Argument: A national renewable energy standard will increase electricity costs


Jonathan DuHamel. “National Renewable Energy Standard Will Mean Higher Electricity Bills.” Tuscon Citizen. September 30th, 2010: “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.”

Charles Steele. “A national renewable energy standard is a mistake.” Daily Caller. July 15, 2010: “It’s well and good to increase our usage of renewable energy sources where it is economical to do so. Yet it’s clear that a national standard and national transmission infrastructure will be too costly and too unwieldy.”

Ronald Bailey. “Forcing Consumers to Buy Renewable Energy.” Reason Foundation. July 13, 2010: “Setting aside quibbles about energy cost and capacity modeling, if renewables like wind power were already cost competitive, then Congress would not need to mandate them. So will renewables soon be cost competitive? There are reasons to doubt they will be. Taking EIA projections with the requisite grain of salt, the agency’s Annual Energy Outlook for 2010 estimated the levelized costs [PDF] of various generation plants in 2016. Levelized costs include the cost of constructing a plant, the time required to construct a plant, the non-fuel costs of operating a plant, the fuel costs, the cost of financing, and the utilization of a plant. The levelized costs per megawatt hour are $100 for conventional coal power, rising to $129 for advanced coal with carbon capture and sequestration. On-shore wind costs are $149 per megawatt hour, and off-shore costs are $191. The cost of solar photovoltaic power is $396 per megawatt hour and solar thermal is $257. For what it’s worth, advanced nuclear comes in at $119 per megawatt hour.

Crudely, these levelized costs suggest that substituting wind for conventional coal under a 20 percent mandate would boost electricity prices by 10 percent. Similarly substituting solar photovoltaic power would increase electricity prices by about 20 percent. A recent analysis by the Heritage Foundation takes into account the costs of building a vast new national high voltage electricity grid to transmit wind and solar power from the plains and the deserts to coastal cities, the costs of building and maintaining additional natural gas electricity generation capacity to back up intermittent renewable energy sources, and consumer cuts in their electricity use due to higher prices. Once these and other factors are added in, the Heritage Foundation study finds that in 2020 a 15 percent renewable energy standard would reduce the disposal incomes of American families by $1,700 per year and increase unemployment over what it would otherwise have been by more than one million jobs.

Ultimately, the top-down imposition of a renewable energy standard now being considered by Congress is a stupid and costly way to cut greenhouse gas emissions; will destroy more jobs than it creates; is just another wasteful subsidy showered on depopulating rural communities; will do nothing for the chimerical pursuit of energy independence; and will, in fact, increase energy prices to consumers. A national renewable energy standard, concludes California State University economist Michaels, “is an inefficient and inequitable response to the emissions of pollutants and greenhouse gases, a reassuring and ultimately dysfunctional distraction from real problems.” What could be more perfect for bipartisan action in Congress?”

Karen Kerrigan. “Commentary: Renewable energy legislation would add to drain on small business.” Washington Post. July 26th, 2010: “Since it’s often more expensive to produce energy from renewable sources than from fossil fuels, costs will surely rise. If energy costs increase for businesses, consumers and workers will bear the burden through higher prices and stagnant wages. For many small businesses, raising prices is not a competitive option. Therefore, business owners will have fewer dollars to invest in new jobs, higher wages and benefits for existing employees, or new equipment and technologies.”