The High Price of Renewables

Wind power is more expensive than fossil fuels—so in many states, regulators won"t allow utilities to purchase clean energy.

Renewable energies like wind and solar power have a tough time competing when fossil fuels like oil and natural gas fall in price. A new article in the New York Times series "Beyond Fossil Fuels" finds that many states are rejecting renewable power in an effort to protect ratepayers from cost increases. They write: "Deals to buy renewable power have been scuttled or slowed in states including Florida, Idaho and Kentucky as well as Virginia. By the end of the third quarter, year-to-date installations of new wind power dropped 72 percent from 2009 levels, according to the American Wind Energy Association, a trade group."

In general, regulators are seeking to protect consumers—but their insistence on cost over sustainability has struck many, from renewable energy companies to utility companies, as short-sighted. In Rhode Island, for example, the state Public Utilities Commission rejected a contract for the largest utility to purchase power from what would have been the nation’s first offshore wind farm. The problem was that the 24.4 cents per kilowatt-hour price was nearly three times what the National Grid pays for fossil fuel energy. When rate increases and markups are taken into account, purchasing the wind power would have cost "hundreds of millions of dollars in additional costs to the state’s 480,000 ratepayers over two decades," according to an article in the Providence Journal.

With elevated costs preventing states from supporting clean energy development, the U.S. could fall behind the rest of the world in developing advanced solar cell and wind turbine technology. Makers of renewable energy systems, the Times reports, "argue that a national energy policy is needed to guarantee them a market that will allow their industry to develop."

SOURCES: The New York Times; The Providence Journal.