The latest chart from Lawrence Livermore National Laboratory shows that US residents used more energy in 2018 than the previous year. Overall energy consumption in 2018 rose to 101.2 quadrillion British Thermal Units (BTU). The prior record was 101.0 quadrillion BTU set in 2007. Energy use increased by 3.6% in 2018 from the previous year, which was also the largest annual increase in usage since 2010. Natural gas, wind, and solar saw the biggest growth in usage in 2018. Solar was up 22%, wind 7.6%, and natural gas 10.7% from the previous year. The latest energy flow chart shows that total renewable energy production doubled, including a five-fold increase in wind and a 48-fold increase in solar in the 10-year period from 2008 to 2018. Read more here.
Ohio’s HB 6 Contradicts Conservative Values
In this well written op-ed, public policy expert Sarah Hunt argues that an Ohio bill said to be about clean energy is actually a government bailout. Instead of boosting the economy while fighting pollution, this bill cost Ohio taxpayers millions with nothing in return. Read the rest at Townhall.
How Cost Competitive Are Renewable Energy Sources
Renewable energy continues to be the future fuel source of choice for power generation. The benefits of renewables – and here we’re speaking primarily of wind, solar – to deliver carbon-free electricity and address climate change and air pollution are well known. If these energy sources can compete on price as well as environmental performance, their adoption will be far quicker.
Data and market analysts suggest that the costs of renewable energy overall is dropping quickly, even as preferential tax treatment for wind and solar are scheduled to be phased out. The outlook for the price competitiveness of renewables looks bright, but is the industry at a point where it can stand on their own?
Current Cost of Wind and Solar
The past decade has seen the cost of renewable energy drop consistently in the United States, as well as in much of the rest of the world. Advances in technology have improved the efficiency of renewable generation, while improvements in the manufacturing process has helped bring down production costs. The result is more affordable renewable energy.
Looking at global electricity costs in 2018, data from the International Renewable Energy Agency (IRENA) shows how costs across different renewable technologies have dropped.
Breaking these costs down into a single number is difficult as different nations face varying costs. Additionally, soft costs, hardware costs, and installation costs all vary significantly in different countries as the following chart shows.
Breaking down costs for the United States, IRENA found that U.S. onshore wind energy cost $0.048 per kilowatt hour (kWh) in 2018 – a 66 percent drop from costs in 1984. Utility scale solar cost $0.082/kWh – a 60 percent drop from eight years earlier.
Comparing Renewable Costs With Other Generation
The reduction in costs achieved by renewables is impressive, but only so far as it makes them competitive with traditional fossil fuels.
The U.S. Energy Information Administration (EIA) tracks levelized costs and levelized avoided costs to approximate relative values. These metrics are imperfect and do not account for some unique attributes of different energy sources. Fossil fuel plants may be more expensive to operate than nuclear, but nuclear is more expensive to build. Natural gas is dispatchable, meaning these plants can be turned on and off quickly to match demand, while renewables like wind and solar rely on external factors to determine if they can generate. Some of these attributes come with their own advantages to the utility industry.
In the end, though, these levelized costs can provide a suitable starting point for comparing costs of generation sources. The EIA analysis below shows the relative affordability projected in the coming years of renewable energy sources compared with their traditional nonrenewable counterparts.
In terms of direct comparisons, the recent IRENA report details how renewable generation is becoming more of an obvious economic decision. Over 75 percent of onshore wind power and 80 percent of utility scale solar expected to be built by 2020 will provide electricity at a lower price than the cheapest generation from new coal, oil or natural gas.
Factoring in the Tax Subsidies
In the United States, renewable energy currently enjoys government support. The current federal tax credits include production tax credits (PTC) for new wind capacity (as well as geothermal and closed-loop biomass) at $24 per megawatt hour (MWh), adjusted for inflation and applicable for each of the first 10 years of plant operation. Plants that began construction by 2016 received the full PTC, with benefits declining each year construction started after that year. The PTC is scheduled to expire at the end of 2019.
The solar investment tax credit (ITC) allows for 30 percent credit for utility scale and small-scale solar projects that began construction before 2020. The tax credit for solar energy begins to phase out in 2020. The upcoming sunset dates demonstrate that policymakers have confidence that renewables are ready to stand on their own. Furthermore, future projections from EIA, IRENA, and other forecasters predict renewables to be cost competitive even accounting for these credits expiring.
Expected Renewable Price Trends Going Forward
The cost reductions for renewables are expected to continue. IRENA data predicts solar energy can drop to $0.048/kWh in 2021, while wind could drop to $0.045/kWh over the same time period. As technology advances, the cost of renewable energy will likely go even lower.
The renewable industry has already reached the point where new renewable generation is a good investment compared to new fossil generation. But the next step comes when new-build onshore wind and solar is cheaper than it costs to operate existing coal plants. The United States has already entered this ‘coal cost crossover’ according to research by Energy Innovation. Renewable generation could already replace 74 percent of U.S. coal generation with an immediate cost savings to electricity customers. A figure projected to rise to 86 percent by 2025.
Of course, all predictions are subject to future energy policies, including tax credits but also tariffs on solar technology imports. The overall trend is for renewable energy prices to continue to decline with the outcome of increased renewable energy generation.
Watertown Council Approves Electrical Aggregation Program
The Massachusetts community of Watertown on Tuesday approved the creation of a community choice aggregation (CCA) program, which gives municipalities more choice over where their electricity comes from and is used as a tool for towns to increase renewable energy sources in their electricity supply, without raising prices. More than 125 Massachusetts communities have implemented a CCA program. The program gives the town a chance to cut 16,000 tons of C02 annually. Read more.
AEE Rolls Out New Report on Market Barriers in Wholesale Electricity Markets
The Advanced Energy Economy released a new report this week detailing market rules in wholesale markets that are standing in the way of technology neutral competition on price and performance. The report, Wholesale Market Barriers to Advanced Energy – And How to Remove Them, details 21 case studies of instances where market rules are outdated, preventing new technologies from selling their services on the open market, and keeping the electricity system from being modernized for higher performance. Read more at AEE.net.
Fight for Consumer Electricity Choice in Florida Reaches State Supreme Court
The effort to bring competition to electricity markets in Florida has reached the state Supreme Court.
Earlier this year, energy choice advocates in Florida put forward a ballot initiative to overhaul the state’s electric utility industry. The proposal calls for wholesale and retail electricity markets to “be fully competitive so that electricity customers are afforded meaningful choices among a wide variety of competing electricity providers.”
The proposal, which faces fierce opposition from state leaders, business groups, and utilities, is scheduled for an August 28 hearing before the Florida Supreme Court.
The initiative itself would not directly change the structure of the state’s electric-power retail market, according to the website Ballotpedia. Instead, the amendment would declare that the state’s policy is to establish an open and competitive market for electric power; provide consumers of investor-owned utility companies with the rights to choose providers in competitive wholesale and retail markets and to produce electricity for themselves; and require the Florida State Legislature to pass laws to implement the amendment.
Despite the realization of these benefits in more than a dozen states and the District of Columbia, legacy utilities across the Sunshine State have thrown their weight behind an effort to stop the initiative. The battle is now headed to the Florida Supreme Court where comments in the case were due May 23. (The Energy Choice Coalition is a signer of comments in support of the ballot initiative.)
Energy Choice in Florida & The Path to This Point
Despite being the second-largest consumer of electricity in the United States, Florida remains the only state among the nation’s seven largest to not have customer choice in its power sector.
Advocates for energy choice tried last year to advance a constitutional amendment through the Florida Constitution Revision Commission. After the amendment failed to gain traction with the commission, advocates shifted to the public ballot process with the aim of putting the question before voters in the 2020 election.
Initiative backers need to gather 766,200 signatures by February 1. So far, they’ve collected roughly 250,010 signatures. Once on the ballot, the initiative would need to receive 60 percent approval to pass and be added to the state constitution.
The Florida Attorney General has filed a petition to the state Supreme Court arguing the initiative summary is misleading and does not comply with the state's single-subject rule meant to ensure voter initiatives are simple to understand.
Advocates for Energy Choice
Rich Blaser of Infinite Energy has been the driving force behind the ballot initiative through the political action group Citizens for Energy Choice.
The group’s stated goal is to protect customers against deceptive and unfair practices in the utility industry. According to Citizens for Energy Choice, opening Florida’s electricity sector to competition in could save consumers up to $5 billion annually.
On the other side, leaders in the Florida House and Senate have both filed comments opposing the initiative, while several other groups representing the status quo of the power industry in Florida have also sided with those trying to block the initiative with claims that the market changes are complicated and wouldn't save customers money.
House leaders argue that allowing competition in the electricity sector would have a “deleterious effect” and that the ballot initiative represents an abuse of the ballot initiative process by trying to govern through amendment rather than through legislation.
Senate leaders argue the rule would dramatically alter the functions of multiple government agencies and force voters to choose among many different choices on the ballot, violating the single-subject rule that mandates voters must know what an amendment does and how it will affect the Constitution for it to be on the ballot. Also, the Senate’s comment expressed concern about the broad effects of the initiative that would “upend the entire electric utility regulatory framework.”
Alex Patton, chairman of Citizens for Energy Choices, told the Tampa Bay Times in April that his group has “far more respect” for voters in deciding the worthiness of the initiative than the utilities that have lobbied against it.
Patton went on to compare electricity choice to other ballot measures.
“Marijuana, $15 minimum wage are all things that do very well in public opinion. This petition initiative process is the way to break that logjam.
Energy choice advocates want this issue to go before the voters to decide for themselves, but the debate comes at a time of intense partisan clashes over the issue.
The Republican-led Florida Legislature is considering legislation that would make constitutional amendments more difficult to enact, while Democrats are looking to constitutional amendments to enact popular measures because they've been unable to retain consistent control of the capital.
On the second point, proponents point out that a broad transformation is the goal. It is also worth noting that Florida already allows for customer choice for natural gas, which did not destabilize the marketplace.
The Florida proposal is designed to mirror the successful free market of Texas.
Florida’s investor-owned utilities have poured millions of dollars into candidates and political committees to retain monopoly.
“When you are powerful and entrenched, you fight against change and disruption. The monopoly utilities have proven in other states that they will bankroll almost an unlimited amount of money. We're going to have to do more with less, be smarter and make our case very clear,” Patton told the Times.
Potential Benefits to Allowing Florida Energy Choice
In the states with competitive electricity markets, increased competition has generally led to lower power prices, improved service, and innovative product offerings as the previously uncontested utilities must now do what they can to stand out amongst new rivals in order to keep customers.
Energy choice has also driven efficiency improvements, prompted energy providers to turn to greater renewable energy offerings, and even enabled community aggregation to enhance the benefits of electricity choice by grouping together large numbers of customers to drive down prices, according to the National Renewable Energy Laboratory.
While residential participation rates in states with electricity choice is somewhat low, the commercial and industrial sectors have seen a notable number of customers switch to competitive service options.
A spokesman for the retailer Walmart noted that competitive energy markets could save the company $15 million annually on energy costs in Florida alone. The Florida Restaurant and Lodging Association has been a key advocate in the fight for energy choice, noting that open markets would result in a boon to the state’s prized tourism industry and could lead to new businesses opening up across the state.
In other states that have implemented customer choice, the resulting market has been one filled with increases in efficiency, job growth, innovation, and environmental performance.
Ideally these factors will be considered when the oral arguments begin in front of the Florida Supreme Court, which are currently scheduled for August 28. If Citizens for Energy Choice is successful, Florida residents will be given the first of hopefully many choices: whether or not energy choice should be a right under the state’s constitution.
Virginia Joins Campaign For Consumer Choice
We’re happy to welcome the Virginia Energy Reform Coalition (VERC) to the campaign for more competitive retail electricity markets by ending utility’s traditional monopolies over both the production and delivery of electricity. Jim Presswood and former Virginia Attorney General Ken Cuccinelli announced the launch of VERC in Richmond on May 7.
Presswood, Executive Director of the Earth Stewardship Alliance, said modernizing reforms the coalition is calling for would “unleash a wave of innovation through Virginia’s electricity system that reduces pollution, lowers energy bills, and gives consumers more choices.”
The nonpartisan coalition will advocate for consumer choice and more competitive markets in the Commonwealth, including advocating for the creation of:
Competitive retail electricity market
Independent grid operator
Streamlined and uniform interconnection standards
Performance-based regulation
Fully integrated grids, markets, and operations
Phase out of wholesale capacity markets
“The coalition’s agenda strikes a fair-minded balance between customer empowerment and customer protection, both of which are things Virginia energy policy has needed more of for years,” said Travis Kavulla, Director of Energy Policy at R Street Institute.
Technology is hastening the transformation of the outdated traditional monopoly model of the utility that owns both the generation and delivery of electricity by giving consumers more choices and greater control over their daily energy use. While monopoly utilities have resisted the shift away from capacity markets and a government-guaranteed rate of return, the transition to more competitive retail markets - what’s known as the “Texas model” is being implemented in states across the country.
“Moving from Virginia’s 100+ year old government-regulated electricity market to a 21st-century free market will finally put families and businesses in control of their electricity buying decisions. Shrinking the control of the government-imposed electricity monopoly means more citizens’ control, more choices, more innovation and lower prices,” said Cuccinelli, Director of the Regulatory Action Center of FreedomWorks Foundation.
Watch this space for more updates about the campaign for competition and consumer choice in Virginia.