The Institute for Energy Research is a not-for-profit organization that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets.

About IER
September 21, 2010

Expensive Energy Mandate a Raw Deal for Taxpayers of Every Party

September 21, 2010
Print Friendly

Expensive Energy Mandate a Raw Deal for Republican, Democrat and Independent Taxpayers

Latest proposal touted for bipartisan nature doesn’t change the outcome for consumers

WASHINGTON – Over the August recess, proponents of a national renewable electricity standard (RES) went on an all-out push to convince policymakers that a federal mandate for expensive and often unreliable energy consumption was a good deal for consumers and domestic manufacturing. While they may have been successful in lobbying a handful of politicians to introduce a bipartisan RES bill, the facts surrounding such a proposal have not changed.

Currently, 29 states have renewable electricity mandates; seven more have renewable electricity “goals.” Of these states, 36 percent are on track or are meeting their mandates, while 39 percent are not. Interestingly, 19 percent of states can’t say definitively either way. In all, electricity prices are nearly 40 percent higher in states with renewable electricity mandates than in states without.

“No matter how you package a renewable electricity mandate, it’s a raw and expensive deal for the American people,” said Thomas J. Pyle, president of the market-based Institute for Energy Research. “We call it a ‘mandate’ for a reason – and it’s not because it’s so cheap, easy and reliable that its outcomes would have been delivered through natural, voluntary means without the long-arm of government reaching into the back-pocket of its citizens.”

Internationally, studies released over the past two years in Spanish, Denmark and Germany show the expensive nature of wind and solar generated electricity. In Spain for example, estimates suggest that government subsidization of expensive, renewable energy cost twice as many jobs as could have been created if those resources were diverted in a different way. The solar industry has since collapsed in Spain, a function of the central government’s decision to cut subsidies.

“According to the Department of Energy, subsidies for wind power are $23.37 per megawatt hour, compared to 44 cents for traditional coal, 25 cents for natural gas and petroleum liquids, 67 cents for hydroelectric power, and $1.59 for nuclear. Despite these generous handouts, wind remains uneconomic. For solar, the numbers are even more startling,” continued Pyle. “While we hope one day these expensive forms of energy will one day be economically viable, the fact remains that even with a generous handout from Uncle Sam, they can’t stand on their own two feet. The question must be asked: At what cost should the taxpayers be responsible for a technology that can’t pass the market test?”


September 21, 2010
Laura Henderson 202.61.2951

Print Friendly

View Comments
Back to top