Five reasons Arizona should repeal its renewable energy standards mandate

renewable energyIn 2006, the Arizona Corporation Commission (ACC) imposed the Renewable Energy Standard and Tariff (REST) on non-government-owned electric utilities. REST requires that electric utilities generate an ever increasing amount of electricity from renewable sources such as wind and solar. The original mandated goal was to reach a total of 15 percent renewable generation by the year 2025. The ACC this year slightly rolled back that mandate. They or the Arizona legislature should go all the way and eliminate the REST program entirely. Let utility companies generate electricity by the method they see as most efficient, cost effective, and reliable. Most renewable energy sources are none of these things.

Currently, Arizona produces about 7 percent of its electricity from renewable resources but that figure counts the 6 percent from hydroelectric generation. We currently get less than 1 percent from so-called green energy sources. The integrity of our electrical grid will be in danger when 15 percent of our electricity is generated by unreliable sources such as wind and solar.

One stated rationale for establishing REST is to reduce our dependence on foreign oil. But in the entire U.S., only about 1% of electricity is generated by burning petroleum. In Arizona, petroleum generates less than 0.1% of our electricity. Besides, America has abundant domestic sources of petroleum if only the feds would let us exploit it. Another rationale is to reduce emissions of carbon dioxide and thus forestall dread global warming.

Reasons why Arizona should eliminate the Renewable Energy Standard and Tariff:

1. Electricity generated from renewable sources is much more expensive than conventional generation. That expense is reflected in higher electricity bills. For instance, my bill from Tucson Electric Power itemizes an expense for “Renewable Energy Standard Tariff” and another charge for “DSM Surcharge.” (DSM is demand side management, more on that later). In 2011, TEP raised about $35 million from these charges. The ACC estimates that from 2010 to 2025, the surcharges for electricity from REST will cost consumers $1.2 billion more than they would have paid for conventional energy sources.

Another estimate of the economic impact of REST upon Arizona comes from a recent study by the Beacon Hill Institute at Suffolk University in Boston, MA. (See full study here.) They calculate low, medium, and high estimated impacts. Among their findings are:

The current REST rule will raise the cost of electricity by $389 million for Arizona’s electricity consumers in 2025, within a range of $239 million and $626 million.

The REST mandate will cost Arizona’s electricity consumers $1.383 billion from 2013 to 2025, within a range of $857 million and $2.221 billion.

Arizona’s electricity prices will rise by 6 percent by 2025, within a range of 3.7 percent and 9.7 percent.
These increased energy prices will hurt Arizona’s households and businesses and, in turn, inflict harm on the state economy.

In 2025, the REST would:

• Lower employment by 2,500 jobs, within a range of 1,500 jobs and 4,100 jobs.

• Reduce real disposable income by $334 million, within a range of $202 million and $543 million.

• Decrease investment in the state by $38 million, within a range of $23 million and $61 million.

•Increase the average household electricity bill by $128 per year; commercial businesses by an average of $686 per year; and industrial businesses by an average of $28,600 per year.

The cost of being politically correct is essentially a regressive tax that will cause low income households to shoulder a greater burden than higher income households because the energy costs make up a larger portion of their budget.

2. Renewable energy sources such as wind and solar are intermittent, unpredictable, and unreliable. Increased generation from unreliable sources will make our electric grid more susceptible to blackouts and brownouts. Solar and wind generation typically produces at only about 20 percent of rated generation capacity. Tucson Electric Power operates one of the largest solar PV arrays in the United States, a 5-MW system. But during five years of operation it has produced at only 19 percent of it rated capacity. Even in Arizona, clouds cause rapid fluctuation in the array’s power output.

3. Because generation from renewable energy sources is intermittent and unpredictable, these sources require backup generation which is usually by burning fossil fuels. Because the time and duration for backup generation need is unpredictable, the fossil-fuel fired backup generators cannot be run efficiently. Experience in Europe shows that backup generators actually use more fuel and produce more carbon dioxide emissions and pollutants such as sulfur dioxide than they normally would if they were run efficiently for primary generation.

A new report from the European Nuclear Energy Agency analyzed the effects erratic intermittent source generation on the electric grid: The report considers “six technologies in detail: nuclear, coal, gas, onshore wind, offshore wind and solar. It finds that the so-called dispatchable technologies – coal, gas and nuclear – have system costs of less than $3 per MWh, while the system costs for renewables can reach up to $40 per MWh for onshore wind, $45 per MWh for offshore wind and $80 per MWh for solar. The costs for renewables vary depending on the country, technology and penetration levels, with higher system costs for greater penetration of renewables.”

4. Use of renewable energy will not impact climate. By using data from the Carbon Dioxide Information Analysis Center, NOAA, and the IPCC, it is possible to estimate the temperature impact of carbon dioxide emissions. For instance, if we stopped all U.S. carbon dioxide emissions it could theoretically prevent a temperature rise of 0.08 C by 2050. If Arizona stopped all carbon dioxide emissions it could theoretically prevent a temperature rise of 0.0015 C by 2050. Will you notice? (Data from Science & Public Policy Institute report “Analysis of US and State-by-State Carbon Dioxide Emissions & Potential ‘Savings’ in Future Global Temperature & Global Sea Level Rise

Above, I mentioned DSM – demand side management. The REST program requires electric utilities reduce the amount they produce, i.e., ration electricity. “Arizona’s public utilities will be required to achieve annual energy savings of at least 22%, measured in kWh, by 2020, with the savings to increase incrementally as a percent of retail energy sales in each prior calendar year to reach that goal.” ( ACC Source).
One of the ways to achieve DSM is through use of the so-called “smart grid” and “smart meters.” Smart meters placed on your house or business will allow the electric company to monitor and control your electricity use via radio or internet-controlled commands to your meter. If you use too much air-conditioning, for instance, the electric company will be able to turn it off.
Because these systems are radio/internet controlled they are vulnerable to mischief by hackers who may decide to turn off the A/C in a shopping mall or neighborhood.

5. Finally, renewable energy is not as green as advertized. For example, many PV solar panels rely on polysilicon being manufactured in large quantities and at high quality. A byproduct of polysilicon production is silicon tetrachloride, a highly toxic substance that poses a major environmental hazard. Wherever silicon tetrachloride is dumped, the land becomes totally infertile. A major environmental cost of photovoltaic solar energy is toxic chemical pollution (arsenic, gallium, and cadmium) and energy consumption associated with the large-scale manufacture of photovoltaic panels. Wind turbines chop up birds and bats.

A Cato report found that the materials required for thermal-solar projects were 1,000 times greater than for a similarly sized fossil-fuel facility, creating substantial incremental energy consumption and industrial pollution.

The Renewable Energy Standard and Tariff should be eliminated because the mandates are bad for ratepayers, bad for the environment, and even bad for the state’s economy because of the increased electrical costs on business and the expense of government subsidies required by the mandate. The mandate fails to accomplish the stated rationales and is essentially just a politically correct eco-fad (with a little crony capitalism thrown in) that increases our electricity costs but provides no real benefit.