AWEA rebuts attack on national Renewable Electricity Standard by discredited Institute for Energy Research

The Institute for Energy Research (IER), a front group for fossil-fuel industry funders, is at it again. After helping fund and publicize a series of discredited "reports" attacking wind energy in other countries last year, IER this week released a report of its own, claiming that a national Renewable Electricity Standard (RES) would cost American consumers money.

Unsurprisingly, IER does not have the facts to back up its conclusion this time, either.

A number of recent studies have confirmed that wind power saves consumers money by reducing the use of expensive fossil fuels, reducing their electric and other energy bills.

These savings occur because wind resources displace the highest-cost electricity on the power grid. Because wind power has no fuel costs and very low operating costs, it is able to produce electricity more cheaply than nearly all other sources of electricity. Renewable energy can provide low-cost and stable-priced fuel to Americans — something that fossil fuels cannot guarantee over the long life of their plants. Overreliance on fossil fuels leaves Americans at risk of volatile prices in the future.

The supply curve for electricity is typically quite steep, so even modest additions of renewable generation to the power system can significantly reduce power prices by displacing more expensive generators and lowering the market clearing price. Texas has more wind power than any other state in the nation, and has seen not only low power prices, but a decrease in power prices due to wind.

Department of Energy studies, including many conducted during the Bush Administration, show that a Renewable Electricity Standard would reduce consumers’ energy bills by offsetting the use of more expensive fossil fuels. A
December 2007 DOE study found that a "15% by 2020" Renewable Electricity Standard (RES) would reduce electricity prices by 0.3% and natural gas prices by 1%, saving consumers $400 million. A 2007 DOE study of a "25% by 2025" RES found that under this higher standard, consumers would realize even greater energy savings of $2 billion.

In addition to these studies, it’s worth looking at some real-world experience. Thirty states have RES laws. Are electric rates in those states increasing faster than in states without RESs? No.

DOE data shows that, over the last 10 years, electric rates in states without RESs increased more than 31% faster than in states with RESs. Between 2000 and 2010, states without RESs saw their electric rates increase by more than 60% on an average load-weighted basis, while states with RESs only saw an average increase of 46%. As one would expect, the data shows that consumers in states with RESs were protected from drastic increases in fossil fuel prices, while consumers in states without RESs had no choice but to continue relying on fossil fuels even as the price doubled or tripled.

IER selectively uses statistics in an attempt to hide this fact. By only focusing on electricity prices at the end of the period and ignoring what prices were at the beginning of the period, IER is trying to hide behind the fact that, for a number of other reasons, states that adopted RESs already had high electricity rates before they implemented their RESs. However, a closer look at the data shows that consumers in RES states have fared much better than consumers in states without RESs.

Renewable requirements make consumers better off through less-direct means as well. The Department of Energy’s 2008 report, "20% Wind Energy by 2030," found that producing 20% of the nation’s electricity from wind energy by 2030 would reduce consumers’ natural gas costs by a cumulative $150 billion by reducing electric sector demand for natural gas, and thus reducing the price for all natural gas consumers.

By offsetting fossil fuel generation, renewable targets also reduce the cost passed on to consumers for compliance with other environmental regulations, like SO2 and NOx emissions regulations. Many other major benefits of wind deployment — job creation, tax revenue growth, and community economic development — also accrue to consumers in direct and indirect ways, in addition to savings on their utility bills.