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Renewable Energy Standards Deliver Affordable, Clean Power

Renewable Energy Standards Deliver Affordable, Clean Power

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Richard W. Caperton looks at the history of these standards and explains why they don't make electricity prices rise.
Richard W. Caperton looks at the history of these standards and explains why they don't make electricity prices rise.

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Published by: Center for American Progress on Apr 10, 2012
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11/02/2012

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1Center or American Progress | Renewable Energy Standards Deliver Aordable, Clean Power
Renewable Energy StandardsDeliver Affordable, Clean Power
Right-Wing Attacks on These Standards Are Misguided
Richard W. Caperton April 11, 2012
Introduction
New Jersey, exas, and Caliornia have very dieren energy proles. Tey use dierenypes o energy o power heir economy. Tey have dieren ypes o uiliy sysems. And hey have dieren expecaions o heir energy sysem.Bu hese saes share one imporan rai: Tey’re reaping he benes o renewableenergy. New Jerseyans are rs-hand winesses o how solar power creaes new busi-nesses and new jobs.
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exans can hank wind power or keeping he lighs on duringexreme weaher ha sruck he sae in early 2011.
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And Caliornians are using renew-able energy o mee heir sae’s new greenhouse gas polluion reducion sandards.
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weny-six oher saes also have renewable energy sandards, which require a cerainamoun o he elecriciy sold wihin a sae o come rom renewable energy. Tese poli-cies lead o cleaner air, economic developmen, and a more resilien elecrical grid.Despie hese acs, hough, renewable energy sandards have come under atack. A small bu vocal group o righ-wing aciviss and ossil-uel advocaes claim ha hesepolicies are raising elecriciy prices or consumers, which in urn is holding back saeeconomies.
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As conservaive lobbyis Grover Norquis wroe in a recen
 Politico
op-ed:
Renewable energy standards, by design, are intended to drive up energy costs—requir-ing utilities to use more expensive and oen less reliable sources o energy. Not surpris-ingly, such laws have hit ratepayers hard. States that have a binding [renewable energystandard] now have electricity costs that are 39 percent higher than states that don’t have a binding [standard].
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2Center or American Progress | Renewable Energy Standards Deliver Aordable, Clean Power
 And Rober Bryce o he conservaive Manhatan Insiue adds:
Tere is growing evidence that the costs may be too high—that the price tag or pur-chasing renewable energy, and or building new transmission lines to deliver it, may not only outweigh any environmental benefts but may also be detrimental to the economy,costing jobs rather than adding them.
Forunaely or consumers in he 29 saes wih renewable energy sandards, hese criics are wrong. Tere are no daa showing ha hese sandards cause elecriciy raes o skyrocke.Tis issue brie will describe he hisory o renewable energy sandards, explain how elec-riciy raes are deermined, and presen evidence showing ha hese sandards have nocaused elecriciy prices o rise. Tis inormaion ses he sage or moving orward in wocriical ways: srenghening sae-level renewable energy sandards so consumers can seeeven greaer benes rom renewable energy, and passing a similar policy a he ederal level.
Renewable energy standards are commonsense policies with bipartisansupport and economic benefits
 A he mos basic level, every renewable energy sandard is he same: Tey require uili-ies o sell a cerain amoun o energy generaed rom renewable sources like wind, solar,geohermal, and biomass, among ohers. Beyond ha, he deails can vary: Saes canallow dieren echnologies, such as hydropower or landll gas; hey can eiher allow elecriciy generaion rom ou o sae or resric i o only in-sae generaion; and hey can eiher cover all uiliies or exemp cerain uiliies rom he policy. When sae policymakers implemened hese sandards hey craed hem o mee heneeds o heir sae in a commonsense way. Conrary o naysayers’ claims, hese areno radical policies. In ac, here’s a long hisory o biparisan suppor or renewableenergy sandards. Tese policies were signed ino law by ormer Republican gover-nors like George W. Bush (exas), Chrisie odd Whiman (New Jersey), and imPawleny (Minnesoa), as well as ormer Democraic governors like Jennier Granholm(Michigan), Jane Napoliano (Arizona), and Gray Davis (Caliornia).Tere are many reasons why a sae would wan a renewable energy sandard:
•
Using renewable energy insead o ossil uels has many public healh benes, such asreducing he harmul air polluion ha causes ashma.
•
Tese sandards creae opporuniies or new businesses, which can build renewableenergy projecs.
 
3Center or American Progress | Renewable Energy Standards Deliver Aordable, Clean Power
•
Tese sandards can drive down he cos o specic echnologies hrough he “learn-ing by doing” process, in which echnologies like solar panels ge cheaper as we gainmore experience making hem.Tere are also some very imporan—and oen ignored—reasons why hese sandardscan posiively impac elecriciy raes. Te Union o Concerned Scieniss has documenedhow shiing elecriciy generaion rom naural gas o renewables causes naural gas priceso go down, making he remaining naural gas generaion cheaper han i was beore.
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Renewable energy sandards also ensure resource diversiy. In ac, some saes callheir renewable energy sandard a “renewable porolio sandard” o emphasize harenewables are a valuable par o a diverse porolio o energy resources. Such a diverseporolio reduces exposure o any single energy source, reducing risk o consumers.Finally, renewable energy sandards play especially imporan roles in saes ha resruc-ured heir elecriciy markes. Saring in he 1990s some saes moved away romradiional monopoly uiliies and oward so-called “deregulaed” markes.In he radiional srucure, uiliies submi plans o sae regulaors abou heir generaionmix. Regulaors have he abiliy o make uiliies accoun or hings like how a uure priceon carbon will impac consumers i a uiliy builds a coal-red power plan, or how nauralgas price spikes could impac consumers i a uiliy builds a naural gas power plan.Bu in a resrucured marke regulaed uiliies no longer own power plans and regulaorsdon’ approve heir resource plans. Insead, uiliies buy power rom independenly ownedand operaed power plans. Tese power-plan owners (commonly called “merchan gen-eraors”) have no obligaion o provide a diverse mix o elecriciy. In hese saes a renew-able energy sandard is he only way o ensure resource diversiy. Tis is no small issue:Every single sae wih a resrucured uiliy indusry has a renewable energy sandard.
Electricity prices are influenced by dozens of factors
Beore explaining how renewable energy sandards impac elecriciy raes, i’s worhgiving a litle bi o background on how he raes are deermined.ypically, a sae public uiliy commission approves a uiliy’s raes. Trough a monhs-long process, he commission looks a uiliy daa and deermines how much i shouldcos he uiliy o provide reliable service o all o is cusomers. Tis includes a reason-able pro, so ha he uiliy is incenivized o deliver qualiy elecrical service. Ten hecommission projecs how much elecriciy he uiliy will sell and divides he amoun o money required o provide service by he amoun o energy sold o come up wih a rae,ypically expressed as cens per kilowat-hour.

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