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UCS report: Renewable Portfolio Standards provide economic benefits at ‘little or no’ cost

UCS report: Renewable Portfolio Standards provide economic benefits at ‘little or no’ cost

Trailblazing the renewable energy frontier, in 1983 Iowa became the first state to implement a renewable portfolio standard.  Though modest – the RPS only required MidAmerican and Alliant Energy to procure 105 megawatts of renewable generation capacity – the policy positioned Iowa to become a renewable energy leader.  Fast forward to today and you will find that 29 states and the District of Columbia now have RPS policies in place, requiring electricity providers in those states to generate a percentage of their total electricity supply from renewable resources.

Over this period, RPS policies have proven to be a significant driver for renewable energy deployment and a source of economic activity.  A new report from the Union of Concerned Scientists, How Renewable Electricity Standards Deliver Economic Benefits, examines the role of RPS policies and concludes that “utilities are successfully meeting their renewable energy requirements with little or no additional costs to consumers, while supporting rapidly growing renewable energy industries that provide substantial economic benefits.”

According to UCS, RPS policies apply to approximately 50% of the total U.S. electricity demand and will drive the development of more than 87,000 MW of new electricity generating capacity from renewable energy sources through 2025.  To date, compliance with the renewable requirements has been high – over 96 percent of RPS requirements were met through 2010 – with many states, including Colorado, Kansas, and Minnesota, “several years ahead of schedule.”  High levels of compliance in future years are also expected, with many utilities continuing to bring substantial renewable energy capacity online.

Not only are utilities successfully complying with the renewable energy laws, they are doing so with “little or no additional costs to consumers.” Examining 2009 and 2010 RPS cost compliance data, Lawrence Berkeley National Laboratory researchers found that out of 14 states examined, all but one experienced cost impacts of 1.6 percent or less.  UCS points to eight states – Michigan, Minnesota, Oregon, Illinois, North Carolina, Kansas, Wisconsin, and Rhode Island – where consumers’ electricity rates have been minimally impacted, exemplifying the cost-effectiveness of RPS programs.

Moreover, because renewable electricity sources have zero “fuel costs,” they serve as a hedge against future fossil fuel price volatility.  As UCS concludes, “increasing renewable energy also helps stabilize electricity rates and provide long-term savings. Once a wind or solar facility is installed, the ‘fuel’ is free. Fossil fuels, on the other hand, are subject to potentially volatile prices that can lead to significant fluctuations in electricity rates.”

In addition to minimally impacting consumer’s electricity rates, RPS policies create a range of economic benefits.  Renewable energy development across the U.S., in large part driven by these policies, has stimulated significant economic activity.  The UCS report summarizes these economic benefits nicely:

– The renewable energy industry supports American jobs. More than 119,000 people worked in solar-related industries in 2012, while wind energy development employed 75,000 full-time workers across the U.S., including 30,000 jobs at manufacturing facilities throughout the country.

Renewable energy development promotes investments in the U.S. economy. In 2012, wind power made up 42 percent of all new U.S. electric capacity additions, representing a $25 billion investment in the U.S. economy.

– Renewable energy development outperforms fossil fuels in two important ways when it comes to driving job growth: 1)  Renewable energy development is relatively labor intensive, so it creates more jobs per dollar invested than fossil fuel resources and 2) Installing renewable energy facilities uses primarily local workers, so investment dollars are kept in local communities.

– Local landowners benefit from renewable energy development. When wind turbines are installed on privately owned land, the land owners typically receive payments in the form of lease, royalty, or right-of-way payments. These payments can be an important source of income for rural families.

– Renewable energy projects pay property and income taxes that help support states and local communities. For example, wind projects in Iowa, which now generates more than 20 percent of its electricity with wind, provided more than $19.5 million in annual property tax payments to state and local governments in 2011.

Continued support and implementation of RPS policies will ensure that these economic benefits continue to accrue and that more renewable generation is deployed.

Related articles:

Opinion: Montana's renewable energy remains bright in wake of '13 session, June 3, 2013
Colorado legislature approves bill to expand, improve state Renewable Energy Standard, May 2, 2013
Hawaiian Electric Companies hit new high in renewable energy use in 2012, April 30, 2013
Fact check: The real story? State RPSs hold strong, April 26, 2013
North Carolina business leaders alarmed by attack on renewable energy, April 16, 2013
Fact check: Attack by Locke Foundation's Sanders on N.C. RPS relies on flawed data, April 3, 2013
Action alert: Stand up for Kansas wind power, February 26, 2013
Investor opinion: Colorado can lead in renewable energy, February 19, 2013
Kansas interfaith group says: Maintain state renewable standard, February 13, 2013
Wisconsin PSC: RPS has economic benefits, negligible rate impact, June 25, 2012
California PUC: Renewable energy procurement up in 2011, costs falling, February 8, 2012

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