States that invest in renewable energy are seeing strong returns, while those that cling to older methods of generating electricity are falling behind. As the price of renewable energy continues to plummet, this pattern is only likely to perpetuate.
California offers an excellent example of how renewable energy can yield economic benefits. California leads the nation in terms of the sheer amount of installed and operating renewable energy, according to the National Renewable Energy Laboratory’s 2013 Renewable Energy Data Book. Bloomberg Business now reports that “California’s bet on green energy is paying off, with clean technology companies creating more jobs and investing more money than competitors in any other state.” In fact, stocks in California’s clean energy businesses are projected to grow more than twice as quickly as those in other states. Moreover, California’s clean energy job market has grown more than four times as quickly as in other states. Bloomberg Business ties both trends directly to California’s strong policies supporting renewable energy.
Hopefully, the strong economic returns from renewable energy will bolster the political prospects of California increasing its Renewable Portfolio Standard. Governor Jerry Brown announced his intention to have half of the state’s energy come from renewable resources by 2050 in his recent inaugural address. Now, California Assemblyman Eduardo Garcia (D-Coachella) has proposed a “Clean Energy Act” that would turn Governor Brown’s proposal into law. Interestingly, the proposed Clean Energy Act would focus on non-intermittent renewable resources—which can generate electricity 24 hours a day—such as concentrated solar power or geothermal power. Additionally, the proposed law may increase the market for energy storage—another field in which California is already a leader, with the nation’s first energy storage procurement mandate for utilities. These new requirements for renewable energy and energy storage will poise California to continue to lead the nation toward a future powered by renewable energy, and will likely yield great economic benefits for the Golden State along the way.
Meanwhile, states that continue to rely on older energy generation technologies are not seeing the kinds of economic benefits that California has seen. I reported recently that states that have no renewable energy requirements face average increases in electricity rates comparable to states with Renewable Portfolio Standards—and that some rate increases from upgrading fossil fuel-fired power plants outstrip the rate impacts from renewables.
Recent news from Mississippi and Georgia confirms that clinging to fossil fuels and nuclear power is incredibly costly. The Southern Company, a utility that serves several southern states, has been working on a massive new coal-fired power plant in Kemper County, Mississippi since 2010. That plant is still under construction and has cost more than twice as much as originally projected. The current price tag is a whopping $6.1 billion. Even when the plant was slated to cost only $4.7 billion in September 2013, the plant would still have been “one of the most expensive power plants ever built for the amount of electricity it will produce,” according to a Sierra Club spokesman quoted in Bloomberg Business. The result has been rate increases of 15%, roughly 5 times the national average. This plant was supposed to prove that “clean coal” was affordable and realistic; what it has actually proven is that clinging to coal costs ratepayers far more than investing in renewables.
A similar lesson comes from Georgia Power’s $14 billion Vogtle nuclear power plant. That plant is also over-budget and overdue. In fact, according to the Southern Alliance for Clean Energy (SACE), the project is “more than three years delayed and the total project costs are at least $4 billion over-budget.” SACE is currently engaged in a legal battle with Georgia Power over how much of the project’s costs should be borne by ratepayers, and when. Georgia law allows the utility to recover costs and earn profit even before the power plant comes online, meaning that Georgia’s citizens are paying the tab before they see any power. In effect, as SACE argues, Georgia’s ratepayers “were forced to pay early for this multibillion-dollar project and are carrying all the risk, while the company’s shareholders are getting all the profit.” The effect on rates has been similar to the effect from the Kemper coal plant, with rates for Georgia Power’s customers rising between 6 and 12 percent—between twice and four times the national average.
In stark contrast to the delays and cost overruns associated with coal and nuclear power in Mississippi and Georgia, those states that have enacted Renewable Portfolio Standards are overwhelmingly on track to meet their targets on time and with much less significant rate impacts, less than 3% in the vast majority of states. The lesson seems clear. Clinging to outmoded energy sources costs ratepayers, but investments in renewable energy pay off.