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Yesterday’s story on whether renewable energy standards raise utility rates focused primarily on efforts by Minnesota utilities and co-ops to comply with the state’s law. And the simple answer to the question is that, as with all things involving energy, there is no simple answer to the question.
That’s clearly a disappointment to anyone looking for a straightforward formula on energy costs that squares with their political ideology. Nevertheless, the reality is that sometimes renewable power makes things more expensive, sometimes it doesn’t.
In the Midwest, when we talk about utility-scale renewable electricity, we’re talking about wind farms. But what about other parts of the country where wind isn’t as strong a resource?
Earlier this month, Public Utilities Fortnightly interviewed Brad Albert of Arizona Public Service, that state’s largest utility. APS has been investing heavily in solar power to comply with the state renewable energy mandate, but also plans to add additional solar capacity well in excess of what the law requires.
Albert says that while solar power isn’t currently cost-competitive with conventional sources, it’s getting cheaper, and APS sees this diversification as a hedge against volatile natural gas prices:
We’ve seen this marketplace evolve very rapidly, and I hesitate to make any predictions about what’s around the next corner. We’ve just been a believer in diversifying, not putting all of our eggs in one basket as this marketplace continues to evolve.
See? It’s complicated, and it’s impossible to say whether an energy source that’s cost-effective today will still be a wise investment 10 years from now.
Big utilities aren’t investing in renewable power just because it’s warm and fuzzy or the state says they have to – it’s a business decision, and anyone who can say for certain whether it will pay off will have a very bright future in the energy business.