Originally published in Clean Capital.
Benefits of state renewable energy standards outweigh costs, study finds
By Jenny Tan
January 14, 2016
A new U.S. Department of Energy report finds the benefits of renewable portfolio standards greatly exceed their costs.
Renewable portfolio standards (RPS) require a certain percentage of electricity to be produced from renewable sources. Twenty-nine American states plus the District of Columbia have instituted these standards.
The report finds an estimated $7.4 billion of benefits from RPS programs in 2013, mostly due to the health and environmental benefits of reduced air pollution and greenhouse gas emissions. An earlier study, also produced by the Department of Energy, estimates the compliance costs of RPS programs at just $1 billion.
The two studies use different methodologies and can’t be directly compared, Department of Energy analyst and report co-author Ryan Wiser told Greentech Media. However, he added, “the new report does help provide an important counterweight to arguments that state RPS targets are driving up electricity costs to unacceptable levels.”
In 2014, Ohio froze its benchmarks on electricity production from renewable sources for two years. Preventing cost increases was cited by supporters as a reason for the freeze.
The $7.4 billion in benefits from RPS targets does not include the reduction in water withdrawals, estimated at 830 billion gallons in 2013. Drought-prone California will likely see the largest savings in water withdrawals, the report states, as switching to renewable energy sources reduces the net demand for water.
Also not included are other impacts of RPS programs, such as reducing consumer electricity bills by up to $1.2 billion and natural gas bills by up to $3.7 billion. The report also estimates that RPS targets have supported up to 200,000 jobs in renewable energy.
Some Canadian provinces are implementing their own financial incentives for renewable energy producers.
Nova Scotia, Prince Edward Island, and New Brunswick have instituted province-wide RPS programs.
In 2006, Ontario launched a feed-in tariff program that guarantees fixed prices for renewable energy producers, allowing them to compete with conventional energy producers. “The big surprise with the standard offer was just how successful it was,” World Wildlife Fund Canada analyst Keith Stewart told the New York times. Prince Edward Island and Nova Scotia have since launched their own feed-in tariff programs.
However, Ontario’s feed-in tariff program has been scaled back since its inception, and Nova Scotia’s program was cancelled in August 2015. The provincial government cited concerns about the program’s impact on power rates.
Photo Credit: Duke Energy