Costs of a Renewable Portfolio Standard?

Marlo Lewis of the Competitive Enterprise Institute complains that the Energy Information Administration has found that the Bingaman Renewable Portfolio Standard (RPS) would cost consumers a net of $18 billion through the year 2030.

It should be noted that a similar analysis in March by Wood Mackenzie, a respected oil & gas research firm, found that the same RPS provision would save consumers more than $100 billion through 2026. From the Wood Mackenzie press release:

According to the report, the adoption of a 15% Federal RPS will require a flood of new wind and other renewable projects well beyond current proposed projects, leading to a 500-percent increase in renewable capacity from current levels by 2026. This increase translates into an incremental construction cost of $134 billion (2006 dollars) between 2006 and 2026. The report also shows the switch to renewable energy will drive down demand and price of natural gas. "The lower fuel costs and fossil fuel consumption will lead to lower electricity costs," continued Sannicandro. "Over the next 20 years, the Federal RPS case leads to a savings of $240 billion (2006 dollars) in wholesale power costs, outweighing the higher capital investment to build the additional capacity."

Regards,
Tom

MidAmerican Gives Wind Power a Boost

MidAmerican Energy, a major investor-owned utility based in Iowa, said April 19 that it will add another 540 megawatts (MW) of wind power to the 460 MW it already owns. Iowa Gov. Chet Culver (D) is calling for "regulators, business professionals and utility companies" to add 1,015 MW to the 1,000 MW already installed in the state for a total of 2,015 MW by the year 2015.

In announcing the utility's plans, MidAmerican President Greg Abel praised wind power for helping keep electricity rates stable: "In addition to the environmental benefit of adding new wind energy production in Iowa, customers of MidAmerican Energy will continue to benefit from electric rate stability. The last electric rate increase MidAmerican Energy customers experienced was in 1995, and we propose adding the new wind energy while maintaining electric rate stability until 2014, which is nearly 20 years of electric rate stability for MidAmerican Energy customers.” Wind power, which uses no fuel, is immune to price swings in global energy markets for oil, natural gas, or other fuels. This is a major benefit to utilities and customers alike, because it keeps energy prices more predictable.