Renewable Energy: 'An Opportunity America Can't Afford to Miss'

The climate bill under discussion in U.S. House would require electric utilities to draw an increasing amount of power from renewable sources, spurring growth of wind, solar, biomass and geothermal energy and reducing carbon emissions.

Opponents argue that it would raise consumer's electricity prices too high. But is that true?

The question is critical to whether a final bill contains a Renewable Electricity Standard mandating that retail electric utilities generate 25% of their power from renewable sources by 2025.

The answer, according to the Department of Energy’s Energy Information Administration, is no.

In a report last month, the EIA said that any additional costs to consumers from a 25% renewable electricity standard would not be significant. The cumulative costs to consumers' electric and natural gas bills through 2030 could be 0.2 percent, according to an analysis of the numbers by the Union of Concerned Scientists.

An earlier USC report, which assumes more reliance on wind power and less on biomass than the EIA study, found that a 25% RES by 2025 could lead to $95 billion in cumulative savings for consumers. The savings would come from diversifying the energy mix and spurring competition for fuel sources.

“By diversifying the electric mix, you are displacing need for natural gas to be used for electric power and some coal,” says Jeff Deyette, a UCS energy analyst. “By increasing this competition in the energy sector we see an impact on prices.”

Utility executives say the industry faces other costs, though, including building renewable energy facilities and adding transmission lines – costs they'll pass on to their customers. Several Congress members have also complained that a nationwide RES doesn't allow for regional differences, which wouldn't be fair, they say, because not all states have the wind potential of Texas or the sunshine of California.

“The feedback from my clients is there’s not a lot of confidence that it will be cost neutral,” says Andrew Roehr, vice president, North American utilities at Capgemini, a consulting firm.

A big issue, according to Roehr, will be the costs of getting renewable power to regions that don't have established wind, solar or biomass production.

One project already in the works to carry wind power from the plains of the Dakotas and Iowa to the Midwest's cities, dubbed the Green Power Express, is estimated to cost $10 billion to $12 billion for 3,000 miles of extra high-voltage transmission. The cost might not be that high by the time it reaches utilities and their customers, though, because of the strong support from Washington. The recovery act passed earlier year, for example, set aside $11 billion for transmission projects.

The 25% by 2025 Renewable Electricity Standard is part of the comprehensive climate bill proposed by Reps. Henry Waxman (D-Calif.) and Ed Markey (D-Mass.) as the American Clean Energy and Security Act. (Similar RES proposals are being floated in the Senate.)

Under the Waxman-Markey plan, the standard would apply to electric utilities with retail sales of at least 1 million megawatt-hours. The requirements build gradually, beginning with a 6% in 2012. Renewable sources that would qualify include solar, wind, geothermal, tidal, landfill gas and certain biomass feedstocks. Also included is new hydroelectric power, and renewable power used to co-fire a coal plant. Existing hydroelectric power and municipal sold waste generation would be subtracted from a utility’s sales baseline, but couldn’t be used to meet the standard.