This July 2007 report by John Farrell finds that there are indeed small cost reductions from very large scale, absentee owned renewable energy facilities. But that these are overshadowed by the significant loss in potential economic benefits from locally owned and more modestly scaled facilities. The study finds that these transportation-related costs may offset a large part of the reduced production costs from large wind farms and ethanol plants. Continue reading
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About John Farrell
John Farrell directs the Energy Self-Reliant States and Communities program at the Institute for Local Self-Reliance and he focuses on energy policy developments that best expand the benefits of local ownership and dispersed generation of renewable energy. More
This July 2007 policy brief by John Farrell is a companion piece to the Wind and Ethanol: Economies and Diseconomies of Scale report. Policymakers who promote wind energy and biofuels argue that their policies have two goals: the rapid increase in renewable energy, and the betterment of the rural and agricultural economies. Yet to date their policies have been tailored almost entirely to achieve the first goal — more, not better.
Larger wind farms and ethanol plants do produce energy at a lower unit cost, but because they are usually more distant from their ultimate customers, transportation related costs increase. Thus, the net cost reductions are modest.
Laws recently passed by the states of Washington and Montana are creating greenhouse gas emissions standards for new power plants. The two states are relying on different approaches but each has C02 reduction from future coal plants as the primary goal.
San Francisco’s Mayor has approved a local power plan that could achieve a 51 percent renewable energy portfolio by 2017. The Community Choice Aggregation (CCA) plan creates an innovative new financial structure using municipal revenue bonds (“H Bonds”) to make San Francisco energy independent and finance construction of a 360 megawatt solar power network and make investments in energy conservation efforts.
In late April 2007, a new policy was put in place in Massachusetts that requires certain developers to "quantify the greenhouse gas (GHG) emissions generated by proposed projects and identify measures to avoid, minimize, or mitigate such emissions" The policy applies to developments requiring an Environmental Impact Report (EIR) that need an air quality permit, receive state funding or generate a significant number of new vehicle trips.
London Mayor Ken Livingstone wants to further reduce the City’s greenhouse gas (GHG) emissions by making motorists take financial responsibility for their own emissions. The first approach set to begin in February 2008 is the establishment of a Low Emissions Zone. The second approach still under debate would modify the current congestion fee by establishing an Emissions Influenced Charging Structure.
On May 7th, Washington’s Governor signed a new law that effectively reverses a January 2007 Washington Supreme Court decision. The State Supreme Court ruled 5-4 that the Seattle municipal utility could not purchase carbon offsets with ratepayer money. This case originated from ratepayers that were protesting Seattle City Light’s purchases of carbon offsets to counter the utility’s greenhouse gas emissions.
In mid-May, Los Angeles’ Mayor announced a new climate change action plan that calls for the LA municipal utility to increase its renewable energy portfolio to reach 35 percent by 2020. This in combination with about 50 other proposed actions will work to reduce GHG emissions in the city of angels to 35 percent below 1990 levels by 2030.
Responding to concerns and evidence put forward by solar power companies and advocates, Governor Schwarznegger has pledged to fix a flaw in California’s Solar Initiative that has caused a reported 78 percent drop off in proposed photovoltaic installations in the state.
In early April 2007, Waverly Light and Power’s Board of Trustees approved a new residential rate structure designed to encourage energy conservation by charging customers higher rates as more electricity is used. This "inverted" rate is going into effect only during four summer months beginning July 1, 2007.
WLP, a municipally-owned utility with about 4,500 customers, experiences the highest demand for electricity during summer and is hoping that this program leads to decreased demand for power. The rate structure after July will look like this: