Renewable Energy: Too Expensive or Cost Effective?

Is renewable energy more cost effective than fossil fuels? Or is it more expensive?

Well, a recent Los Angeles Times article reported that, according to the results of a draft report issued by the California Public Utilities Commission (PUC) in 2009, incoming governor Jerry Brown’s goal of 33 percent renewables by the year 2020 would cost the state $60 billion. The same article also stated that a 14.5 percent electricity rate hike would be required to meet it.

But actually, it was current Governor Arnold Schwarzenegger who had the 33 percent mandate, and the PUC draft report was never completed. And the $60 billion figure–actually around $58.6 billion —included in the report is the total cost for all electricity investments by 2020, not just the expenses of achieving the 33 percent goal. The report also assumes no reduction in renewable energy costs by 2020.

This has already been proven wrong, as new numbers that will be released soon show significant reductions in wind turbine and solar panel costs since the draft report came out. The costs for solar panels have plummeted and are predicted to drop even more in the coming years as the market is becoming saturated. Finally, two additional 33-percent scenarios, one that focuses on higher wind power use and the other on more out-of-state energy projects, showed even lower costs to ratepayers, $2.1 billion incremental investments by 2020, and $1.9 billion, respectively.

No one will argue that $2 billion isn’t expensive. But California ratepayers already shell out around $30 billion per year on electricity so $2 billion by 2020 in one lump some, not each year, is a relatively small investment to reach that mandate of 33 percent renewables. And bear in mind, these numbers are based on the analysis of the unpublished draft report.

The California Energy Commission’s most recent estimates show that renewable energy is often cheaper than traditional fossil fuels. Geothermal, wind, and in-conduit hydro are all extremely cost effective. Even solar power turns out to be cheaper than the expenses of peak-power natural gas plants.

It turns out that if the 33 percent renewable energy mandate is achieved by 2020 with California-based solar photovoltaics, or PV generation, taxpayers will pay a relatively small amount, and the state will see dramatic job growth in the renewable energy industry. Reduced greenhouse gas emissions, and more energy-efficient homes and vehicles are additional benefits. This, added to the fact that right now 25 percent of all venture capital investment in California goes to clean technology, or “cleantech,” means the state’s ratepayers will see their energy costs go down in the long run.

Article by Julie Mitchell, appearing courtesy Celsias.