Category — Renewable Portfolio Standard/Renewable Electricity Standard

Seven Southeastern states have rejected renewable energy mandates and/or voluntary alternative energy quotas on electric companies: Louisiana, Alabama, Arkansas, Georgia, Kentucky, Mississippi, South Carolina and Tennessee. (North Carolina is another story, requiring a 10% share for renewables and mandated efficiency savings by 2018.)

The good news for the seven states is not only that unnecessary costs have been avoided during the political boom of ‘green’ energy. The benefit is also that artificial bubble jobs are not on a death watch as they are in other states that now face ‘green’-energy retrenchment.

Bad Wind

William Yeatman, an energy policy analyst for the Competitive Enterprise Institute, contends that Southeastern states do not have as much renewable energy potential as the rest of the country. “The Southeast has the lowest wind energy potential of all regions, and wind is the energy source that is used to achieve virtually all renewable electricity mandates in the U.S.”

However, Yeatman says that even though the Southeast has limited renewable energy potential, that does not mean renewable energy mandates are a good idea in the Northwest, Northeast or the Southwest. Rather, “It is to say that renewable energy is even more uneconomical in the southeast than in the rest of the country.”

Louisiana’s Politically Clean Energy

Robert Bradley of the Institute for Energy Research affirms that, “It is a competitive advantage that Louisiana is energy clean when it comes to politically forced energies.” [Read more →]

Part I yesterday reviewed in-state electricity generation and power imports required to meet California’s current power demand. Part II today shows how Renewable Energy Credits may be used to meet California’s aggressive renewable energy goals.

Renewable Energy Credits

Renewable Energy Credits (RECs) are the power generation credits that a distribution system can use to meet its renewable portfolio. These RECs come in two flavors—bundled and unbundled. The bundled RECs are the credits that are bought and used within the same distribution system; unbundled RECs are those bought by one distribution system but used in another. These RECs are managed by the Center for Resource Solutions, which also prevents double counting of credits.

Unbundled RECs are particularly interesting, because it means that a distribution system doesn’t need to build renewable energy power plants because the distribution system can simply buy the renewable power that is generated in another distribution system.

Paper Renewables?

This creates significant problems for the exporting distribution system. For example, the Bonneville Power Administration is currently negotiating with California about (in BPA’s words)

potentially significant negative consequences for Northwest and California consumers if decisions about the use of unbundled RECs are made without full consideration of the infrastructure requirements associated with the delivering a reliable, least cost supply of renewable energy to California.

So, what are the consequences? The use of unbundled RECs seems to mean that California could purchase all the renewable power generated by all the windmills that are connected to the California grid.

This is happening right now as California is contracting for wind energy from places as far away as Alberta, Canada. The electricity generated in Alberta, however, will not arrive in California. It is too far away. The only thing that is happening is that Californians are paying for it to meet their renewable portfolio. This seems pretty strange, that Californians are required to pay for a benefit that they don’t get.

The fact that 15 percent of its imports in 2009 are “unspecified” probably means that California intends to purchase enough renewable energy credits to meet its goal. This would mean that it would not need to build any more renewable power generators. It just needs to purchase the power from its neighbors (at the expense of the rate payers in California).

There are three major problems with unbundled RECs: [Read more →]

California is committed to a renewable energy portfolio to provide 33 percent of its electricity by 2020 from qualifying resources such as wind, solar, geothermal, biomass, and small hydroelectric facilities.

Can this portfolio succeed? Ambitious goals take more than legislative action to have a chance for success. It takes an actual plan that can be implemented with actual engineering accomplishments.

Drastic Increase Needed

In order to determine the probability of success, we can look at California’s renewable energy sources in prior years. These are available on the Internetand are presented in the following graph.

The plot shows the actual renewable sources of electricity generated in California from 2005 to 2009 and shows the projected increase required to achieve the goal of 33 percent by 2020. Notice that the renewable contribution has been rather constant over the previous years and requires a dramatic increaseto achieve the goal. This implies that something different needs to be done than what has been done it the past, otherwise the projection line will be ever steeper and eventually needs to be abandoned.

Looking at the Pieces

So, exactly which of the renewable energy sources can be increased to reach the goal? It is generally accepted that biomass, geothermal, and small hydro cannot be increased significantly, which leaves the intermittent sources of solar and wind to do the job. Is it reasonable to expect that solar and wind can accomplish the task? The gap that must be closed by 2020 is 21 percent of the total electricity consumption.

Solar currently contributes only 0.3 percent (2009) of the electricity used in California. This contribution is too small to expect a significant contribution by 2020. It might be doubled by 2020, but this is still a small amount.

Windcontributed 2.7 percent (2009). The expectation that it will close the 21-percent renewable gap is unrealistic, however, for the following reasons: [Read more →]

[Editor note: Marita Noon is the Executive Director at Energy Makes America Great Inc., the advocacy arm of the Citizens’ Alliance for Responsible Energy. CARE works to educate the public and influence policymakers regarding the role of energy in freedom and the American way of life.]

At least 18 states have legislation proposed or pending—44 bills—relating to renewable energy mandates, according to the American Legislative Exchange Council. Within the last couple of weeks, I have had wary legislators from two different states ask me about such mandates. I have spoken to energy groups opening with, “How many of you know what an RPS is?” … Nothing…. “It stands for Renewable Portfolio Standard.” … Still blank.

The RPS is a silent little killer of the American economy. “Silent” because, despite widespread activity, its presence is nearly unknown. It is not dramatic or sexy—seeming hardly newsworthy. With little attention, 29 states have enacted an RPS and 7 more have agreed to voluntary goals (see here for more).

Background

The RPS is a legislated mandate requiring a certain percentage of a state’s electricity “portfolio” come from renewable energy (typically referring to wind and solar) by predetermined dates. Most states’ standards are 15% by 2015, and 20% by 2020. Maine is the most aggressive with a goal of 40% by 2017. In his State of the Union Address, President Obama announced that he’d like to see 80% clean energy by 2035.

Renewable energy is known to be more expensive for the consumer than electricity generated from traditional sources—even with subsidies of about $24 per megawatt hour (based on data from the Energy Information Administration). During a hearing for the New Mexico state-wide cap and trade program in which I participated, the supporting attorney stated, “The reason for Renewable Portfolio Standards (RPS) is because renewables are more expensive. No one would choose them if it wasn’t required.”

Regardless of high cost and intermittent availability, renewable energy is touted as the savior. Environmental groups lobby legislators to push for mandates—or higher mandates when the states have already voted in the RPS. But, from what is renewable energy “saving” us?

Two Falsehoods: Oil Security and Climate Alarmism

The need for renewables is based on two falsehoods. [Read more →]

[Editors note: this post is a summary/review of the article by Jonathan Lesser, "Gresham's Law of Green Energy: High-Cost Subsidized Renewable Resources Destroy Jobs and Hurt Consumers" (Regulation magazine, Cato Institute).]

“Industries that require never-ending subsidies simply cannot increase overall economic welfare. To conclude otherwise is to believe in ‘free-lunch’ economics of the worst kind. Yet, free-lunch economics are driving the push for renewable energy.”

- Jonathan A. Lesser

Jonathan A. Lesser, of Continental Economics Inc., has written a penetrating essay describing the unmet promises of subsidies to so-called green energy (or politically correct, nonhydro renewables). He looks at the supposed benefits of these subsidies and the associated costs and comes to a familiar conclusion: government-subsidized energy is uneconomic energy.

The arguments for green energy subsidies are numerous; perhaps most used are those pertaining to putting people to work and even creating wholly new industries that will re-invigorate the entire economy (the Obama fantasy). At its core, Lesser’s refutation of these notions provides quite a good lesson in some of the foundational theories of microeconomics (and good common sense).

Lesser begins by exploring the history of electricity markets, and how with the creation of markets for “installed capacity” (backup power to meet peak demand), several states reacted with price-suppression policies. The principle lesson one learns in microeconomics is that markets are intended to get the prices “right”. If extra capacity comes free, that drives down the market clearing price other utilities can receive, thus meaning they exit the market (cannot make a profit). Less competition is never good for consumers.

He refers to this principle as “Gresham’s Law of Green Energy,” an application of a principle that says that bad can drive out good (rather than the other way around) from government interference with consumer preference in an open market. Elsewhere in the piece he uses a more appropriate metaphor: transferring wealth instead of creating it. Subsidies for green energy are taken from taxpayer dollars, meaning that you and I are less well-off while the owners and employees of green energy companies are better off. But factor in ratepayers, all losers, and the wealth transfer is negative and pernicous indeed. [Read more →]

On September 21, 2010, U.S. Sen. Jeff Bingaman (D-NM) introduced a bill[1] that would create an insidious national “Renewable Electricity Standard” (RES). Bingaman now has 32 cosponsors but expects 60.

The bill would result in higher monthly bills for millions of home owners and renters, farms, businesses, industries, hospitals, educational institutions, and any other organization that uses electricity.

Despite the intense citizen displeasure with Congress, Bingaman’s RES bill shows that both Democrats and Republicans, while in Washington, are eager to favor special interests and their lobbyists while ignoring the adverse impact of their actions on the nation’s ordinary citizens, consumers and taxpayers. The bill belies Republican claims that they favor less federal government intrusion, control, and damage.

Key Provisions

The bill would require that, by 2021, 15% of the electricity sold by an electric utility must be generated from wind or certain other “renewable” energy sources, or from energy efficiency. The bill would create a new US Department of Energy (DOE) bureaucracy to oversee and enforce the new federal demands. Under the bill, up to 4 of the mandated 15% could, theoretically, be achieved by actions that improve energy efficiency but the measures that qualify are tightly defined so utilities may have to use electricity from renewables instead of energy efficiency to meet the bill’s requirements.

As demonstrated by states and European countries that have imposed similar “renewable” energy requirements, higher electric bills are a direct result. [Read more →]

For a long time, fans of renewable electricity have made their case by running simulations. Input the right data and (more importantly) the right assumptions, impose a renewable portfolio requirement or carbon plan, compute 30 years forward, and walk into a clean, fully employed future. Just close your eyes, click your heels, remember
to believe, and elect the right federal government.

Then reality intervened in the form of two country-wide case studies.

Denmark

More than a year ago, this column scooped the mainstream media with the truth about Denmark’s 20 percent wind generation. The country actually uses less than half of that power, but can keep the machines spinning thanks to (export) connections with the coal-based German grid and the nuclear- and hydro-based Scandinavian RTO.

For all this, the little mermaid enjoys the highest power costs in Europe. There is now an excellent report with lots of data by a think-tank there called CEPOS, which occupies roughly the same position that the pro-market Cato Institute does in Washington. (Disclosure: I am a Cato adjunct scholar and have taken money from them. Cato itself, like CEPOS, is supported almost entirely by private—as opposed to corporate—money.)

The study points out the sad fact that in a few years Denmark’s neighbors will be producing enough of their own wind power that their grid will have difficulty accepting Denmark’s, even if it comes gratis.

Spain

Spain is a more tragic story. [Read more →]

Yesterday’s post at MasterResource described the failure of the 81st Texas Legislature (aka the “solar session”) to enact a new renewables mandate. Other big news is the rejection of an initial renewable (read solar, biomass) mandate by the Florida Legislature, as well as a sweetheart deal desired by Florida Power & Light (FPL). Nuclear and offshore drilling also came into play in the legislative debate as tie-in’s in the political environment.

All this is instructive for the current federal push for a National Electricity Standard (NES). Florida would be a loser in any national NES–especially given the prohibitive cost of converting sunshine into electricity in any sort of a major way. The age-old promises of solar breakthroughs are a mirage, and Enron’s 1994 contrived Solarex splash should not be forgotten.

As reported by John Dorschner in the Miami Herald, Florida rejected a year-long push by environmental groups and their business allies to enact a renewable quota in the state. The drama included the pro-mandate/subsidy Gov. Charlie Crisp; Southern Alliance for Clean Energy; sugarcane company Florida Crystals; and (would-be) solar town developer Syd Kitson. On the other side [Read more →]

“We can push solar, and that’s great. But somebody’s got to pay for it. You can’t have those who can barely afford their energy bills subsidizing it.”

- Texas Rep. Sylvester Turner, quoted in the Houston Chronicle

The Houston Democrat made a national statement, not just statewide one, in reference to proposed legislation to surcharge ratepayers to subsidize solar roofs. Such sentiment beat back a well-funded effort by national environmental pressure groups and the solar industry. Has the decade-old Enron-launched artificial stimulus to uneconomic, unreliable renewables reached its apogee? Might existing and planned renewable programs enacted at the expense of ratepayers and taxpayers be reconsidered by the Public Utility Commission of Texas and the 82nd Texas Legislature in 2011?

Background

The Texas Legislature, which meets every two years, fell to Enron and environmental lobbyists back in 1999 when the nation’s strictest renewable energy mandate was passed and signed into law by then Gov. George W. Bush. In 2005, the renewable quota was increased again, making Texas the national leader in industrial wind parks–and energy liabilities parading as assets (see here). [Read more →]

As a physicist, my belief is that one of the reasons that intelligent energy policies have not gained sufficient traction is that we are allowing those with political agendas (vs scientists) to define some key energy terms. And as a golfer, I know that a wager can be won or lost at the first tee — where the terms and conditions are agreed on.

Outside of “fiscal responsibility” probably the most significant misused concept that we have unwittingly gone along with is the term “renewable energy”. Giving some critical thought to this moniker is no academic matter, as the majority members of the U.S. Senate’s Energy Committee are currently pushing for a national Renewable Portfolio Standard (RPS), or what is now called the Renewable Electrical Standard (RES). Their decision as to what is a “renewable” will have profound technical, economic and environmental consequences on the United States.

To my knowledge there is no “official” definition of this bandied about term. [Read more →]