Bill for national Renewable Portfolio Standard (U.S. Senate)

Sep 26, 2010

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—Editorial, Industrial Wind Action Group (9/23/10)

Editor’s note:  Click here for the original article, which includes hotlinked references.

Senate Jeff Bingaman, chair of the Senate Energy and Natural Resources Committee, signaled he’s determined to see a national renewable portfolio standard (“RPS”) passed in the Senate before the members recess for the fall campaign season. Joined by majority leader Harry Reid (D-NV) and twenty other co-sponsors including three Republicans: Sens. Sam Brownback of Kansas, Susan Collins of Maine and John Ensign of Nevada, Bingaman introduced new RPS legislation that will require retail suppliers of electricity to secure a percentage of their generation from renewable energy resources.

Bingaman’s apparent explanation for pushing the bill now, according to a press announcement this week, is hardly convincing: “I think that the votes are present in the Senate to pass a renewable electricity standard. I think that they are present in the House. I think that we need to get on with figuring out what we can pass and move forward.”

Is that the best he can muster to justify a mandate for purchasing renewable energy and setting aside 15% of the electricity market solely for wind, solar, and other preferred forms of generation?

Perhaps he’s relying on AWEA’s Denise Bode to make his case with her boast that a national RPS “is the single most important thing we can do to grow jobs here in the United States and keep 85,000 American wind energy workers on the job.” Denise must have missed the latest press on green jobs that explained, again, how the hype surrounding green projects is not matching reality. What’s missing entirely in the discussion is how much a 15% RPS will cost the American ratepayers and how many jobs in every other sector in the country will be lost due to higher energy rates.

More than half of the U.S. States has already adopted RPS legislation in the last decade and a number of these programs are up for review to determine whether their promises of job growth and low impact on electricity rates have been realized. Wouldn’t it be prudent to understand the costs and benefits of these programs before launching into new, farther reaching mandates?

Or maybe we already know what these reviews will find.

According to a March 2007 study released by the Lawrence Berkeley National Laboratory, adoption of State RPS policies hinged on state-sponsored studies that projected the costs and benefits of programs. However, across all state studies, the methodologies used in determining projected electricity rate impacts, environmental effects, and public benefits were limited and failed to account for key costs including:

1. transmission and integration costs for wind energy*,

2. fluctuating capacity values,

3. increasing capital costs for the turbines, and

4. likelihood that coal-fired generation, not natural gas, will drive wholesale market prices in some regions.

*The bulk of the renewable generation is expected to be satisfied by wind according to the report.

In an interview, Berkeley Lab researcher Ryan Wiser said that “many of the studies were designed with the explicit intent to either influence legislative processes or, alternatively, to potentially affect the design of RPS policies as established by regulatory agencies.”

The “disparity between study expectations and current market reality suggests that the actual cost impacts of state RPS policies may significantly exceed those estimated in our sample of studies, especially if higher wind costs persist.”

Do we have any reason to believe Bingaman’s bill will do better?

There are other practical considerations of a national RPS that suggest a 15% mandate will have serious negative consequences.

In their 2008 paper entitled “A National Renewable Portfolio Standard? Not Practical”, Dr. Jay Apt and others were clear in explaining the perils of a national RES as excerpted here:

A national RPS is a bad idea for three reasons. First, “renewable” and “low greenhouse gas emissions” are not synonyms; there are several other practical and often less expensive ways to generate electricity with low CO2 emissions. Second, renewable sources such as wind, geothermal, and solar are located far from where most people live. This means that huge numbers of unpopular and expensive transmission lines would have to be built to get the power to where it could be used. Third, since we doubt that all the needed transmission lines would be built, a national RPS without sufficient transmission would force a city such as Atlanta to buy renewable credits, essentially bribing rural states such as North Dakota to use their wind power locally. However, the abundant renewable resources and low population in these areas mean that supply could exceed local demand. Although the grid can handle 20% of its power coming from an intermittent source such as wind, it is well beyond the state of the art to handle 50% or more in one area. At that percentage, supply disruptions become much more likely, and the highly interconnected electricity grid is subject to cascading blackouts when there is a disturbance, even in a remote area.

Renewable energy sources are a key part of the nation’s future, but wishful thinking does not provide an adequate foundation for public policy. The national RPS …would be expensive and difficult to attain; it could cause a backlash that might doom renewable energy even in the areas where it is abundant and economical.

As it stands, subsidies for wind dwarf most fuel types at $23.37 MWh not including state and local tax breaks and subsidies for project owners, tax- and ratepayer funded transmission costs, and other public perks thrown at the industry. It’s time to step back and consider what’s best for us as a Country and demand that Congress stop picking favorites and stand behind a free energy market where companies succeed by building cheaper, better products than competitors. Saying NO to a national RPS would be an important first step.

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