Evergreen Solar's products.
    I think it's widely recognized that a Renewable Electricity 
Standard is a fundamental market-making policy that is going to 
drive innovation. It's going to create jobs. It is going to 
create and attract investment capital and then there's a 
multiplier effect here. It's not just venture capital 
investment, but alongside venture capital in new energy 
technologies, you have the business expansion capital, you have 
the investment in manufacturing and in renewable energy 
projects. And I can tell you that those dollars are on an order 
of magnitude greater than the $2.4 billion of venture capital 
that was invested in technology last year.
    So how have state Renewable Electricity Standards impacted 
jobs and investment capital? And I'm going to cite some 
statistics from my part of the world which is California and 
the Pacific Northwest. In all three states, California, 
Washington, and Oregon have passed Renewable Electricity 
Standards. Oregon, in the last legislative session, so just 
this past summer. Two years ago when I testified in front of 
the California State Legislature, I predicted that there would 
be $11 billion invested in renewable energy companies and 
projects by 2010. And I was wrong. More than $11 billion was 
invested in the two years since that Renewable Electricity 
Standard was passed and 50 percent of that capital was invested 
in California-based companies and projects.
    Last year, following the passage of the Renewable 
Electricity Standard in Washington State, Washington became the 
second state, second largest state in terms of new wind 
development, adding almost a thousand megawatts of new wind 
which represented about $1.4 billion of capital investment. But 
you know, the industry is not just growing on the West Coast, 
it's growing nationally. Yes, 60 percent of my firm's portfolio 
are investments that are on the West Coast, but the rest of our 
portfolio is spread among 13 other states.
    And let me take Mississippi as an example. I have an 
investment in Jackson, Mississippi, I'm on the board, so I 
spend a fair amount of time in the state and I'm well aware of 
the concerns of the unequal distribution of renewable resource 
in this country. And we've heard the South doesn't have a lot 
of resource in terms of wind resource, but they've got a lot of 
biomass. A national Renewable Electricity Standard could 
jumpstart a biopower industry in the South or maybe an energy 
efficiency industry because the South is the least energy 
efficient region of the country on a per capita electricity 
usage basis.
    And the EIA is----
    The Chairman. If you could please summarize.
    Ms. Floyd. Yes, okay. Thank you. Renewal energy, it's big 
business. Serious companies. Series investors. We can lead this 
growth sector. We have a chance to show leadership and the 
investment community will step up. Thank you.
    [The statement of Ms. Floyd follows:]

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    The Chairman. Thank you, Ms. Floyd.
    Mr. Sloan. Our next witness is Mike Sloan, Managing 
Consultant of The Wind Coalition based in Austin, Texas. Mr. 
Sloan has been active in Texas renewable energy debates since 
1997, including being part of the Texas PUCs renewable energy 
working group. He was appointed by then Governor George W. Bush 
to serve on the Texas Energy Coordination Council.
    We welcome you, sir. Whenever you're ready, please begin.

                    STATEMENT OF MIKE SLOAN

    Mr. Sloan. Thank you, Chairman and esteemed Members. I'm 
here to talk about the Renewable Energy Standard in Texas and 
the related policies that have really helped make the wind 
industry there the premiere market for wind power, at least in 
the United States, if not the world. And to put it in a 
nutshell, one thing I want to sort of underscore from the Texas 
experience is that you can get quick results with proper 
policies, significant results very quickly.
    I want to skip over and talk about the level of wind that's 
going into Texas right now. Last year, Texas passed California 
to become the number one state for renewable energy. This is 
going from zero 12 years ago where Texas literally had the 
lowest percentage energy use of renewables in the whole 
country, ranked 51st, even my District of Columbia. So it's 
come a long way very quickly and since last year, it has almost 
doubled its amount of wind power.
    This year, there's about $3 billion worth of wind projects 
going into the State of Texas, about 2000 megawatts. There's 
many more that are queued up, that have signed interconnection 
agreements, over 3600 megawatts that are waiting to come on. 
Some fraction of those will not be able to come on because 
there's inadequate transmission infrastructure. If you look out 
further, there is a tremendous amount, nearly 40,000 megawatts 
of wind are exploring coming onto the system in Texas, and 
there simply is not infrastructure or market to support that 
right now.
    Only a modest fraction of that will come on, so there's 
some work to do, particularly on the infrastructure. And that's 
one new area that Texas has stepped in and really stimulated 
the market is a competitive renewal energy zone concept. It's a 
proactive transmission planning regime and the State of Texas, 
an interim final order is expected this week and it will 
designate eight different areas out in West Texas that will 
have associated transmission plans that will support at least 
10,000 to up to 26,000 megawatts of windpower. This is from a 
single state. So it shows that things can move forward quite 
quickly.
    I will just mention that last year and again this year that 
the wind installations going into Texas are actually greater 
than the combined power plant additions from all other kinds of 
power plants in Texas, very significant.
    On the policy side, how Texas has done that, it's a 
combination or a suite of different policies. First off, it did 
deliberative polls for education, it wanted to find out what 
did customers really want and they found out that customers 
wanted renewables. This was done about 10 years ago. Then the 
RES was developed as a catalyst. It is a catalyst to increase 
use of renewable energy. So that operates on the demand side, 
creates the demand.
    I will mention you can get diversity in a Renewable Energy 
Standard, but you have to work on it. But there are some 
methods to do that. That was not what was done in Texas, 
though. That one is just the cheapest resource is what is done, 
so it is predominately wind power. I will mention that within 
three years, going from a legislative concept to a billion 
dollars worth of projects on the ground took less than three 
years in Texas. So you can move very quickly.
    We also have a renewable energy credits program that has 
really helped stimulate the voluntary markets that make the 
renewable goals happen faster than legislative requirements.
    A key thing about the competitive renewable energy zone, as 
has been pointed out, the good resources generally are in rural 
areas, not where the people are. So you have to have 
infrastructure. Texas went through a serious contested case. 
Over fifty parties were involved, and they made a decision that 
this is good for the state and they are going to move forward 
with major transmission.
    Also very important is the role of incentives. If you're 
going to have an RES that requires people to use it, it makes 
it much more appealing if you can have incentives that bring 
down the production cost to put it on par with other resources. 
That brings less opposition then from utilities that want to 
use it if you can get these where they are competitive. And the 
production tax credit has played a critical role, the federal 
production tax credit, in wind power in the State of Texas.
    If you look, when the production tax credit has expired, 
both after 1999 and 2001, even in Texas, which is the best wind 
market in the country, there were zero megawatts installed the 
following year. So it is really a combined package that works 
together to make it happen.
    There are a couple lessons learned that I want to mention. 
A real key one is that the Renewable Energy Standard has 
expedited market action. There's nine investor-owned utilities 
in Texas, and if you look at those that had a requirement under 
the RES and those that didn't, those that had the requirement 
voluntarily bought more renewable energy for those that didn't 
buy any voluntarily. And it just shows that it's really a 
catalyst. You're forcing these companies to look at it. When 
they get more experience, they get comfortable with it and move 
on. It has had a lot of benefits. It is saving consumers money 
and really helps the rural areas. Thank you.
    [The statement of Mr. Sloan follows:]

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    The Chairman. Thank you, Mr. Sloan, very much. Our next 
witness, Chris Hobson, is from the Southern Company. Mr. Hobson 
currently serves as the Southern Company's senior vice 
president for research and environmental affairs. He has been 
with the Southern Company since 1973. Thank you, sir.

                   STATEMENT OF CHRIS HOBSON

    Mr. Hobson. Thank you. Mr. Chairman, Congressman 
Sensenbrenner and Members of the Committee, thank you for 
letting me have the opportunity to come to you and talk to you 
today about the use of renewable resources in the production of 
electricity.
    Southern Company serves 4.3 million customers in the States 
of Georgia, Alabama, Florida, and Mississippi. We also provide 
competitive wholesale power in those four states and in the 
Carolinas. And we do that through a diverse portfolio of energy 
sources. We use coal, nuclear, natural gas, and renewable 
resources. And renewable resources have played an important 
role in the electric system that we operate in the Southeast.
    Over a hundred years ago, the first power plants in Alabama 
and Georgia were hydroelectric plants. And even today, those 
same plants provide important renewable resources of peaking 
power for our customers. Southern Company believes that the use 
of renewable resources for power generation can be increased, 
and we are working hard to make sure that that happens.
    We've been researching and testing various non-hydro-
renewable technologies for years, including biomass, solar, 
wind, and landfill menthane. But in the Southeast region, 
traditional renewable resources have their challenges. For 
instance, biomass is probably the most abundant non-hydro-
renewable resource in our part of the country. We've been 
testing ways to use biomass not only in coal firing in 
traditional coal-fired power plants, but also in repowering 
applications.
    And while the increase in the use of biomass has some 
promise, there are challenges. These include the high cost of 
handling and transporting biomass and dealing with a much lower 
heating value compared to fossil fuels. Additionally, the cost 
of using biomass will likely go up as the demand increases to 
meet the new cellulosic ethanol requirements of the energy 
legislation.
    Department of Energy data shows that wind has very limited 
application for power generation in the Southeast. Our written 
testimony shows the DOE map that shows the large absence of 
commercially available wind in our region. We have, however, 
done considerable research to see where wind resources might be 
available to us. We've worked with Georgia Tech on a study of 
offshore wind possibilities off the coast of Georgia. We have 
worked with TVA on the potential for wind located on mountain 
ridgetops in northern Georgia and eastern Tennessee. We're 
following up on those studies.
    But overall, we agree with DOE that the potential use of 
wind for power generation in the Southeast is very limited. Our 
research and DOE data have also shown that the use of solar 
energy is limited in the Southeast. It might not be readily 
apparent, but cloud cover and humidity lower the amount of 
solar radiation available for power generation in the Southeast 
as compared to other areas of the country like the Southwest.
    Solar is extremely high cost and its lower availability for 
power production means that it will not be a large source of 
energy production. We're working with local governments to tap 
into sources for landfill methane. This will be a good source, 
resource, for small applications for power generation.
    So why are we committed to increasing the role of renewable 
resources in our region? We think that federal mandates that 
would impose a single one size fits all standard for renewables 
across the country is the wrong approach. Such an approach was 
added to the House bill this past summer, and that requirement 
mandates 15 percent of the utilities' retail sales must come 
from a limited set of renewables, such as wind, solar, biomass, 
and geothermal.
    If a utility doesn't have access to those renewable 
resources in order to meet the standard, we must either buy 
credits from developers in some other part of the country or 
more likely pay an alternative compliance payment to the 
federal government. This would be punitive to regions that 
don't have resources to meet such a standard like the 
Southeast. Having to otherwise purchase credits from developers 
in other parts of the country or write checks to the federal 
government essentially imposes a tax on the customers of 
resource-poor areas.
    As you can see in our written testimony, we've assessed the 
impacts of that 15 percent mandate on our customers. Since we 
don't have enough resources available to meet the requirement, 
we would have to comply by buying credit or making alternative 
compliance payments to the federal government that will result 
in our customers paying over $1 billion every year to comply.
    Alternatively, states have taken the lead in developing 
renewable programs. This approach has allowed states and local 
governments to take into account the regional differences on 
renewable availability. There are 25 states with renewable 
portfolio standards today and those are tailored to make sense 
for those states, not for our country. It is significant that 
not one of the 25 state programs is consistent with provisions 
included in the House energy bill this summer.
    We operate in the State of Florida. The State of Florida is 
considering renewable portfolio standards. We're working with 
that state for the development of a program that will make 
sense for Florida, but not necessarily make sense for other 
states. As I've said, we're working to find ways to increase 
the use of renewables in a cost-effective way in our energy 
mix. We believe that the current approach of federal incentives 
and funding for research and development, coupled with the 
development of state renewable programs is the best way to 
bring renewables into the marketplace.
    This avoids a federal single standard that in resource-poor 
areas of the country will simply mean a tax on electricity for 
consumers. We don't think that is good energy or good 
environmental policy.
    Thank you, Mr. Chairman.
    [The statement of Mr. Hobson follows:]

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    The Chairman. Thank you, Mr. Hobson, very much. Our next 
witness is Mr. Bob Reedy. He is the Director of the Solar 
Energy Center. Before coming to the Florida Solar Energy 
Center. Mr. Reedy spent 23 years with the Department of 
Electric and Water Utilities with the City of Lakeland, 
Florida. Welcome, sir. Whenever you are ready, please begin.

                     STATEMENT OF BOB REEDY

    Mr. Reedy. Thank you, Chairman Markey and Members of the 
Committee, certainly for the chance to present my views but 
more important, for the leadership and initiative taken in this 
critical area.
    I would begin with a quote from a famous American. It goes 
like this. ``I put my money on the sun and solar energy. What a 
source of power. I hope we don't have to wait until oil and 
coal run out before we tackle that.'' Well, that was Thomas 
Edison. That was in 1931, and Thomas Edison is easily 
considered the father of the utility industry, as in 
Consolidated Edison and Commonwealth Edison, names of major 
utilities.
    The president's vision for the DOE's Solar America 
Initiative is changing the way we power our homes and 
businesses, with a goal for a cost competitive photovoltaic 
industry by 2015. The great strength of this vision lies in the 
forces behind our discussion here today. We are well on track 
to see this happen.
    While I hail from the business of the sun, today I will 
speak more from the perspective of a utility. You heard that I 
have spent most of my career with utilities. Let's take a look 
at the critical characteristics of energy supply from a utility 
perspective, and although I speak of solar energy, I will 
acknowledge that many of these characteristics occur with other 
renewable technologies.
    Consider risk. Ultimately, the generation decision is all 
about risk. Utilities are uniquely capital intensive, with very 
long payback periods inherent in their business model. So how 
can such inherently risky ventures as a large coal-fired steam 
plant or a combined-cycle gas turbine pass this risk criteria? 
These plants have many modes of mechanical failure, which I 
call technology risk. They face high risk of fuel shortages. 
They have large negative environmental impacts, which is a 
regulatory risk. And they present a technically unhealthy size, 
I call it technically unhealthy to the nation's grid. If you 
recall the blackout outages of August of 2003.
    So the good news I bring, the renewable energy technologies 
will surely lower the risk even when evaluated on utility 
terms. So let's look at a few key elements of this risk 
profile. Economic feasibility is certainly first. U.S. 
Department of Energy cost projections show the cost of PV 
systems without, this is without financial incentives, 
decreasing from a present U.S. national average of 32 cents per 
kilowatt hour to a future of nine cents per kilowatt hour by 
2020.
    And solar water heating, which is a fairly mature 
technology, so it is likely to remain flat in its cost 
projections will come in less than 8 cents per kilowatt hour. 
Floridians now pay the utility about 12 cents a kilowatt hour. 
If one assumes that the cost of electricity from Florida 
utilities goes up by only three percent by year, in 2010 we 
will pay 13 and a half cents per kilowatt hour and by 2020, 
that will be 18 cents per kilowatt hour.
    So if no incentives or subsidies in 2020, the energy 
generation systems on your roof and the energy efficiencies 
built into your home will cost half the utility rate. This is 
the customer perspective. The utility economies are 
proportionate. Nothing about the solar energy system on a 
residential rooftop precludes the utility from owning and 
operating the system under an easement agreement and enjoying 
the certain rate-basing capabilities of that system. So go 
green and have a guaranteed return.
    One major frustration to the solar industry is our 
persistent habit of comparing the base rate, base load energy 
rate of average generation costs of conventional generation to 
the peak period production costs of solar energy. I even did it 
just in the paragraph above. In fact, utility generation costs 
during the daily summer peak, that's when PV production is the 
highest or about three times the annual generation cost.
    In a recent analysis of Florida generation costs, the Solar 
Energy Center found the total amortized 30 year lifecycle cost 
of a new, simple cycle gas turbine peaking unit to be around 
$180 per megawatt hour.
    The Chairman. If you could summarize your testimony.
    Mr. Reedy. Yes, sir. And the equivalent PV investment was 
less than $110 per megawatt dollar. Solar systems are very 
reliable, predictable, and these are attributes highly valued 
by utility. They are highly available and we can discuss later 
the many ways that have not been realized to find solar 
resource.
    [The statement of Mr. Reedy follows:]

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    The Chairman. Thank you, sir. I appreciate it. Our next 
witness is Dave Foster. He currently serves as the Executive 
Director of the Blue Green Alliance, a partnership between the 
United Steelworkers and the Sierra Club. Previously, he was the 
Director of the United Steelworkers District No. 11 region in 
the Midwest and we thank you, sir, for being here. Whenever you 
are ready, please begin.

                    STATEMENT OF DAVE FOSTER

    Mr. Foster. Thank you, Mr. Chairman, and Members of the 
Committee. One of the most famous American industrialists of 
the 20th century, Henry J. Kaiser, who built an innovative 
manufacturing enterprise that included aluminum, steel, and 
shipbuilding and created the health care delivery system that 
still bares his name, once observed that ``problems are just 
opportunities in work clothes.''
    Solving global warming need not be the economic calamity 
that some are predicting. It's our view, in fact, that 
solutions to global warming, like Renewable Energy Standards 
will be the most important economic development tools of the 
21st Century.
    Evidence of that fact already surrounds us. In Germany, 1.4 
million people are already employed in the environmental sector 
and 40,000 people are employed in their wind energy industry 
that in a country that has only 20 percent of the wind resource 
of my home State of Minnesota.
    Economic studies that the Steelworkers have supported over 
the past decade have shown repeatedly that well-crafted public 
policies that move as steadily and predictably toward global 
warming emission reductions will have a net positive impact on 
jobs including in manufacturing.
    A 2002 study produced by the Center for Sustainable 
Economies and the Economic Policy Institute showed, for 
instance, that a menu of renewable energy investments, 
efficiency measures, and carbon reduction mandates in line with 
the Kyoto targets would have created a net increase of 1.4 
million jobs in our economy including increases in most 
manufacturing industries.
    And when these policies are accompanied with a modest order 
adjustment fee to ensure that the increase in energy costs in 
the U.S. does not simply result in an export of American 
manufacturing to environmentally unregulated parts of the 
world, we have the policy tools to rebuild America's 
manufacturing infrastructure.
    Another study of component manufacturing in the renewable 
energy industry based on the rough equivalent of the 20 percent 
RES found that 850,000 jobs would be created with $160 billion 
of investment in manufacturing. This investment would ripple 
through 43,000 firms and revitalize the 20 states hardest hit 
by the decline in manufacturing in the last decade.
    Nothing, however, is quite as convincing as actually seeing 
the economic activity generated by the passage of Renewable 
Energy Standards in the states. In 2004, Pennsylvania passed 
its 18 percent RES and as a result, Gamesa, the Spanish wind 
turbine company selected the certainty of the market demand in 
Pennsylvania created by that RES to build its first North 
American plants.
    Today, almost a thousand steelworkers are employed by 
Gamesa outside of Philadelphia making wind turbines on the site 
of an abandoned U.S. steel mill. The company's products are 
sold out through 2009.
    Currently, in response to state energy standards new wind 
turbine equipment plants have been built in six communities in 
my part of the country, North Dakota, Minnesota, and Iowa, 
directly employing over 2200 people. One of these companies, LM 
Glasfiber, recently announced its agreement to build an 
additional plant in Little Rock, Arkansas, employing another 
1,000 people and another DMI announced a new power plant in 
Tulsa, Oklahoma, employing at least 450.
    Wind turbine installation is also creating jobs and 
bringing economic benefits to rural America. Mortenson 
Construction, based in Minnesota, and one of North America's 
largest installers, now does 25 percent of its business in 
wind. Mortenson installs about 2,000 megawatts per year, 
employing almost a thousand construction workers in 16 sites 
around the country. The company also reports that on an average 
100 megawatt project, it spends between $15 and $20 million 
within a 75-mile radius thus bolstering local economies.
    The State of Minnesota has also calculated the value of 
wind energy production to rural and farm income, demonstrating 
that after initial capital costs of $1 to $2 million have been 
recovered, farm profits from renewable energy sales can rise to 
as much as $100,000 per year.
    Now some might argue that in the face of growing evidence 
that renewable energy is now cost competitive with many forms 
of fossil fuel-derived energy, the government should simply get 
out of the way and allow the market to work its wonders. That 
approach would, I fear, draw exactly the wrong lesson from the 
years of involvement of the state level in crafting these 
Renewable Energy Standards. These laws are precisely what 
provided enough market certainty to allow market forces to 
perform their function.
    In the Twin Cities of Minnesota, I co-chair with the Mayors 
of Minneapolis and St. Paul the New Green Manufacturing 
Initiative, a wide-ranging task force guided by the principle 
that investments in solving critical environmental challenges 
such as global warming represents strategic economic 
opportunities.
    The GMI has brought together over 100 representatives from 
Xcel Energy to the Sierra Club from the Minneapolis-St. Paul 
Chambers of Commerce to the construction trades unions from the 
investment community to state government, all with an eye to 
informing our mayors on how to capture the value of these new 
opportunities and make their cities world renown for the 
research and commercialization of renewable energy and 
efficiency processes, equipment and systems.
    Economic transformations in our society have always bred 
winners and losers. It's an inescapable fact that when Henry 
Ford began to mass produce automobiles, the blacksmiths of the 
19th century were replaced by the United Auto Workers of the 
20th. But the America that emerged from that transformation was 
richer and fairer because of the courage of government to 
manage it properly. We can have the same outcome with the 
transformation to a clean energy economy if we choose to do 
likewise.
    Thank you.
    [The statement of Mr. Foster follows:]

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    The Chairman. Thank you, Mr. Foster, very much.
    The Chair will now recognize himself for a round of 
questions.
    Let me begin with you, Ms. Floyd. You say you have a 
biomass company, is it, in Mississippi?
    Ms. Floyd. No, it's not a biomass company. It's actually 
something, an advanced metering company. But I spend a lot of 
time in the state.
    The Chairman. I see, I see. Well, let me go back to you 
then Mr. Hobson. You have testified that no mater how hard that 
your company works at this, you're not going to be able to 
squeeze more than 850 megawatts of renewables out of your 
region which would appear to be less than five percent that 
would constitute renewables.
    Meanwhile, the Department of Energy has looked at this and 
estimates that the Southeast region can meet its entire 15 
percent renewable requirement through 2020 without having a 
single credit from either another utility or from the 
government and that would come largely from biomass. How do you 
respond to the Department of Energy's study on that issue?
    Mr. Hobson. Mr. Chairman, we are excited about the 
prospects for biomass in the region. But we are also realistic 
about its limitations.
    I'm not sure there is a full appreciation. I'm not familiar 
with the particulars of that study, but I'm not sure that there 
is an appreciation for the amount of renewable resources, 
biomass, that is required to fuel a power plant or power plants 
capable of providing the energy resources of the Southeast.
    Our studies indicate that if you take a look at power plant 
locations and you draw circles around how much of the--how much 
of the biomass resources are required to fuel that plant, it's 
a very small number of plants that can be built.
    We have looked at biomass plants in terms of sort of 50 
megawatts, if you will, 50 megawatt plant sizes and it is clear 
to us that the number of plants that can actually be sited in 
the Southeast and supplied with the resources to provide that 
electricity is small.
    The Chairman. Could you supply to the Committee the 
analysis that the Southern Company has done that demonstrates 
that your region's resources limit you to producing so much 
less than what the EIA and other studies indicate that you can 
and could you take the EIA study and tell us where the Bush 
Administration is wrong in their analysis of your region.
    Mr. Hobson. Sure.
    The Chairman. Then we can share that with the Bush 
Administration as well.
    Mr. Foster, could you--let me come over here for a second, 
Ms. Floyd, he's pessimistic. Tell us about wind in the 
Southeast. Tell us about wind in Mississippi. Tell us about 
wind in other regions of the country other than the West?
    Ms. Floyd. Other than the West?
    The Chairman. Yes.
    Ms. Floyd. Obviously, there's good wind resource in the 
Northeast. In the South, wind is limited because the good wind 
regimes are on protected properties such as in Appalachian 
Mountains.
    I mean one thing that has not been addressed is offshore 
wind and you know certainly in Europe where they are more 
advanced in off-shore wind, that is very much a possibility 
because in the Southeast you have very shallow waters for quite 
a distance and offshore wind is very much a possibility.
    The Chairman. So if we had a national scheme for wind 
development offshore, that could offer significant potential 
for the Southeast?
    Ms. Floyd. That could offer significant potential, yes.
    The Chairman. Do you agree with that, Mr. Hobson?
    Mr. Hobson. No, I don't, Mr. Chairman, and the reason is 
that the Southeast has a unique characteristic to it that the 
rest of the country or the rest of the world might not, and 
that is it sits in the pathway of major storms that come in the 
form of hurricanes and wind turbines are not able to withstand 
even a very small Class 3 hurricane. And so putting resources, 
huge investments in the Gulf Region or even in the South 
Atlantic would be a huge risk. We have done work at Georgia 
Tech to look at offshore wind off the coast of Georgia, and the 
wind, the availability of wind offshore is better than on 
shore, but it is not good enough to offset the additional cost 
required to build offshore.
    The Chairman. Okay, and on the issue of Florida being the 
Sunshine State, meaning that a huge percentage of the 
population from Massachusetts and New York and New Jersey have 
moved down there based upon that advertising? You're saying to 
us that it's really a very cloudy state and it's not good for 
solar and that perhaps it should be renamed the Cloudy State, 
not the Sunshine State?
    It seems to run contrary to the misimpression that people 
in the colder, cloudier parts of the country have about your 
state, sir.
    Mr. Hobson. Mr. Chairman, I think that there are, Governor 
Crist reminded us during his global climate forum that Florida 
is indeed the Sunshine State. I think that based on what I know 
about solar in Florida, there are probably areas in Florida 
where solar would be a real option. But I think even for 
Florida to think that solar is an option for the entire state, 
because it is a very geographically diverse state, I think a 
lot of work would have to be done to make the leap that Florida 
can be the sunshine state in terms of solar generation.
    The Chairman. My time has expired. I will now recognize the 
gentleman from Oregon, Mr. Blumenauer.
    Mr. Blumenauer. With your permission, Mr. Chairman, I would 
just like to take up where you left off and I would like to 
engage Ms. Floyd, Mr. Foster in a conversation with Mr. Hobson, 
because I was struck, Mr. Foster, with your vision of this 
being a comprehensive approach to be able to deal with 
technology, to be able to put people to work onsite and with a 
variety of technologies.
    Ms. Floyd, you had referenced, for instance, a photovoltaic 
operation that was located in Germany to take advantage of the 
opportunities there. And I just, with all due respect, Mr. 
Hobson, I know that you are the expert with your company for 
environment and alternative energy and you supplied us with a 
chart in your testimony about solar intensity as to why solar 
doesn't work in your service area.
    I wonder what the solar intensity map would look like for 
Germany, which has four, five times the application. I mean, 
Ms. Floyd, can you help Mr. Hobson with a different alternative 
and Mr. Foster and then Mr. Hobson if you would just respond, 
because it just seems to me we have this conversation and I was 
stunned with some of the people who have taken the material 
from your company, arguing against renewable portfolio standard 
that it would devastate Florida and other states and it just 
struck me as a little bizarre and maybe Ms. Floyd, could you 
help us with an alternative for Mr. Hobson?
    Ms. Floyd. Well, certainly Germany does not have terrific 
solar insulation or whatever the term is for measuring solar 
intensity and they have built a very large industry, I think 
growing very rapidly in the last couple of years.
    If you look at the solar resource map, you know, I think 
the Southeast compares very much to Oregon and Washington. I 
can tell you that with new technology and in investment 
capital, entrepreneurs are going out and building large scale 
solar in rural areas, so benefitting rural areas, with much 
more efficient solar technology. Obviously it has to be 
efficient, because you can't get project financing for plants 
that are not efficient. So building large projects in areas 
that have the same solar intensity that most of the Southeast 
has.
    Mr. Blumenauer. Thank you. Mr. Foster?
    Mr. Foster. Yes, thank you. Mr. Chairman, my home State of 
Minnesota also has a significant forestry and pulp and paper 
industry similar to the Southeast. Currently, Minnesota is 
operating at least three biomass electric generation facilities 
and interestingly, the creation of one of those facilities 
resulted in the importation and establishment of a new biomass 
pelletizing plant that draws a source of fiber, the poplar in 
Northern Minnesota, a very quick growing tree.
    Now that those pellets supply the Virginia and Minnesota 
biomass plant, that facility has expanded and is shipping 
60,000 tons of biomass pellets a year through the Great Lakes 
to Spain, where there is a clear market for biomass feedstock 
for electric generation. So it seems to me that there is a 
clear roadmap for a RES producing exactly the kind of market 
that would make widespread use of the biomass resources of the 
rest of the country available for electric power generation and 
that story is the case in point.
    Mr. Blumenauer. Mr. Hobson, does the observations about 
Germany and Minnesota, which would seem to be at least on a par 
with the southeastern region, is there anything here or is it 
just that it's just so far off the charts that that's something 
that isn't possible for your company?
    Mr. Hobson. You know, I don't want to give the Committee 
the impression that the Southern Company thinks that there are 
no opportunities for these renewable resources in the 
southeast. Certainly, there are opportunities. We see a lot of 
solar applications in the southeast, primarily on the end use 
of electricity which we think is a great application.
    What we're talking about here is for the generation of 
electricity. I don't have the luxury of investing in resources 
that will supply me power for a small percentage of the time 
and hope that that source of energy will be available when I 
need it. We have an obligation to serve our customers 24 hours 
a day, 365 days a year. So we have to know that the energy will 
be there when we need it. If I need solar and it's not 
available, my customers are going to suffer. If I need wind and 
the wind is not blowing, my customers are going to suffer.
    Renewable resources have some very real opportunities to 
help us in niche situations and on the margins. But when you're 
talking about supplying electric power to a broad base of 
customers, you have real demands every day of the year. You 
have to have energy sources that you can rely on 24 hours a 
day, seven days a week.
    Mr. Blumenauer. Thank you, Mr. Hobson. Thank you, Mr. 
Chairman. I just am struck that there are other parts of the 
world and other parts of the country who face exactly the same 
challenges in terms of predictability, reliability, that are 
being able to have the vision to come to scale, have the 
ingenuity, to be able to put these partnerships in place. I 
hope that your Governor Crist is able to persuade you that 
Florida and the southeast is capable of the same ingenuity, the 
same sort of creativity, the same sort of investment to be able 
to make it happen there and that's as it is happening in the 
rest of the country, and sadly in the rest of the world ahead 
of us.
    The Chairman. The gentleman's time has expired. There is 
one roll call on the House floor. Motion to adjourn. The Chair 
intends on continuing the hearing. So if the Members would like 
to go over to make the roll call, the Chair will be here when 
you come back to be able to recognize you, but I now recognize 
the gentleman from Kansas, I mean from Missouri, from Kansas 
City, Mr. Cleaver, for his round of questions.
    Mr. Cleaver. Thank you, Mr. Chairman. There is the most 
potential for wind energy in the center of the country. I was 
on a radio show last week and made the statement that we didn't 
have the wind potential of some of the surrounding states, and 
the interviewer asked me if the people in Nebraska were 
stealing our wind and the bad part was that he was serious.
    We have this issue in terms of the potential in the Great 
Plains and in the Northeast. Solar energy has apparently the 
best potential in the Southwest. Missouri has good wind 
potential, but in the northwest area of the state just to the 
north of Kansas City. But not all of the state, the 
southeastern states and Members have expressed concern over the 
possibility of reaching a national RPS because of the lack of 
potential for such energy.
    So only a few states in the Southeast have adapted a state 
RPS. What is the potential? What are the problems with regard 
to some areas having wind potential, some not, in us passing a 
national RPS? Anyone? I mean, what are our challenges?
    Mr. Sloan. One of the challenges is infrastructure. I think 
the debate about a Renewable Energy Standard, a lot of times 
focuses on where is the energy going to be produced instead of 
where is the energy going to be used. If you look at other 
resources, be it coal or nuclear or oil or gas, there's a very 
limited number of states that most of those resources are 
produced in, and then they are moved to areas where they are 
used. And actually, there's a great example from Joplin, 
Missouri, Empire District. In your state, it is actually one of 
the top users of wind energy in the country. It is importing 
wind from Kansas, but it benefits its rate payers by being able 
to lower the electric costs because they are able to reduce 
natural gas costs.
    So part of it is just to sort of, not necessarily reframe. 
It's important where it is produced, but it is almost so 
important the benefits of using it and that will require 
infrastructure. I suspect over time it will be very much like 
you see with oil and gas and coal and uranium. It is going to 
be produced in the best areas predominately and then it will 
require infrastructure to move to the areas that want to use 
it.
    Mr. Cleaver. All right, thank you.
    The Chairman. The chair recognizes--does the gentleman 
yield back the balance of his time?
    The chair recognizes the gentlelady from South Dakota.
    Ms. Sandlin. Thank you, Mr. Chairman. I want to thank all 
of you for being here today. As I came into the hearing I heard 
a number of states in my region mentioned, but not my State of 
South Dakota. And I think there's a consensus brewing that 
South Dakota has one of the richest wind resources in the 
country, and we do have to get down to the vote. So I just 
wanted to share a comment that I think while state RESs like 
Minnesota's, Colorado's, and I believe Montana recently passed 
one, are very important as it relates to the community-based 
energy development that certainly Minnesota has benefitted and 
the consumers and citizens of South Dakota could as well and 
I'm working with my colleagues in the State Legislature back 
home to talk about the importance of that policy change, if 
it's on the horizon in South Dakota. But in addition to the 
Renewable Electricity Standard that we hope makes its may into 
the Conference Report for the Energy Bill that we include in 
the House version, I do think that we have to consider other 
changes and investments in the electricity grid, access to the 
WAPA grid, when there is room on that grid, so that we can in 
addition to the resources available in other regions of the 
country and in the South, we can get those wind resources, east 
and west, and in every direction.
    And so I thank you for the work that you're already doing 
for the important testimony you've provided here today about 
what's happening in different states and different regions and 
we hope that within just a few years we can be sharing our rich 
resources as well as using it locally in the State of South 
Dakota.
    So Mr. Chairman, thank you very much and I thank the 
witnesses for their testimony as well as the benefits to rural 
America of this important resource and being a solution to the 
nation's energy problems. Thank you.
    The Chairman. The gentlelady's time has expired. They've 
added two additional roll calls out on the House Floor, so 
we're going to take a 15 minute recess and then we'll reconvene 
the Committee some time between 5 past and 10 past 11.
    (Off the record.)
    The Chairman. I apologize to our witnesses. The roll call 
took an additional 15 minutes that had not been anticipated.
    Let me ask Ms. Floyd, in terms of wind potential, there are 
stories that there could be upwards of 4,000 new megawatts 
added this year to the national grid. Do you agree with that 
number?
    Ms. Floyd. I just want to remind the Chairman that I am--I 
was a wind developer in the early '80s and I now invest in a 
very broad range of technologies. So I probably don't have 
those statistics at hand. I did mention in my testimony that in 
the State of Washington last year they added a thousand 
megawatts so certainly I think that's in the ballpark.
    The Chairman. What is Texas going to add this year?
    Mr. Sloan. Just this year, 2000 megwatts, about $3 billion 
worth of wind farms.
    The Chairman. So Washington State was 1000. Texas is 2000. 
There were only 11,000 megawatts of natural gas added last year 
to the whole national grid. Only 600 megawatts of coal, no 
nuclear, and no oil. So what do you think is reasonable then, 
Ms. Sloan? What could we expect from Texas this year? Did you 
say 2000 megawatts?
    Mr. Sloan. Approximately 2000 megawatts this year, similar 
numbers are certainly available going into the future. A key 
limitation is going to be infrastructure. There is more 
investor interest. There's literally 40,000 megawatts of wind 
projects that are evaluating interconnection to the system.
    The Chairman. Right now?
    Mr. Sloan. Right now.
    The Chairman. So there could be upwards of 5,000 megawatts 
a year being added in 2012 if the interconnection transmission 
issues are resolved.
    Mr. Sloan. If the country were to get very serious about 
accommodating those resources, that the market wants to add, it 
could be very high numbers.
    The Chairman. The interesting thing about that is the 
nuclear industry after 50 years has 100,000 megawatts and they 
haven't added any new megawatts in a generation. So here comes 
winds adding upwards of 4000 this year and that's nationally, 
but that seems like a conservative estimate, given what we're 
hearing about Washington State and Texas, that the nation might 
average 8000 or 10,000 megawatts a year being added in another 
five years and at that pace within 10 years, it would match the 
nuclear industry. It doesn't have the same ability to produce 
it on a regular basis, but that's quite a story.
    Mr. Sloan. If I can, there's the capability, I think, of 
the industry to gear up to do that, but the two key challenges 
will be infrastructure and you have to proactively look ahead. 
You will need the transmission lines to get from those windy 
areas to markets where people can use it. And also, is the 
supply chain, if you will. You know manufacturing the wind 
turbines and components which has been pointed out is not done 
very much today in the United States, but if the country were 
to get very serious with an RES, you would see, I think, an 
enormous investment in manufacturing of those components.
    The Chairman. Yes, Ms. Floyd.
    Ms. Floyd. And could I just add a point on infrastructure. 
One of the areas that we're investing in is quote unquote Smart 
Grid. And whether we like it or not, this country is going to 
have to invest in the infrastructure. For the last two decades, 
the amount of investment in the grid has declined dramatically 
and so just from a reliability standpoint, never mind being 
able to handle this additional wind generation and other 
distributed generation, there is going to have to be an 
investment and an upgrade in that infrastructure to provide the 
kind of reliability that customers demand.
    The Chairman. Now, wind, as a result has a chance to really 
make a big difference in terms of what our national needs will 
be for new electrical generation between now and the year 2030. 
If you project, let's just say it's 5,000 a year, for 23 years, 
you have 115,000 megawatts by 2030 and nuclear only has 100,000 
today. But if you make it 10,000 per year, it really picks up 
nationally now. Texas at 2000 is at the dawn of the era, you're 
saying almost, so Texas might start adding even more per year 
and so you do have this real likelihood that there could be 
upwards of 200,000 megawatts of wind in the United States by 
the Year 2030.
    Is that realistic? Is that possible, if we make the right 
transmission decisions? Is there a limitation on how much wind 
we can produce?
    Mr. Sloan. I will say there certainly is a limitation, but 
we will not reach it for a long time. If you look at the 
potential of wind, it is virtually unlimited. Just in the State 
of Texas, we literally have sufficient sites to support 500,000 
megawatts of wind and the good ones, there was recently a major 
study, in fact, we're in the middle of it in Texas right now 
called competitive renewable energy zones and they identified 
150,000 megawatts of quality sites. They're available, but it's 
going to be limited in your ability to use it, use it locally, 
but also export it to other areas where they can use it.
    Texas has always embraced the idea that it is an energy 
producer. There's other states that take that on. You mentioned 
the NIMBY issues and BANANA issues. In Texas and other 
producing regions, they can build large-scale projects, so----
    The Chairman. I understand that, but I mean Texas hasn't 
always embraced it. I mean TXU was going to build 11 coal-fired 
plants and so that's clearly a lagging indicator of where the 
future is going. And now, with the new owners they're moving in 
a different direction. I don't know if they're embracing 
renewables. They're saying they can get by with only three 
coal-fired plants. But to the extent to which Texas is now 
becoming the leader, and showing the way, I'd just like you to 
elaborate and then I'll allow the other witnesses to answer.
    I read a story in The Washington Post back in March. It was 
a story about West Texas, and a family in West Texas that was 
now allowing these turbines to be placed on their farmland and 
while they kind of missed the farmland and they were taking 
photographs of what it looked like, with one wind turbine per 
acre, they were already up to 23 wind turbines and the story 
said that some farmers get paid upwards of $10,000 a turbine. 
That might be on the high side. But even let's say $5,000, 
$3500, you put up a 100 of those turbines on your farm and you 
can plug it into the grid, you've got a pretty stable source of 
income for your children, for your grandchildren out into 
eternity really in terms of providing electricity.
    So is that really what's happening? Is this catching on 
like a fever out in West Texas with farmers and ranchers, put 
those wind turbines on my land?
    Mr. Sloan. Absolutely. It is a boom, just like the oil boom 
in the '30s and '50s in Texas. There's essentially a frenzy 
going on to get in the wind business. There's this limitation 
of the infrastructure, but that is being dealt with by the 
State of Texas through this process.
    The Chairman. Tell me about, what effect did the Renewable 
Electricity Standard that Governor Bush put on the books back 
in '97 or so, have on this wind explosion? Is there a 
relationship between the Renewable Electricity Standard that he 
signed into law and this phenomena?
    Mr. Sloan. Absolutely. If you think about it, there's other 
places in the country that are as windy as Texas. We've got 
good wind sites, but other places, South Dakota is an example, 
maybe even has better wind sites. Everyone had availability to 
the production tax credit, the federal incentives, yet Texas 
really took off and it was because of the quality of the state 
incentives. It was laid out in a pretty simple fashion, the RES 
in Texas. And importantly, all of the stakeholders got 
involved.
    Originally, there was hesitance from a lot of the 
utilities. They were very skeptical. But when you had public 
polls where the utilities' customers were saying listen, we 
really want more renewable energy, everyone got on board. The 
political leaders, the electric utilities, and other 
stakeholders, the industry and consumer and environmental 
groups, and it really was a recipe to make it all move forward. 
So that's the important thing about an RES. It is a catalyst to 
get action going.
    The Chairman. Mr. Hobson.
    Mr. Hobson. This is exciting. It's exciting stuff. It's 
great that we're able to take advantage of wind resources in 
the country where they exist, but I think it's important to 
keep this in context. We operate in this country and we demand 
as consumers of electricity an electricity system that operates 
at 90 plus percent reliability. The best wind turbine in the 
very best wind site has an availability probably no more than 
40 percent of the time. And so when we reach a point in this 
country where wind turbines are called on to do more than just 
supplying energy when they can, which is what's going on today, 
when we get to the point where we want to rely on wind turbines 
as a part of the backbone of the system, we will have to put in 
place traditional generation technologies that will be able to 
operate during those times when wind is not available.
    So for instance, if I have a load forecaster who tells me 
next year we're going to need 1,000 additional megawatts in 
Georgia and we decide that we're going to do that with wind, I 
will have to build right beside it another 1,000 megawatts of 
say gas-fired combustion turbines or combined-cycle units 
because I can't count that wind as capacity. It won't be 
available when I need it and so I have to make sure that my 90 
percent reliability threshold is met and you can't do that with 
wind.
    The Chairman. How is Texas handling that issue, Mr. Sloan?
    Mr. Sloan. These are issues that have come up. We hear 
these all the time. And I will just point to Europe. Europe 
already uses very high penetrations of wind. Some countries, 
for instance, Denmark, in a single month earlier this year the 
average energy was 35 percent coming from wind power. So it can 
be done. I mean there's physical examples of how it can be done 
and I would actually argue that wind power makes the electric 
system more reliable and the reason is because utility planners 
do not count on it to be there for capacity. It is an energy 
resource. So it's there sometimes when you're not expecting it, 
it will be there. And an analogy would be in this room you have 
lights. You have enough lights to make sure that you can light 
this room, but if these lights go out, you could probably open 
those shades behind and take advantage of natural light.
    The natural wind resources, solar resources, the fuel is 
free. And you--it's almost sort of common sense approach. Take 
what nature gives you and use your controllable resources when 
you need to, to fill in the gaps.
    The Chairman. Doesn't wind have a higher capacity factor 
than natural gas?
    Mr. Sloan. Yes, it does, on average in this country. One 
thing I want to see if I can clarify----
    The Chairman. And isn't natural gas increasingly going to 
become a problem because we're going to be importing it as 
liquified natural gas from more and more unstable parts of the 
rest of the world. And so that is also a factor. You have that 
instability as well and it does raise issues there.
    Mr. Hobson.
    Mr. Hobson. Mr. Chairman, as much as we would like for it 
to be, any 40 percent capacity factor source of generation 
cannot become the backbone of a 90 percent plus reliable 
electricity system.
    The Chairman. Can it become 15 percent of it?
    Mr. Hobson. Well, it can't even really become 15 percent of 
it. He said it correctly.
    The Chairman. You're saying the Governor of Colorado is 
heading for trouble having a 20 percent standard?
    Mr. Hobson. No, no. Understand what I'm saying. He said it 
correctly. If I have wind, if I have wind resources, if I have 
enough capacity on the ground to meet my load through 
traditional means and I have wind resources that are available 
to me, sure, it makes a lot of sense to take advantage of that 
free fuel when I can and not run another source of energy. That 
makes sense. But I have to build the capacity to make sure I 
can supply my customers when they call on the demand.
    So my customers in essence will be paying twice as much for 
generation, because if I put a wind turbine on the ground, I've 
got to put a gas turbine on the ground as well. But as long as 
we are developing wind resources as we are now, for those areas 
where reliability is not the issue, I think that's terrific. I 
think that it becomes problematic when we think we're going to 
be building 40 percent capacity factor resources to supply 
electricity for our customers. In a 90 percent system, it's 
just not going to happen.
    Now technology may get better. But where we are right now, 
I can't rely on a 40 percent capacity factor wind turbine to 
supply my customers.
    The Chairman. And how does Denmark do it, Mr. Hobson?
    Mr. Hobson. I'm sorry?
    The Chairman. How does Denmark do it?
    Mr. Hobson. I'm not familiar with Denmark.
    The Chairman. Could you do me a favor? Could you look at 
Denmark and then in writing, send back to us your answer as to 
why we could not adopt a system like Denmark in order to ensure 
that wind is incorporated, not at a 35 percent or 25 percent, 
but at 15 percent level. If you could give us that analysis, 
have your experts look at Denmark and tell us what is different 
in their system from ours.
    Mr. Hobson. We would be happy to do that.
    The Chairman. Okay, that would help us.
    Mr. Hobson. My suspicion would be one of two things, Mr. 
Chairman. My suspicion would be that Denmark, if you look at 
Denmark, they have a backbone electrical system that can manage 
their needs and use the wind resources when they are available.
    The Chairman. Right.
    Mr. Hobson. Or interconnections with other countries.
    The Chairman. Right.
    Mr. Hobson. They have some source of power.
    The Chairman. But we could do that, too. I mean, the 
Southern Company, obviously unconstrained by PUCA is across 
more and more states and so obviously you when advertising, 
changes in laws is a way for you to interconnect and have more 
efficiency across state lines, right?
    Mr. Hobson. Sure, sure.
    The Chairman. And of course, the more states that are 
included in any grid is the more likely the wind is blowing in 
some other state, you know? Another 500 miles away, and that's 
then going to be part of this interconnected grid, so it 
doesn't have to be, it doesn't have to be windy in all parts of 
a grid in order to get a 30, 40 percent. It just has to be 
windy in parts of the grid in order to kind of maintain that 
level of stability.
    And then I think statistically, you would probably wind up 
in a situation where it is highly unlikely to not be windy 
everywhere at the same time, you know? That probably doesn't 
happen very often anywhere as long as the grid is 
interconnected and it is large enough. So I guess what I'm 
saying is where there is a will, there's a way, and it just 
depends upon the, but again, analyzing Denmark would be great 
because it seems to me that's what you're saying, there's an 
interconnection they can get it from other places and if that's 
possible, that would help us.
    Ms. Floyd.
    Ms. Floyd. Yes, Mr. Chairman. I just want to put my venture 
capital hat on and to say that, you know, $2.4 billion of 
capital didn't go into the status quo. And so to be assured 
that there is money and investment going into new energy 
storage technologies, that could be at a very large scale, that 
there is investment going into when you talk about overall wind 
potential. And again, there are many technologies. We've talked 
a lot about wind and solar today, but looking at wind turbines 
that are very efficient in moderate wind regimes, not just the 
very highest wind regimes.
    So I just want, again, to remind the Committee that there 
is new technology being developed that when we invest, we 
expect there will be commercial product within a year or two of 
that investment and a lot of money going into energy storage.
    The Chairman. Thank you.
    Mr. Foster, you had your hand up.
    Mr. Foster. Yes, Mr. Chairman. I was going to observe that 
my State of Minnesota has the distinction of being the largest 
importer of electrical energy of any state in the country. So 
we've looked at the development of the wind resources in 
Minnesota, really, as an opportunity for promoting a level of 
homegrown energy production and energy independence, one of the 
themes of this Committee.
    But the largest source of Minnesota's power has been from 
the Canadian Manitoba hydro system, and in my experience in 
talking about these issues in Minnesota, the hydro systems 
provide themselves really as natural energy storage locations 
for wind reserves, so that when wind resources are being 
utilized, hydro systems can be in a sense turned off and the 
energy stored that would otherwise have passed through the 
hydro systems, and so it seems to me that you've got built in 
to an awful lot of the energy systems in the United States 
already, home grown storage facility for the complimentary use 
of hydro with wind generation.
    The Chairman. I mean, like Minnesota, New England imports 
electricity from another country as well, Canada. So we import. 
What would be their receptivity, for example, of Minnesota to 
importing electricity from South Dakota if they were able to 
exploit their wind resources there and the transmission issues 
were overcome. Would that be something that was consistent with 
the history of importing electricity from Canada?
    Mr. Foster. It certainly would in our state. And then I 
obviously understand in this debate the sensitivities that 
states have about importing energy from other states, but that 
certainly has been our history of producing electricity where 
it is cheap and where fuel sources were cheap and then 
importing it. The thing that I have found most exciting in 
terms of economic development is the degree to which the growth 
of renewable energy really touches every state in the country 
and every state has the potential for producing its 15 percent 
renewables on its own, which is something that didn't currently 
exist under our current system of electrical production, my 
home state of Minnesota being a prime example, because until 
the development of efficient wind resources, we never had the 
capacity to generate much of our own electrical fuel.
    The Chairman. Right. I mean, New England is not too far 
different there. So I guess some states get used to importing 
oil or any energy resource. Other states get used to exporting 
it and don't like the idea of importing anything from anyone, 
but I think that is more of a personality factor than it is 
something that can't be dealt with as a market issue. The 
Southern Company seems to want to avoid importing any 
electricity into its region, but other regions get used to it 
just out of necessity. I think that is a factor as well.
    There are always agreements that can be worked out. In 
grammar school, at least in Boston, we have a chapter in every 
one of our geography books entitled Our Friends, the Canadians. 
So we just learn how dependent we are going to be upon the 
Canadians for so many things from the early age, and we don't 
even give it a second thought that this hydro and all this 
natural gas coming down into our region. We kind of accept it 
as part of our energy profile, at least my 31 years on the 
Committee.
    Mr. Reedy, can we go to the solar issue in Florida? Mr. 
Hobson is talking about the clouds in Florida and how it's not 
as good as Arizona or New Mexico. Is that true?
    Mr. Reedy. No. No, sir. We do have less solar resource in 
Florida. It's a different kind of solar resource. It's diffuse. 
It has a large component of diffuse energy as compared to 
direct sunlight and direct focused energy. But photovoltaic 
panels respond very well to diffused energy.
    The Chairman. Are there success stories in Florida right 
now?
    Mr. Reedy. There certainly are. We do have our resource, 
when compared to the very best in the world is about 85 percent 
of the resource say in Arizona. And Georgia is something around 
83 percent. I don't call that limited and I don't call that 
inferior. That 83 percent is twice the resource in Germany, as 
we've discussed earlier today.
    The Chairman. So Germany is successful in deploying solar 
at 40 to 45 percent.
    Mr. Reedy. Of the world's best, yes, sir. That's correct.
    The Chairman. And would Arizona and New Mexico be at 100 
percent and Florida and Georgia be at 85, 83 percent?
    Mr. Reedy. Something of that nature, so the success comes 
from the distributive nature of the----
    The Chairman. In other words, they would be in the upper 
quintile in Florida for wind potential.
    Mr. Reedy. Absolutely.
    The Chairman. I mean solar potential.
    Mr. Reedy. It is the Sunshine State. I owe that to Governor 
Crist.
    The Chairman. In 1940, there were 16 Congressmen from 
Massachusetts and 6 from Florida, 1940. We now have 10 and they 
have 30.
    Mr. Reedy. My grandfather was one of those immigrants.
    The Chairman. I think they left for the weather.
    Mr. Reedy. Yes, sir.
    The Chairman. The sun. It might not have been the sun, but 
that's what they all said when they were saying goodbye, that 
they were just tired of the winters, the clouds, the snow, the 
rain, and they were going down to the Sunshine State. So it 
does seem to me that they would be in the upper quintile of sun 
available and then the technology deployed to capture it would, 
it would seem to me, have to be developed that might be 
somewhat dissimilar from Arizona or from Germany. But clearly 
that's more of a question of will than technology.
    Mr. Reedy. Absolutely.
    The Chairman. You do agree with that?
    Mr. Reedy. I agree with that and I think that having the 
certainty is the real measure of success. We know where we're 
going.
    The Chairman. Again, Mr. Hobson, do you dispute that 
Florida is in the upper quintile of the country in terms of 
availability of sunshine?
    Mr. Hobson. No, Chairman, like I said earlier, I'm going to 
try to draw the distinction between solar, several things I'd 
like to say about solar. One is I like to draw the distinction 
between the demand side use of solar versus the supply side use 
of solar. I think solar has great promise, even in the 
Southeast we see examples of it all the time of individual 
applications of solar for end use. For instance, we sponsored 
with Georgia Tech during the Olympics their swimming natatorium 
is all solar panel. Southern Company helped. Georgia Tech. We 
funded that. It's still operating today. It's a great 
application. There are those kinds of applications.
    It just becomes a different value proposition when you're 
thinking about using something like solar on a large scale for 
the production of electricity on the supply side. It's not--
it's still things like reliability.
    The Chairman. I understand that. No, I understand these 
reliability questions which--can I ask the Southern Company as 
well then to provide for us your analysis of the comparison 
between the Southern Company and Germany in terms of their 
integration of solar into their grid and why you couldn't do 
that, what obstacles would be for you to match Germany at a 40 
percent solar level with--it seems to me a higher level of 
predictability and guaranteed sourcing.
    Mr. Hobson. One other point I would say about solar that 
has to be made and that is that we operate in a region where 
our customers are paying about 8 cents a kilowatt hour for 
electricity. We view solar in the 50 cents per kilowatt hour 
range and so aside from just the technical challenges 
associated with solar, there are economic challenges.
    The Chairman. Can I go back to you again, Mr. Reedy, in 
Florida, is it 50 cents a kilowatt hour?
    Mr. Reedy. No, sir, Mr. Chairman. Even in a one off small 
applications, it's well below 30 cents a kilowatt hour. In 
utility scale applications, there's analysis that supports 
something around 11 to 12 cents a kilowatt hour, in large, very 
large utility applications.
    The Chairman. Could you give Mr. Hobson an example of where 
it's under 30 cents a kilowatt hour already? You might not be 
able to know where of in Florida?
    Mr. Reedy. Throughout the markets in California and New 
Jersey which is pretty far north again, a fair amount of 
clouds. Those are the costs that are being seen by installers 
and contractors and by the end user. So we would take great 
issue with those figures and the technology is vastly improving 
and by prediction and analysis of the Department of Energy it's 
going to be down around 15 cents in about 5 years.
    The Chairman. Is Governor Crist pessimistic about solar 
energy in Florida? Is he aware of how cloudy it is down there?
    Mr. Reedy. Governor Crist has a saying, he says, ``It can 
be done. It can be done.'' He is very optimistic about it.
    The Chairman. I do think it gets cloudy down there in 
Florida. You're on the beach all day. It's unbelievably hot. 
You've got 35 skin protection on to protect you against the 
sun, then around 4:30 every afternoon you have a thunderstorm 
that cools off the state. It's really--it happens every day and 
then after an hour it gets nice again. So that's a 
misimpression those of us who pay a lot of money to go to 
Florida to get warm during the day have, but the clouds it 
seems just don't last that long or at least the ads kind of 
just have the clouds going by very, very briefly. The rest of 
the day it's quite beautiful.
    So I just think that we need to work a little bit more here 
with the Southern Company in learning a little bit more about 
Germany and Denmark and other states that have already reached 
a lower point price, a price point for their solar.
    Let's do this. Let's ask each of you to give us the one 
minute that you want us to remember, as we're going forward 
about these issues. And we'll go in reverse order and we will 
begin with you, Mr. Foster.
    Mr. Foster. Thank you, Mr. Chairman. I would like to stress 
to the Committee as someone with a lifetime of activity being 
concerned about working people and their jobs that we're losing 
the global economic competition in this country because of our 
tolerance of energy inefficiency and our reliance on dirty 
forms of energy.
    We're seeing the alternative in countries like Germany and 
Denmark, Japan. Germany uses half the amount of energy per 
capita as we do. We have a way forward that would do an 
enormous amount to restore manufacturing capacity in those 
parts of our country that have been hard hit over the last 
decade, losing some three million manufacturing jobs. We can do 
it based on a strategy of embracing global warming solutions 
which include, as I said, very specific targeted mandates from 
federal government like a Renewable Energy Standard by 
believing in the efficacy over the long term of meeting the 
global warming challenge, by capping our global warming 
emissions, and relying on the creativity and innovation and 
hard work of the American people. Thank you.
    The Chairman. And how many jobs again, how many jobs do you 
think are at stake here?
    Mr. Foster. We believe that we would be on balance 1.4 
million jobs better had we taken on seriously the Kyoto 
Protocol targets ten years ago.
    The Chairman. Thank you, sir. Mr. Reedy.
    Mr. Reedy. Thank you, Mr. Chairman. I would close with an 
emphasis that solar energy is extremely predictable, extremely 
reliable and is becoming extremely economic. And I look forward 
to the day that we would be not discussing its cost as greater 
than conventional generation and that day will not be so far 
off, I would add, but rather less than conventional generation 
and it would serve the utility well as a peaking unit which is 
a common practice today and is today economic with peaking 
generation. So I would urge with the lead in photovoltaics 
followed by solar thermal energy, we will find this discussion 
delightfully moot in the near future.
    The Chairman. Mr. Hobson.
    Mr. Hobson. Mr. Chairman, what I'd say I would like for us 
to look to the success that the State of Colorado has had, and 
hopefully, we'll continue to experience in the future, and 
focus in on that that is a state who took a look at its 
renewable possibilities and is exploiting those to the greatest 
extent.
    Southern Company is not opposed to commitment to renewable 
energy. All we would call for is to allow the different regions 
and the individual states to look at the resources that are 
available, make their own determinations for how much they can 
do and what limitations they have, and not try to put a one 
size fits all renewable strategy across the country.
    The Federal government should have an opinion, should tell 
the states we think this is something we need to do and then 
turn to the states and let the states assess their own 
situations and develop standards that make sense for them, 
rather than have to worry about whether or not they fit into a 
group, a nationwide group.
    The Chairman. Thank you. Mr. Sloan.
    Mr. Sloan. I want to start off by saying thank you for the 
opportunity and I want to point out Texas is a conservative 
state and I can assure you they do not like mandates. Yet, they 
do listen to the public and the public made it very clear that 
they support renewables and they believed everyone should do 
some renewables and that people that want to do more could do 
more.
    Texas policy leaders listened to that. They responded and 
they passed proactive, well-conceived, and highly effective 
rules. I think it's encapsulated--I asked the chairman of the 
State Affairs Committee, as conservative Republican as you'll 
find in Texas, David Swinford, and he put it this way about a 
mandate. He said ``sometimes, if it's important enough, you 
just got to give it a little bit of a shove.''
    The Chairman. Ms. Floyd.
    Ms. Floyd. Last night I listened former Fed Chairman Alan 
Greenspan and he said one of his key messages was this country 
is headed for economic decline or we need to change technology. 
And the question is how quickly can we change technology?
    Things have changed in this country with resource 
depletion, energy security, global warming, and it makes 
traditional energy technologies untenable. And we have the 
opportunity to participate in one of the biggest economic 
development efforts, one of the biggest growth industries of 
this century and I think the passage of a national renewal 
electricity standard will show our leadership and will help us 
capture this growth opportunity.
    The Chairman. Thank you. And we thank each of you for your 
testimony today. You're really helping this whole debate that 
we're having here in Washington and we're having across the 
country and across the world. Back at the dawn of the 
industrial age in the United States, in my congressional 
district, when it began, when the Cabots and the Lowells built 
their first factory right on the Charles River in Waltham in my 
district, there were 280 parts per million of carbon dioxide up 
in the atmosphere. Now we've moved to 380 parts per million, 
putting another blanket over our atmosphere, warming up our 
planet even more.
    If we allow it to go to 450, 550 parts per million, adding 
a second blanket, a third blanket that will continue to heat up 
this planet, then there are really catastrophic consequences.
    I visited with the Speaker and the Select Committee in 
Greenland over the Memorial Day break. Greenland has a thousand 
mile long ice cap on it. It's 300 miles wide and it is ten 
Empire State Buildings high. So think of looking at the top of 
the Empire State Building and then looking up ten more times. 
That's how high the block of ice on top of Iceland is.
    And on top of it now, are forming these huge lakes that are 
getting larger and larger, and as the summer goes on, they 
eddy, they burrow down right to the bottom of the ice cap and 
the water then flows to the bottom of the ice cap, creating 
these mulans that then further liquify, further lubricate the 
bottom of the ice cap moving it ever more quickly towards the 
ocean.
    As the ocean rises, of course, Florida will be one of the 
principal victims. So will Cape Cod, the coast of 
Massachusetts. That's why Massachusetts sued in the case, 
Massachusetts versus EPA. They were contending that they should 
have the right to protect themselves against this rising tide 
of climate change that was affecting our 200 miles of beaches.
    And the Supreme Court ruled in April 5 to 4 that 
Massachusetts was right and that we needed a national policy to 
deal with this issue, that Massachusetts alone could not deal 
with it, that we needed a plan that we were going to put 
together. And it called upon, the Supreme Court did, EPA to 
make a ruling on CO2 and whether or not it's a 
pollutant, whether or not it is causing this heightened climate 
change, this global warming.
    Now the EPA, unbelievably, still has not ruled whether or 
not CO2 is causing global warming. Every other 
environmental minister in the world talks to their countries in 
those terms. Our environmental minister does not. No one knows 
the name of our environmental minister that might be the 
beginning of the problem, that no one even knows his or her 
name.
    But that is and of itself indicative of the fact that no 
one state can deal with the problem, that we need a national 
plan and then with that national plan we can talk to China, we 
can talk to India. We can talk to the rest of the world. No one 
intends on this being onerous. I think it's just a matter of 
technology. I think it's out there. We can allow the states to 
be flexible in using the technologies and the resources that 
they have in order to meet this renewable objective, but I 
think that we cannot compromise on the objective which has to 
be that we begin to first stop and then reverse global warming. 
And this is one of the central ways to do it, to generate the 
electricity which we need.
    And in a lot of ways that's what we're learning, that 100 
years ago, Thomas Alba Edison, finding ways of deploying 
electricity across our country and then across the world, what 
a gift, a gift that led to washing machines and televisions and 
computers and iPhones that ultimately resulted, however, in all 
of this additional fossil fuel-generated electricity.
    So like many things, there's a Dickensian quality to it. 
It's the best of technology and the worst of technology now at 
the same time. And the same thing is true for the automobile. 
What Henry Ford did in learning how to mass produce these 
vehicles, it was wonderful. It transformed our country and the 
rest of the world, but 100 years later, we can now see how much 
it pollutes.
    So moving to hybrid technologies, moving to cellulosic fuel 
for our vehicles in the same way that we have to move 
increasingly to renewables for our electricity generation deals 
with the other side of these technologies which is the 
consequence that it can have for the whole planet, and as a 
result to everyone who lives on it. And that's all we're really 
talking about now, a technological addition to what was 
invented by these great people long ago to the benefit of our 
entire civilization.
    And we thank you for your contribution to this debate and 
we yield to the gentleman from California who has just walked 
in, Mr. McNerney for his round of questions. And I would ask 
the gentleman if he would then adjourn the hearing at that 
point, at the conclusion of his questions.
    Mr. McNerney. Thank you, Mr. Chairman. I had to run between 
meetings so I'm sorry I'm a little late, but I appreciate all 
of your inputs. It's been interesting and informative. I have 
to say that I'm glad to finally meet Ms. Floyd. We've had 
several telephone conversations over the years, as I was trying 
to raise venture money for wind turbine projects, but let's 
see, my first question is for you, Ms. Floyd. How confident are 
you that the national renewable portfolio standards would 
increase the manufacturing base in this country for wind 
energy, for solar, for other forms of new energy technology?
    Ms. Floyd. I'm very confident. It sends a very strong 
market signal. It's one that investors will respond to and I 
want to further your point that this is broader than solar and 
wind. While you were out voting I made the point several times 
that $2.4 billion of venture capital last year didn't just go 
into solar and wind, but really a broad range of technologies 
that can make a difference here.
    And so I'm very confident this would send a strong signal 
to the investment community and to manufacturers, that we would 
see manufacturing coming back into this country and business 
expansion happening here as a result.
    Mr. McNerney. My light keeps going on and off. That's 
encouraging because we've seen so much flight of certainly 
wind, solar, fuel cells, going overseas. And whatever we can do 
to encourage that flight back to this country I think would be 
beneficial. Are there any other Members that have a comment on 
that question? Looks like you're ready to go there, Mr. Sloan.
    Mr. Sloan. Yes, and I would also concur that an RES will 
really make the manufacturing market take off. Wind is really 
at the leading edge of the renewables that are going to be used 
and I think particularly for domestic manufacturing the parts 
are so large and expensive to move around they make a lot of 
sense to build near the markets. Already in the State of Texas 
just with the announcements that we've had with making sure the 
transmission system is going to be there and the announcements 
from investors that want to build, there has been a big uptake 
in manufacturing plants want to come to Texas.
    One is the wind with TECO-Westinghouse. They just built a 
plant in Texas. There are several others that I am aware of 
that are in negotiation right now. That's just the Texas 
market. When you talk about the whole country with a long-term 
stable policy, that's what the manufacturers want to see. As I 
noted, there is a market there and not just a market today and 
gone tomorrow, but a long-term steady market and they will show 
up here.
    Mr. McNerney. Thank you. Mr. Foster, did you have a 
comment?
    Mr. Foster. Yes, Mr. Chairman. The proof, I think, is in 
what's actually taking place already as a result of the passage 
of state Renewable Energy Standards and earlier, when you were 
out of the room, I listed a half-dozen locations where plants 
have located specifically as a result of the passage of state 
Renewable Energy Standards, ranging from Pennsylvania to 
Minnesota and Iowa.
    In addition, our studies have shown that there are some 
43,000 firms in the United States capable of manufacturing the 
various component parts that go into the renewable energy 
industry, all of whom would be impacted by the passage of a 
national Renewable Energy Standard. I think the reverse is 
important to note, though too, what happens when you don't pass 
one.
    I was in Kansas recently meeting with state officials 
there, responsible for that state's renewable energy 
initiative, which is not being done as a mandate, but simply on 
a voluntary basis. And they express great frustration that the 
one thing they could not accomplish with a voluntary goal was 
the attraction of manufacturing to their state, that 
manufacturers are simply not interested in making the 
investment where there isn't some degree of market expectation, 
that those products will be used.
    So passage of a national Renewable Energy Standard in my 
view would be critical to bringing the manufacturers from 
around the world who are already doing that work to locate 
their plants in the United States.
    Mr. McNerney. Thank you, Mr. Foster.
    Mr. Hobson, you've mentioned that solar is a little too 
expensive to seem practical in the southern states. There is 
some new technology that I would describe it as broadband solar 
photovoltaic, where they concentrate power on a small reactor 
that takes advantage of ultraviolet, infrared, and visible 
light. Do you think that would increase the viability in your 
opinion of solar in those areas?
    Mr. Hobson. I can't specifically answer the question, 
Congressman, about that technology. But I think if it is a 
technology that number one, drives the cost of solar down to 
fit more into the cost that consumers are paying in the 
Southeast, that would be very positive. And if it is a 
technology that improves the reliability of solar so that we 
can depend on solar a much larger percentage of the time. I 
think clearly, those are the two factors that would make a 
technology more viable and more easily adaptable into the 
supply-side of the grid.
    Mr. McNerney. I understand everything you've said, but to 
describe solar as not reliable I think is something that would 
be arguable. So you might want to look into that and the 
reliability of solar equipment is very good now from my 
understanding.
    Mr. Hobson. Let me be sure I am clear. When I said 
reliability in that sense, what I mean is the amount of time 
that the solar, that the resources there to provide the energy. 
I'm speaking about the reliability of the solar equipment 
itself.
    Mr. McNerney. Thanks for the clarification.
    Mr. Reedy, do you think the time of day credit requirements 
would help significantly impact the solar, the cost viability 
of solar production. I mean, in your testimony you mention that 
solar energy is available when the load is the highest, at peak 
load and there is no provision for time of day credit. Would 
that be an advantage, is there some way to include that in 
federal regulation?
    Mr. Reedy. It certainly would. Yes, sir, Mr. Chairman.
    Currently, the utilities, when they consider generation, 
it's all about time of day and that's how the numbers that I 
gave are derived is from the cost at that time of day. Most 
states do have a time of day provision or rate structures for 
the utilities to offer their customers and it is very critical 
in any type of regulation or legislation that the rate be non-
discriminatory. If you would otherwise qualify for time of day, 
that if you have photovoltaic generation that you can also be 
on the time of day rate.
    And to give an example, in Northern California today, the 
time of day rates are very high on the peak period and the 
photovoltaics are cost effective against those rates, and so 
you could follow a strategy of generating during when it's 
worth the most to the utility and using your load when it cost 
you the least and it works very well.
    Mr. McNerney. So that might be another avenue to look at, 
Mr. Hobson, about the cost-effectiveness of solar if you can 
get the local utilities to pay for actual peak load cost.
    Well, it looks like I've run out of my time and I want to 
thank you for your patience in my arriving late and answering 
questions. I want to agree with Mr. Foster that this global 
warming is an opportunity for this country. It's also a 
significant threat and a challenge. But if we take advantage of 
the opportunity, we can create new industries. We can 
revitalize our rural economies. We can end our dependence on 
oil and a whole host of things that would be advantageous to 
our country. So I encourage you to continue your good work.
    Thank you very much. The meeting is adjourned.
    [Whereupon, at 12:27 p.m., the hearing was concluded.]

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