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Rising electricity prices to come as wind, solar mandates increase

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California continues to lead the nation in mandating the deployment of wind and solar power. Unfortunately, that translates into rising electricity costs that are now poised to climb higher. It’s a development that should concern families in every state.

Since 2011, electricity prices in California have jumped 30 percent – the most  expensive in the western United States. And there’s no sign that this steady increase will ease.

While California’s renewable energy targets are particularly aggressive, they’re not the outlier one might imagine. Twenty-nine states and the District of Columbia have renewable energy mandates for ever-increasing amounts of wind and solar power. These mandates tend to be expensive.

Matthew Kandrach

Matthew Kandrach

A recent analysis from the University of Chicago found that mandates drive up electricity prices. After seven years, consumers in these states paid $125 billion more for electricity than they otherwise would.

While the cost of solar arrays and wind turbines has fallen, the expense of integrating them onto the grid is rising. A higher percentage of these weather-dependent sources of electricity means more expense to balance out their peaks and valleys.

In California, for example, the state’s solar generation can produce far too much power in the middle of the day, forcing ratepayers to pay when other states absorb it. And when that solar generation fades in the evening, or fails during bad weather, ratepayers must pay top dollar to import electricity from neighboring states. This selling low and buying high is the opposite of sound economics.

Wind generation poses similar problems. A think-tank led by President Obama’s former Energy Secretary, Ernest Moniz, found that California went 90 days with little or no wind power in 2017. That included multiple gaps when wind generation wasn’t available for several days. This dependence on variable electricity is monumentally challenging. And batteries are hardly a cure-all since the best grid-scale batteries provide just four to six hours of backup, hardly enough to handle days or weeks when solar and wind power are unavailable.

Defenders of California’s renewable-first policy say that the state’s average residential electricity bills are relatively low. But that has little to do with the merits of the policy and everything to do with a temperate climate where Californians simply use less energy.

Move California’s electricity prices to other states where consumers frequently run air conditioning and heat pumps and the same electricity rates would be devastating. And yet, California’s energy approach is being replicated across the country, with little understanding of the potential consequences.

The U.S. Energy Information Administration recently reported that 78 utilities proposed electricity rate increases last year, the highest number since 1983. If anyone believes that moving from reliable, baseload power to weather-dependent, renewable sources of electricity wouldn’t come with rising costs, that bubble is about to burst.

Public utility commissioners and policymakers need to think very carefully about passing the costs of these mandates onto consumers. Trading reliable, affordable power for less reliable, more costly alternatives deserves serious scrutiny.

Matthew Kandrach is the president of Consumer Action for a Strong Economy (CASE), a free-market oriented consumer advocacy organization.

4 comments

  1. “Move California’s electricity prices to other states where consumers frequently run air conditioning and heat pumps and the same electricity rates would be devastating. And yet, California’s energy approach is being replicated across the country, with little understanding of the potential consequences.”

    Californians, except for those on the coast and in mountain communities, use cooling nearly as much as Arizonians. it costs hundreds of dollars a month to cool houses in the Central Valley or desert areas. If solar panels are financed in with construction on new houses, owners start saving immediately.

    Renewables are now more cost-efficient than coal and that’s not counting health and environmental damage created by coal-burning. This opinion is outdated.

    https://www.forbes.com/sites/energyinnovation/2018/12/03/plunging-prices-mean-building-new-renewable-energy-is-cheaper-than-running-existing-coal/#6b8a7bb431f3

  2. This OPINION piece (let’s emphasize that) ignores a number of benefits of increased use of renewable energy. Let’s enumerate:

    1) Renewable energy leads to less pollution. Less pollution leads to fewer health problems. Fewer health problems saves people money, leads to a higher quality of life, and is better for the economy (less sick days, better worker productivity, etc.)

    2) Solar energy produces energy when the vast majority of energy is needed: during the day, when people are awake and working. Yes, energy is still needed at night when the sun isn’t shining and the wind isn’t necessarily blowing. That just means we need to get better at storing energy for later use, not limiting renewable energy production.

    3) Renewable energy is, duh, renewable! Many communities, even in politically deep red areas, are turning towards renewable energy because it just makes economic sense. After the ever-shortening return on investment period, renewable energy saves money (and lots of it). That’s money that can be spent on other things.

    4) Renewable energy production is local. The jobs it brings are local. No need to import coal or oil or gas from thousands of miles away, at much risk to the environment and other communities.

    The author of this article is speaking for an organization that hides the identity of its donors/supporters, but has in the past been a lobbyist for the offshore drilling and energy exploration industries, as well as telecommunications and on-line betting.

  3. “it costs hundreds of dollars a month to cool houses in the Central Valley or desert areas.”

    Either these folks are doing something wrong, or having large populations living in the desert is a bad idea. I have an all electric home with two heat pumps in the Mid-Atlantic, where summers are hot are humid and winters are cold. My electric bill is below two hundred dollars a month, yet on peak consumption days over half of our power supply is fossil fuel (natural gas or coal). Saying that renewables are cost effective is premature.

  4. bradley taylor hudson

    Why would a responsible person make an argument based solely on monthly bills? The reason fossil fuels seem cheap is that we have long hidden, or rather socialized, much of the cost of fossil fuels. (The “profits” are then privatized, of course). Companies pay for only a very small % of the value of fossil fuels as they mine. They do not pay for the costs of pollution and accidents. They do not pay the costs of global warming. Society pays all those costs. We are now beginning to see the cost of global warming, and it is far more than money. The argument for/against renewables based on monthly cost alone is changing rapidly due to advances that come naturally with investment. … But … there is no longer a debate about whether we have to go to renewables to save the planet.

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