Less Carbon, More Savings: The Relationship Between Renewable Energy and Your Electric Bill

"The next time someone tells you that they would support renewable energy if the costs weren't so high, share these findings with them and see if their perspective changes." -- Brennan Louw, ClearSky Advisors

Americans are paying record prices to keep the lights on, the result of a five-year trend that is, according to a recent USA Today analysis of data provided by the Bureau of Economic Analysis, "the largest sustained increase since a run-up in electricity prices during the 1970s." In 2010, American residential customers paid an average of 11.54 cents per kilowatt hour, reflecting not only higher fuel prices but also the expense of replacing old coal plants in order to meet clean air requirements mandated by the federal government.


But if we really want cleaner air, we must transition from fossil fuel electricity generation -- dirty coal power plants, for example -- to renewable energy. One of the barriers to this may be rooted in what ClearSky Advisors calls "a widely held perception that adding wind and solar PV generating capacity results in undue costs to ratepayers." According to a recent analysis by the Toronto-based renewable energy research and advisory firm, the five US states with the most installed wind and solar power experienced the lowest increase in electricity prices from 2005 to 2010.

Using data provided by the U.S. Energy Information Administration (EIA), ClearSky found that the five states with the lowest installed solar and wind capacity -- Alabama, Kentucky, Louisiana, Mississippi and South Carolina -- experienced a 4 percent annual increase in retail electricity, while the five states with the highest capacity -- California, Iowa, Minnesota, Oregon and Texas -- experienced just a 3.2 annual increase. While this does not establish causation, there is at least a correlation that demands a closer study.


In any case, a low carbon economy (LCE) will only be achieved by the implementation of renewables into the total energy mix, and in this regard, California is leading the charge. In April of last year, Governor Edmund Brown signed landmark legislation that requires the Golden State to generate a third of its electricity through renewable sources of energy. Currently, a fifth of California's power comes from renewables. The new law mandates a 33 percent renewable portion of their energy portfolio by the end of 2020.

"This bill will bring many important benefits to California, including stimulating investment in green technologies in the state, creating tens of thousands of new jobs, improving local air quality, promoting energy independence, and reducing greenhouse gas emissions," said Brown in his signing statement.


The declining cost of wind turbines is a positive sign. According to the Energy Department's "Wind Technologies Market Report," wind turbine prices decreased by as much as 33 percent between late-2008 and 2010, with an average decline of around 20 percent for orders placed last year. But Congress must extend the Production Tax Credit (PTC), a critical tax incentive for the renewable energy sector, before it expires at the end of 2012.

Whether or not a higher installed capacity of wind and solar PV causes lower increases in electric bills, America's governors should ensure the nation's LCE transition through legislation, following the lead of Governor Brown, who himself admits that the so-called "one-third renewables" standard is "really just a starting point -- a floor, not a ceiling."

"I would like to see us pursue even more far-reaching targets. With the amount of renewable resources coming on-line, and prices dropping, I think 40 percent, at reasonable cost, is well within our grasp in the near future."



Louw, Brennan. "Renewable Energy Adoption and the Increasing Cost of Electricity in the U.S." Renewable Energy World, December 15, 2011.
Cauchon, Dennis. "Household electricity bills skyrocket." USA Today, December 13, 2011.
Ibid., 1.
Office of Governor Edmund G. Brown, Jr. "Governor Brown Signs Legislation to Boost Renewable Energy." April 12, 2011.
Brown, Edmund. SBX1 2 Signing Message. April 12, 2011.
U.S Department of Energy. Energy Efficiency & Renewable Energy: 2010 Wind Technologies Market Report. June 2011.
Ibid., 5.

image: wind turbine (scelis, Wikimedia Commons)