Renewable energy isn’t boosting electric bills study contends

Renewable energy is seen as the culprit behind higher electricity bills by Colorado Republican lawmakers, but a new study contends it just ain’t so. The Colorado Senate passed a bill rolling back the state’s renewable energy standard – which requires that investor-owned utilities get 30 percent of their energy from renewable sources by 2020 and rural electric coops to get 20 percent — to 15 percent for both. “We want to make sure we’re not pushing the envelope so far that we’re hurting consumers, especially the rural consumers,” said the sponsor, Sen. Ray Scott, R-Grand Junction. And handing out graphs of comparative rates, Rep. Dan Thurlow, R-Grand Junction, said, “We’ve gone from being one of the lowest-cost states, to being higher than most of our neighbors in the mountain states.” The bill, however, died in the Democratic-majority House. It is true that Xcel Energy, the state’s largest electricity provider, has had a series of rate hikes over the last few years, but $347 million in increases between 2006 and 2009 were the result of the utility’s new $1 billion Comanche 3 coal plant coming on line. A lot of the rate increases were also driven by Xcel adding long-deferred infrastructure, such as transmission lines. Putting that aside, have wind and solar installations increased the cost of electricity? A study by Nancy Pfund and Anand Chhabara says there is no evidence to show they have. The study “Renewable Are Driving up Electricity Prices – Wait, What?” looks at the top ten states for renewable energy, the ten state with the least renewable energy and the nation averages. “Basically we didn’t find much difference and I think that’s the point,” said Pfund, who is a managing partner in DBL Investors, a San Francisco-based venture capital firm specializing in clean technologies and sustainable products and services. Chhabara, who is working on dual law and business degrees at Stanford University, was a summer associate a DBL. In their analysis the top 10 states in renewable energy had an average increase in retail electricity prices of 3.06 percent between 2002 and 2013. The 10 states with the least renewable energy generation had a 3.74 percent, while the national average was 3.23 percent. The numbers don’t prove anything one way or another, but they don’t particular support the contention that renewables boost rates. On the other, hand they don’t give any sense of what the rates would have been in those leading renewable energy states if they hadn’t add wind and solar. Another part of the analysis plotted rate increases by year and showed that leaders and laggards had similar curves, though in the early years renewable energy states had higher rates and after 2005 lower rates. Xcel has gone into wind energy in a big way. By 2016, 30 percent of its generation will come from wind. One reason is that the utility has gotten very advantageous prices in wind power purchase agreements. Xcel’s average purchase cost for wind since 2007 has been about $42 a megawatt-hour, according to the company. That is cheaper than natural gas generation and on par with exiting coal plants. “And there are no price fluctuations for the fuel – like you see and coal and natural gas – because the fuel is free,” Pfund said. Solar has been more expensive than wind, but Austin Energy, the Texas city’s municipal utility, in July reportedly signed a purchase power agreement for utility-scale solar at $50 a megawatt-hour. Another way of assessing the relative costs of different generation is a “levelized cost of energy” analysis, which tallies up all the costs of building and running a generation source, a coal plant or a wind farm, over its life and then divides those costs by the amount of energy the plant produces. Lazard, the financial advisor and asset management firm – no earnest environmentalists they, have been tracking levelized costs for several years. In their 2014 analysis for the competing types of generation without any consideration of subsidies finds a pretty tight price spread. Lazard gives ranges for costs per megawatt-hour and the range for utility-scale photovoltaic solar is $72 to $86, while onshore wind is $37 to $81. The range for a supercritical pulverized coal plant, the most efficient coal technology, is between $66 and $151. A natural gas combined cycle plant – again the best technology – is $61 to $87. While natural gas and coal might be marginally cheaper on the low side, renewables looked to be more predictable in price. Residential rooftop solar is just about the most expensive form of generation at $180 to $265 a megawatt-hour – even more expensive than nuclear power or coal with carbon capture, according the the Lazard analysis. The only electricity generation more pricey is a diesel at $297 to $332. Looking back at Lazard’s 2012 analysis one finds utility-scale PV at $101 to $149 per megawatt-hour and wind at $48 to $95. At the same time the price for coal has edged-up from 2012 by $4 to $10 a megawatt-hour. “The cost curves are coming down for renewables,” Pfund said. “And they will continue to come down as markets grow and technologies achieve economies of scale. It is a virtuous cycle.”