RENEWABLE ENERGY:

Less than 1% electricity-price hike seen under Dems' RES plans

Average electricity prices would rise less than 1 percent under any of the leading Democratic plans for a national renewable energy standard (RES), according to a federal study released today.

The National Renewable Energy Laboratory examined plans from Sen. Jeff Bingaman of New Mexico, who proposed an 20 percent RES by 2021, with a quarter of that being met by efficiency; Rep. Ed Markey of Massachusetts, who offered 25 percent by 2025, with no efficiency substitutions; and Rep. Henry Waxman of California, who called for 25 percent by 2025, with efficiency allowed for a fifth of the standard.

Assuming states would take advantage of all efficiency options and would not include costs for implementing efficiency measures, the lab found prices peaking in 2022. Even under Markey's plan -- likely to cost the most -- only five states would see electricity prices increase 3 to 5 percent, and most states would have lower electricity prices compared to the base case of proceeding under current conditions, the study says.

By 2030, Waxman's plan would reduce carbon dioxide emissions by 435 million metric tons annually, Markey's plan would reduce them by 150 million metric tons a year, and Bingaman's would result in a "modest" 95 million metric tons as compared to the base case, NREL said.

Bingaman's plan would result in less renewable energy capacity being constructed compared to the base case because it would reduce electricity demand, and because a significant boost in photovoltaic solar generation -- which receives triple credits for renewable energy under all three plans -- would reduce the need for other renewable energy generation, the study says. Waxman's efficiency requirements result in similar demand savings.

Renewable energy capacity would be boosted to 261 gigawatts by 2030 under Markey's plan, 197 gigawatts under Bingaman's plan and 183 gigawatts under Waxman's plan. The base case would result in 208 gigawatts by 2030.

Renewable-energy credits would also peak in cost in 2022. Under Waxman's plan, credits would cost $25 per megawatt-hour and, under Markey's, credits would cost $15 per megawatt-hour. Credits would remain at zero under the Bingaman plan because there would be no new renewable sources, the study says.

The study did find that, overall, Western states would exceed their RES requirements, and states in the Southeast would be forced to rely on biomass co-firing and credits to meet the requirements.

The study also stressed that it assumed that all transmission capacity necessary to carry electricity from renewable energy would be constructed. "Results would differ if construction of transmission is delayed," it says.

The NREL study is the latest to find an RES would have little impact on average electricity prices. A study by the Energy Information Administration released in April came to similar conclusions (E&ENews PM, April 27).

Bingaman unveiled a new renewable energy standard this week that would require utilities to provide 15 percent of their power from renewable sources such as wind, solar, biomass and geothermal energy by 2021, with slightly more than a fourth of the requirement met through energy efficiency measures.

Meanwhile, Waxman and Markey have included in their energy bill currently before the House Energy and Commerce Committee a plan for a 15 percent renewables standard by 2020, but states could drop that down to 12 percent if their utilities cannot meet the target.

Click here to view the study.

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