Say What? Wyoming Considering a Bill to Penalize Utilities That Use Solar Power

By Travis Hoium Markets Fool.com

It might seem like a state that has wide open plains and a population density even lower than Montana or North Dakota would be a perfect (and profitable) place to build large renewable-energy farms. And in Wyoming, that could be the case -- if politics wasn't about to get in the way.

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But Wyoming produces more coal than any other state, outpacing even West Virginia by nearly 4 to 1, according to the U.S. EIA. And where coal is king, there's not likely to be a lot of political support for renewable energy. But even given that, the lengths some Wyoming politicians are considering going to in their efforts to keep renewables out are pretty astounding.

Image source: Getty Images.

Wyoming's plan to all but kill renewable energy

A bill floating around in the overwhelmingly Republican Wyoming legislature could effectively kill renewable energy in the state. It wouldn't actually bar anyone from building wind or solar power plants, but it would heavily penalize utilities in Wyoming for using wind or solar energy, either from within Wyoming or purchased from utilities in surrounding states. Here's the text that should alarm the renewable energy industry:

In compliance year 2019, each electric utility shall procure a minimum of one hundred percent (100%) of its sales of electricity in Wyoming from eligible generating resources.

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Those "eligible generating resources" are limited to coal, hydroelectric, natural gas, nuclear, oil, and net metering systems (rooftop solar) already approved by state law. Worse yet, any utility buying wind or solar would be fined $10 per MWh, making both energy sources cost-prohibitive. What's crazy is that Wyoming is actually a perfect state for large scale wind and solar plants, which this legislation is essentially trying to undermine.

Wyoming may be shooting itself in the foot

Not only are wind and solar incredibly popular sources of energy -- no matter your political affiliation -- they also could produce energy Wyoming could export to the country -- a business it's already invested in. According to the EIA, Wyoming generated 49.0 terawatt hours of energy in 2015, and exported 62% of that to other states. Making it harder to build wind and solar plants would be economically destructive.

Mandating more coal use within Wyoming won't help coal demand much either. The state ranks just 41st in electricity consumption in the country, and has very little market power to either increase coal consumption or slow the adoption of wind and solar. In other words, barring wind and solar within Wyoming will do little to save coal jobs within the state.

Fighting the future of energy isn't a good idea

Coal plants are being shut down by the hundreds, and new electricity generation is now dominated by wind and solar. According to GTM Research and SIEA, in 2015, wind and solar accounted for 69% of new capacity additions, and 2016 that stayed relatively steady at 65%. In both years, coal had zero new plants because it's not economically competitive with natural gas or renewables.

Image source: GTM Research and SEIA Solar Market Insight Report 2016 Year in Review.

It looks like Wyoming's legislators are trying to punish renewable energy in their state in an effort to stand up for coal. The sentiment is admirable, but they are fighting the future of energy and making their state less attractive for energy investments. And at the end of the day, a fight to promote coal over renewable energy isn't one they can win.

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