The American Legislative Exchange Council (ALEC) is at it again, trying to roll back state renewable energy standards nationwide. The argument behind their model bill, entitled the Electricity Freedom Act, is that renewable energy is simply too expensive. The Skeptical Science blog offers a good short debunking of this claim, based on the cost of electricity in states with aggressive renewable energy goals, and how those costs have changed over the last decade. And this is before any social cost of carbon or other more traditional pollutants is incorporated into the price of fossil fuel based electricity.
States with a larger proportion of renewable electricity generation do not have detectably higher electric rates.
Deploying renewable energy sources has not caused electricity prices to increase in those states any faster than in states which continue to rely on fossil fuels.
Although renewable sources receive larger direct government subsidies per unit of electricity generation, fossil fuels receive larger net subsidies, and have received far higher total historical subsidies.
When including indirect subsidies such as the social cost of carbon via climate change, fossil fuels are far more heavily subsidized than renewable energy.
Therefore, transitioning to renewable energy sources, including with renewable electricity standards, has not caused significant electricity rate increases, and overall will likely save money as compared to continuing to rely on fossil fuels, particularly expensive coal.
The Union of Concerned Scientists has gone through the catalog of America’s coal plants, and found hundreds of mostly small, old, polluting, inefficient generating units that just aren’t worth operating any more, even on a purely economic basis. They looked at several different sets of assumptions, including different natural gas prices going forward, a price on carbon, whether or not the competing natural gas fired generation would need to built new, or whether it existed already with its capital costs paid off, and whether or not the production tax credit for wind ends up being renewed. In all of the scenarios considered, they found substantial coal fired generation that should be shut down on purely economic grounds, above and beyond the 288 generating units that are already slated for retirement in the next few years. They also found that some companies — especially those in traditionally regulated monopoly utility markets in the Southeast — are particularly reluctant to retire uneconomic plants, and suggest this may be because they can effectively pass on their costs to ratepayers, who remain none the wiser.
I just finished reading Renewable Energy Policy by Paul Komor (2004). It’s a little book, giving a simplified overview of the electricity industry in the US and Europe, and the ways in which various jurisdictions have attempted to incentivize the development of renewable electricity generation. The book’s not that old, but the renewable energy industry has changed dramatically in the last decade, so it seems due for an update. There’s an order of magnitude more capacity built out now than ten years ago. Costs have dropped significantly for PV, but not for wind (according to this LBNL report and the associated slides). We’ve got a much longer baseline on which to evaluate the feed-in tariffs and renewable portfolio standards being used in EU member countries and US states. I wonder if any of his conclusions or preferences have been altered as a result? In particular, Komor is clearly not a fan of feed-in tariffs, suggesting that while they are effective, they are not efficient — i.e. you end up paying a higher than necessary price for the renewable capacity that gets built. This German report suggests otherwise, based on the costs of wind capacity built across Europe. Are the Germans just biased toward feed-in tariffs because they’ve committed so many resources to them? NREL also seems to be relatively supportive of feed-in tariff based policies, but maybe this is because the design of such policies has advanced in the last decade, better accounting for declines in the cost of renewables over time, and differentiating between resources of different quality and utility.