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Renewable energy, conventional wisdom, and the bottom line

John Gardner, Research, portraitI was interested to read a recent column by Iowa republican governor Kim Reynolds, touting the importance of renewable energy development to her state.  The point of the article was that Iowa’s commitment to renewable energy has paid big dividends to the Iowa economy, citing over 9,000 jobs and $13.5 billion in investments from wind energy alone.  She also cites Iowa’s leadership in state policy back in the 1980’s, when Iowa was one of the first states to create incentives for the wind industry, as one of the reasons why they’ve done so well.

Conventional wisdom (in Idaho anyway) tells us that government interventions in favor of renewable energy distort the market and drive up costs. Many folks in Idaho are proud of the fact that we’re one of the few states in the region without, for example, a Renewable Portfolio Standard which sets targets for renewable energy generation for utilities that operate within our borders.

square-feet-oct-2017-for-wordpressHowever, the proposition that such regulations drive up rates doesn’t stand up to scrutiny.  According to the Energy Information Administration (part of the US DOE), from 2006 to 2015 (latest data available), Idaho fell from having the cheapest electric rates in the country to 5th because our rates increased 65 percent. Iowa, on the other hand climbed from the 19th lowest rates to 9th, with their rates increasing only 19 percent.

As a point of reference, US rates increased 18 percent during that time period. Yes, all electric rates rose over the past decade, but some rose more than others.

And before you agree with the narrative that it’s the government-backed renewable projects that are responsible for this increase, you should know that wind is about 10 percent of current generation in Idaho and solar didn’t even register during that time frame.  That math just doesn’t work.

But what better time than a contested gubernatorial election to start having serious discussion about energy policy?  It’s been a long time since we’ve heard any of our state officials discuss these issues, and I’ve been listening hard in vain for anything from the current candidates.

A good opportunity is the debate about the way utilities bill customers who invest in solar arrays on their homes.  The filing in front of the Idaho Public Utilities Commission correctly claims that net-metered customers pay less than their share for the services provided to them. In the parlance of energy economics, the utility cannot recover their fixed costs from net-zero net-metered customers.  And no doubt the PUC staff and commissioners will consider these economics closely as they deliberate this case.  I also am confident they will attempt to evaluate the benefit that these distributed resources bring to our grid in decreased transmission and distribution losses and reduced transmission congestion.

But the PUC is limited in their scope to the issues in front of them. They, like the rest of us, look to elected officials for broader leadership.  What about the other advantages of residential solar?  These installation not only create renewable electricity, but they create jobs, economic development and a growing sense among many Idaho communities that we’re working to make a better future for the next generations. Isn’t that something we can all get behind?

John Gardner is a Fellow of the American Society of Mechanical Engineers,  director of the Energy Efficiency Research Institute in the Center for Advanced Energy Studies and professor of Mechanical & Biomedical Engineering at Boise State University

 

About John Gardner, PhD

3 comments

  1. Every state is different, but if you look at the two states with the highest percentage of renewables (Hawaii and California) you find that their electricity rates have gone up much less than the rest of the Country since 2001 (retail and wholesale). Whether this is related to renewables is difficult to ascertain without truly digging into the details. But looking at Idaho is far from representative of the nation as a whole.

  2. jgardner@boisestate.edu

    Happy to engage in civil discourse. It’s important to point out that the EIA statistics of “generation” by state is misleading. For example, Idaho imports significant amounts of electricity from coal plants in Oregon, Nevada and Wyoming. It’s “Retail Sales” by state that tells a more interesting story (in my opinion)

  3. Balderdash! The EIA reports cheap hydropower supplied 54% of net energy (not electricity) generation in Idaho in 2015 but drought reduced hydropower’s share resulting in abnormally higher costs. According to EIA data for 2015, hydropower produced 94% of electricity in Idaho

    Total electric power industry 9,691,475 megawatt hours
    Conventional hydroelectric power 9,114,990 megawatt hours
    % total hydropower = 94%