|Oops! Renewable Energy
Costs Oregon Billions
By Todd Wynn (for the Cascade Policy
March 2011 -- In 2007, Oregon legislators
decided they would force Oregonians
renewable energy whether or not they wanted it, or could
afford it. Legislators proclaimed this would help the Oregon economy
and make our energy system more affordable and reliable.
Todd Wynn is Vice President at Cascade Policy
free market public policy research organization. He was formerly
Climate Change and Energy Policy Analyst at Cascade
year, one in 30 Oregonians had their
electricity cut off due to inability to pay, and enrollment in the
low-income energy assistance program has increased significantly. On
January 1, 2011, electricity rates increased significantly for Oregon
households: Pacific Power rates increased by 14.5% and PGE rates by
4.2%. PGE also added a “Renewable
ratepayers’ bills in January 2010. Currently, this rate is set at 0.22
cents per kWh, or approximately $2.13 extra per month, for an average
household. Rate increases such as these will be the norm over the next
fifteen years as utilities work to comply with restrictive energy
policies on the state and the federal levels.
legislators proclaimed that the 2007 renewable energy mandate would
help “accelerate the transition to a more reliable and more affordable
energy system.” What went wrong?
energy costs more than traditional energy
sources and is often less reliable. Although generating energy from
wind turbines and solar panels is essentially free, the costs of
construction, maintenance and integrating inconsistent energy into the
grid are prohibitively
Thus, adding more renewable energy will increase costs and cause
substantial economic hardships for Oregonians and Oregon businesses.
A Cascade Policy Institute report, The
Impact of Oregon’s Renewable Portfolio Standard,
exposes the cost of renewable mandates on the Oregon economy. Over the
period of 2015-2025, the average Oregonian household will pay an
additional $1,706 in higher electricity costs. The average commercial
business will spend an extra $9,641 and the average industrial business
an extra $80,115. Over the same period, the mandate will cost
Oregonians an additional $6.811 billion over conventional power, within
a range of $4.009 billion and $9.310 billion.
will lead to loss of jobs as well. By 2025 the Oregon economy will lose
an average of 17,530 jobs,within a range of 10,025 jobs under the
low-cost scenario and 24,630 jobs under the high-cost scenario.
Legislators may be able to justify higher electricity costs if
environmental benefits, in terms of reduced emissions, outweigh the
costs. However, it is unclear that the use of renewable energy
resources, especially wind and solar, actually reduces
Due to their intermittency, wind and solar require significant backup
power sources that are cycled up and down to accommodate the
variability in the production of wind and solar power. As a result, a
recent study found that wind power actually increases pollution and
greenhouse gas emissions.
Also, businesses and industries
with high electricity usage likely will move their production, and
emissions, out of Oregon to locations with lower electricity prices.
Therefore, increasing renewable energy in the state will not reduce
global emissions, but rather send jobs and capital investment outside
In the end, renewable energy can and should expand according to voluntary
reflect true demand. Government should not be mandating that citizens
purchase a product they may not value or cannot afford.
is time to face the truth. Legislators thought that by forcing
Oregonians to purchase renewable energy they could make electricity
more affordable and reliable. They were wrong. As a first step,
legislators should repeal the renewable energy mandate and other
restrictive energy policies before electricity costs spiral out of
control. In addition, future energy policies need to be subject to a
rigorous analysis of economic costs and environmental benefits.