National Renewable Energy Standard Will Mean Higher Electricity Bills

The U.S. Senate is considering a nation renewable energy standard (RES) that would require 15% of all electricity produced in the U.S. come from so-called renewable energy sources such as wind and solar power by 2021. Currently about 3% of electricity is produced from wind and solar. Twenty-nine states have some form of RES; Arizona has a 15% requirement (by 2025), and California has a 33% RES requirement by the year 2020.

The renewable energy standard is a backdoor to Cap & Trade, and will cost us dearly because wind and solar generation of electricity are intermittent, very expensive, and requires conventional generation backup.

The Energy Information Administration (EIA) calculated “levelized” costs for various electrical generation systems. “Levelized costs represent the present value of the total cost of building and operating a generating plant over its financial life, converted to equal annual payments and amortized over expected annual generation from an assumed duty cycle. The key factors contributing to levelized costs include the cost of constructing the plant, the time required to construct the plant, the non-fuel costs of operating the plant, the fuel costs, the cost of financing, and the utilization of the plant.” The EIA calculated these costs in dollars per megawatthour as follows:

Conventional coal power: $100.40; Natural gas: $83.10; Nuclear: $119.00; Onshore wind power: $149.30; Offshore wind power: $191.10; Thermal solar power: $256.60, Photo-voltaic solar power: $396.10.

Note also, that the availability, i.e., the ability to produce electricity on demand, according to EIA, is 85% for coal, 87% for natural gas, 90% for nuclear, but only 34%-39% for wind, and 21%-31% for solar.

A Heritage Foundation analysis of a generic RES found that a 22.5% RES by 2025 would cause household electricity prices to jump 36%, and industry prices would rise by 60% by 2035. That would cost an average family an additional $2,400 per year. There would be one million fewer people working on average with the RES in effect. And as the mandated level of renewable use rises over time, so do the losses imposed on the economy. Summing up the impacts for 2012–2035 yields a total loss of $5.2 trillion in GDP.

Dr. Fred Singer opines: “Now, it is quite clear that wind and solar are not economic — and they probably never will be competitive, even when fuel prices rise significantly. So the RES mandate would mean that all of us taxpayers would support even more the RES rent-seekers and lobbyists, who are already milking the government for subsidies and tax breaks for the construction of wind farms and solar energy projects.”

The alleged rationale for RES is to reduce carbon dioxide emissions and thereby forestall global warming (now “climate disruption”) although there is no credible evidence that reduced emissions will have a measurable effect on climate. Another hyped reason is to decrease our dependence on foreign oil, but the U.S. has abundant domestic resources of fossil fuels. The Obama regime, however, seems to be doing all it can to make those resources unavailable.

National renewable energy standards for electricity will have the effect of a national energy tax which will raise rates on families and businesses, cause loss of jobs, and further depress the economy. What was that promise Obama made about taxes and the middle class?

Renewable energy standards are just another rip-off of consumers and taxpayers by rent-seekers, lobbyists, and radical greens.

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7 comments

  1. I can only hope you’re right.  Of course, that would also mean that the Heritage Foundation Cabal would have been right about one thing, one time, putting them just behind a broken clock in accuracy.

  2. Thinking out of box :

    While some short-sighted folks are counting cents on the utility bill, the vessel America is sinking right now.
     
    As always, the U.S. stock market has been so busy chasing the economic data while the oil money, the significant chunk of red ink, has been spilling severely and doggedly.

    For example, what if a household spending far outweighs its earning ?

    To date, the Congress & just about media have been gripped by the infamous lobbyists, in place of FRESH IDEAS, which I feel results in this unimaginable scene.

    It is claimed that : ” the U.S. uses about 24 percent of the world’s oil, this equates to 20.9 million barrels a day. If the U.S chooses to embrace renewable energy, the U.S could save $750 billion per year and create about 6 million jobs”.

  3. Instead of taking the Energy Information Administration’s (EIA) projected levelized costs, and running them through their own “black box” calculations, I wonder why the Heritage Foundation didn’t just look at EIA’s own calculations of what an RES would cost?

    Maybe it’s because EIA found that even a much higher standard–25% by 2025–would have a negligible effect on national electricity prices.  EIA found no price impact at all through 2020, a peak impact of 2.9% in any year, and less than a 1% impact by 2030.  http://www.eia.doe.gov/oiaf/servicerpt/acesa/pdf/sroiaf(2009)04.pdf.  Some regions would see price declines, while the very worst impact in any year in any region equaling only 6% more than the case without an RES.

    Many analysts think that EIA’s assumptions are biased against renewables in favor of fossil fuels and nuclear. When assumptions are based on recent actual project costs, the Union of Concerned Scientists found that a 25% RES would actually save consumers money nation-wide, including $1.27 billion in Arizona. http://www.ucsusa.org/assets/documents/clean_energy/Clean-Power-Green-Jobs-25-RES.pdf

    Of course, the impacts of Sen. Bingaman’s proposed 15% RES would be less.

    Alan Nogee
    Director, Climate & Energy Policy & Strategy
    Union of Concerned Scientists
    on twitter: @alannogee

  4. The above article is relatively accurate based on experience and not any studies.  I am a former LUZ Project Manager and have developed solar projects internationally and in the US since and have a pending solar patent.  One reason I won’t develop in the US is the continued deception as the the true costs of the technology.
    I was also involved in the Kyoto Accords when the goal was to reduce Green House Gases 5.2% below 1990s levels as a Start or beginning when the Chinese were riding bicycles not the present 17% reduction below 2005.  GHG emissions RATES can be successfully leveled off but GHG LEVELS will continue to rise.  The present solution is political.
    All these Renewable Energy projects produce electricity and electrical demand declined 3.6% last year and there isn’t an electric automobile industry to speak of to use the power.  None of this will reduce our dependence on foreign oil or the GHG oil produces as the US doesn’t use foreign oil to produce electricity.  The only viable plan, the US doesn’t have one, is T Boone Pickens plan.
     

  5. To Nogee:
    According to the EIA report you cite, the only way wind and solar might result in lower rates is due to heavy subsidies – taxpayers still pay. About green jobs: Spain, a heavy user of renewable energy, found that for every subsidized green job created, 2.2 jobs were lost elsewhere in the economy. See my article:
    http://tucsoncitizen.com/wryheat/2010/03/08/blowing-in-the-wind-a-look-at-green-jobs/
    By the way, the Union of Concerned Scientists is not what it seems. Anybody can join for a donation of $25. UCS has a history of perverting science, see:
    http://activistcash.com/organization_overview.cfm/o/145-union-of-concerned-scientists

  6. The problem I see is that the increased price of energy in the U.S. will drive businesses oversees where the there is no RES and energy is cheap.  The jobs will stay oversees but the CO2 will blow back with the wind.  In the U.S., we’ll end up with the same CO2 but no jobs.

  7. Mr TBoneLaredo and others,

    The EIA report I cited above found that US power plant carbon emissions would be actually reduced by 6-12% by the RES, and again, that any rate impact would be negligible (much lower than the annual ups and downs from volatile gas and coal prices) and therefore would not be driving jobs overseas. 

    Mr. DuHamel,

    The EIA report actually assumes that the existing tax credits and stimulus funding are not extended and quickly phase out, and looks at the cost of the RES to produce additional renewable generation beyond what those subsidies are projected to lead to.

    The  jobs study from Spain you refer to was funded by the fossil fuel industry, and has been found  inconsistent with the vast majority of  job studies that have found that renewable energy produces more jobs than comparable fossil fuel scenarios. See, e.g., this review of the Spanish study by the U.S. Department of Energy’s National Renewable Energy Lab: http://www.nrel.gov/docs/fy09osti/46261.pdf

    With respect to the activistcash site you reference, it is a project of the Center for Consumer Freedom, a corporate-funded front group whose sole purpose seems to be spreading misinformation about the range of organizations that advocate for environmental protection.  Tellingly, their article on UCS has no citations. Most of the information in it is cherry-picked quotes taken out of context or simple speculation passed off as fact. For the record, UCS is an alliance of scientists and citiziens that works on a range of issues, from smart agriculture, to cleaner cars, climate change and global security. Our general approach is to help policymakers understand what the best science says and where to find it. We also step in to protect scientists when they are silenced by political appointees or otherwise unfairly targeted by politicians. We do take advocacy positions on issues because the scientists we work with see a pressing need for concrete action on security and the environment. Readers can make up their own minds by reading about our staff and policy positions at http://www.ucsusa.org.Alan Nogee

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