A Reality Check on Renewable Energy

Today's congressional proposals to mandate the use of renewables have won significant public support because renewables are widely viewed as environmentally benign and largely "free." As the following facts and observations illustrate, reality is more sobering.

NGSA has collected these statements from a wide variety of studies and reports to help Congress and the public more clearly understand the costs and the risks of using renewables. While these reports have not been endorsed or sponsored by NGSA, they illustrate a broad base of concern about mandated use of renewable fuels.

Cost

On average, renewable power costs twice as much to generate as power from combined-cycle gas technology.⁴

Achieving an 11 percent power contribution from renewables would likely cost "about $203 billion (in 1995$) in subsidies between now and 2010. ³

Many forms of renewable power must be generated where the resources are located, which may be far from population centers. Connecting these generators with the electricity grid costs between $300,000 to $1 million per mile,⁴

Some suggest that problems related to intermittent production from some renewables (wind, solar) could be reduced if power could be stored, as in a battery. The most promising technology, however, solar hydrogen, costs about $600 per kilowatt hour to produce.²

The coal industry estimates the cost of generation from renewables as, at a minimum, 79 percent higher than generation from pulverized coal facilities.²

Various studies estimate that it would cost between $2 billion and $52 billion above today's competitive power costs to increase production from non-hydro renewables to four percent by 2010. ³

Subsidies

"A rough estimate of electric subsidies for renewables and conservation over the last 20 years is between $30-50 billion."⁴

Current subsidies for renewables include: 1) a 1.5 cent per kilowatt hour payment for electricity generated from wind, biomass energy crops, and some other renewables, and 2) for tax purposes, five-year depreciation for facilities rather than the 20-year depreciation available for conventionally fueled facilities.²

"States offer a wide range of incentives and programs to promote the use, purchase and manufacture of renewable energy systems for home and business. Thirty-three states offer tax incentives, eight states have set-asides or targets for renewable capacity additions, 17 states offer loans for renewable energy projects, three states require electric utilities to provide off-grid customers with cost comparison between line extension and a photovoltaic system and four states encourage or require the use of renewable energy systems in state buildings."¹²

Predictions that renewables would become cost-competitive with fossil fuels have generally proved incorrect. Today, no non-hydro renewable power source is cost-competitive with either coal or natural-gas-fired electricity. Similarly, the rapid growth that was anticipated to cut costs through economies of scale has not materialized. A 1976 Department of Energy study, for instance, projected that wind power would constitute 20 percent of U.S. electricity by 1995. The actual figure was "one-tenth of one percent--an overestimate of 20,000 percent."⁴

Energy Security

The argument that renewables are a cost-effective way to help the U.S. achieve energy security is questionable given that the argument rests on predictions that did not prove accurate. The U.S. government developed policies to encourage renewables in response to the oil crisis of the 1970s, when projections of future oil prices ranged up to $100/barrel. The cost of renewables was assumed to be less. Today, thirty years later, oil costs $17/barrel, thus negating the original cost/benefit analyses that led to support for renewables.

Renewables were also assumed to be crucial to U.S. energy security because of the perception in the 1970s that the nation was running out of natural gas. In 1978, for instance, the U.S. Geological Survey predicted that domestic natural gas resources would be exhausted in 25 years. Today, the federal government projects a 60-year natural gas supply recoverable at competitive prices. Additionally, the U.S. has upwards of a 600-year supply of natural gas that can be produced with more advanced technology.⁵ Renewables are not a substitute for imported oil, as oil is used to generate only 3 percent of electricity, and its use in this application is expected to fall.⁸

Incorrect estimates of available fuels and accompanying arguments about energy security are common. In the 19th century, for instance, the U.S. experienced widespread fear of both a "timber famine" and a whale oil shortage. ⁶

Environment

Every form of renewable energy has attracted opposition on environmental grounds.

-Biomass, geothermal, and municipal solid waste emissions in a number of cases exceed emissions from fossil fuels.

-Wind towers kill birds and damage soil.

-Some forms of solar erode fragile desert lands and cause microclimatic changes in sensitive ecologies.

-Geothermal uses large quantities of water.

Defining Renewables

So-called "renewables" are not all renewable. Geothermal resources are, for instance, exhaustible; loss rates can range from two to ten percent annually.²

Some renewables damage non-renewable resources. For instance, certain types of solar facilities and fiber farms (necessary for widespread use of biomass) cause irreparable damage to soil.

Some environmental groups omit certain "renewable" forms of energy from the definition because of the damage they produce:

-Hydropower is perceived as damaging to habitat and to some fish populations.

-While nuclear power is renewable (via breeder reactors, which can produce energy while re-enriching spent nuclear fuel rods)⁶ many omit it from the definition of renewables because they object to the military use of breeder reactors and are concerned about waste disposal.

Some renewables are rarely discussed because of high costs.

-Power production from tides, for instance, costs about 50 cents per kilowatt hour because of high construction costs.²

-Wave and ocean thermal technologies can range up to $10,000 per kilowatt hour, as technologies for these types of generation are unproved. ²

In discussions of renewables, emphasis is frequently on wind, solar, and geothermal power. However, more than 70 percent of non-hydro renewables power today comes from combustion-based sources--biomass and municipal solid waste-- that produce significant air emissions.³

References

¹ Pimentel et al., "Renewable Energy: Economic and Environmental Issues," BioScience, Sept. 1994.

² Resource Data International, "Energy Choices in a Competitive Era: The Role of Renewable and Traditional Energy Resources in America's Electric Generation Mix," April 1995, released by the Center for Energy and Economic Development (an arm of the coal industry). Available at <http://www.conx.com/ceed/elecgenmix/default.html>.

³ Center for Energy and Economic Development, response to the National Renewables Energy Laboratory's comments on Resource Data International's "Energy Choices in a Competitive Era: The Role of Renewable and Traditional Energy Resources in America's Electric Generation Mix," November 1995. Available at <http://www.conx.com/ceed/elecgenmix/default.html>.

⁴ Robert L. Bradley, Jr., "Renewable Energy -- Why Renewable Energy Is Not Cheap and Not Green," released by the National Center for Policy Analysis, Summer 1997. Available at <http://www.public-policy.org/~ncpa/studies/renew/renew.html>.

⁵ National Petroleum Council, The Potential for Natural Gas in the United States, (report to the Secretary of Energy), December 1992.

⁶ National Center for Policy Analysis, materials related to the 1997-98 national high school debate on renewables policy, Summer 1997. Available at <http://www.public-policy.org/~ncpa>.

⁷ Statistical Abstract of the United States 1993, Bureau of the Census, U.S. Department of Commerce, 1993.

⁸ Energy Information Administration, U.S. Department of Energy, Annual

Energy Outlook 1997. Available at http://www.eia.doe.gov/fueloverview.html#forecasts.

⁹ Charles Bragg, "Conservation Notes," Newsletter of the Santa Monica Bay Audubon Society, December 1995. Available at http://www.audubon.org/chapter/ca/santamonicabay/V19N4.HTM#conservation.

¹⁰ Keith Axelson, "Do the Blades Go Deasil...or Widdershins...or Does It Really Make Any Difference?" Newsletter of the Santa Monica Bay Audubon Society, May 1995. Available at <http://www.audubon.org/chapter/ca/santamonicabay/v18n8.htm#Do The Blades>.

¹¹ Herbert Inhaber, "Energy Conservation is a Waste," Wall Street Journal, July 28, 1997.

¹² Public Citizen, "State-By-State Survey Shows Renewable Energy Use Expanding Rapidly," April 18, 1995. Available at <http://www.citizen.org/CMEP/renewables/renproj.html>.

This page was last updated August 31, 1997.