House Renewables Provision Reduces Electricity Costs

Posted by SI Staff on November 05, 2007 No Comments
Categories : Policy Watch

An American Council for an Energy-Efficient Economy (ACEEE) analysis of the House Energy Bill (H.R.3221) Renewable Electricity Standard (RES) provision shows that the RES reduces electricity rates, avoids the need for conventional power plant construction, and reduces carbon dioxide (CO2) emissions.

Part of these benefits stem from the RES allowance for energy efficiency to qualify for up to 27% of resource requirements. The analysis also looked at more aggressive renewable and efficiency RES targets, and examined RES policies against a climate policy framework. These scenarios showed even greater benefits from setting RES-type resource targets.

"This analysis dashes the notion that RES raises electricity rates. Our modeling shows that the RES reduces power prices, customer bills and capacity needs in all parts of the United States," says Bill Prindle, ACEEE's policy director." Since renewable and efficiency resource standards also cut carbon emissions, they should be the cornerstones of U.S. energy and climate policy for the power sector."

ACEEE used ICF International's IPM model to calculate energy, capacity, wholesale electricity prices, carbon dioxide emissions and other impacts of the House RES provision. IPM is widely used by federal and state agencies, as well as utilities, for resource and policy decision-making. The economic analysis was performed using ACEEE's DEEPER model, which estimates economy-wide job impacts.

Key findings from the analysis include:

  • The House RES would, in 2030, reduce CO2 emissions by 121 million metric tons (MMT), save 22 billion kWh of electricity usage, create 41,000 net new jobs and displace a total of 16,000 MW of conventional power plant construction. This would save electricity customers $3.1 billion in 2030 and a cumulative $35 billion through 2030.

  • A more aggressive set of renewable and efficiency standards, a 15% RES coupled with a separate 15% Energy Efficiency Resource Standard (EERS), would produce even greater benefits. This"15-15," policy package would, by 2030, avoid another 105,000 MW of new power plants, reduce electricity prices by up to 0.7 cents per kWh, save another 480 billion kWh of electricity usage per year, and reduce annual CO2 emissions by another 590 MMT per year. The 15-15 policy would also create another 166,000 net new jobs in 2030 beyond the House RES.

  • In a climate policy scenario based on the Bingaman-Specter bill, ACEEE used IPM in a similar fashion, finding that the House RES provision would save another 39,000 MW of power plant capacity, 223 billion kWh and 780 MMT of carbon emissions. The more aggressive 15-15 policy package would contribute another 98,000 MW of conventional power plant capacity avoidance, another 450 billion kWh in energy savings and reduction of 260 MMT of CO2 emissions.

The House RES provision reflects the growth of state RESs, which are in place in 25 states and the District of Columbia, and EERSs, which similarly set long-term resource targets for utilities in some 12 or more states.

The House RES provision would build on this experience, moderately expanding this policy approach through a national standard, requiring 15% of electricity sales to be provided through renewable sources by 2020. Up to 27% of the resource requirement can be met through energy efficiency.

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