New Mexico Gov. Michelle Lujan Grisham signed a law expanding the state’s renewable energy mandate, officially known as the Renewables Portfolio Standard.
The Energy Transitions Act requires 50 percent of the electricity provided by the state’s utilities to be generated by renewable sources by 2030, 80 percent by 2040, and 100 percent by 2050.
New Mexico’s renewable energy mandate, first established in 2002, originally required state utilities to generate 20 percent of their electricity from renewable sources by 2020. On March 22, New Mexico became the third state, after California and Hawaii, to enact a 100 percent renewable energy mandate.
Mandating Huge Price Increases
Studies show renewable energy mandates result in much higher electricity prices for ratepayers, fewer jobs, and reduced economic activity for the states implementing them.
Electricity prices in states with renewable energy mandates have risen twice as fast as the national average, and states with renewable mandates have electricity prices 26 percent higher than those without, according to the U.S. Energy Information Administration (EIA).
The 29 states (plus the District of Columbia) with renewable energy mandates have average retail electricity prices of 11.93 cents per kilowatt hour (cents/kwh), compared to 9.38 cents/kwh in the 21 states without renewable energy, according to the EIA.
New Mexico’s current renewable mandate cost taxpayers and ratepayers more than $192 million in 2016 and increased electricity prices by 6.18 percent, a study by Natural Resource Economics, Inc. found. The mandate caused a loss in economic activity that cost New Mexico more than $405 million and 3,000 jobs in 2016, the study found.
“From the viewpoint of the New Mexico economy, … renewable portfolio standards raise electricity costs that on balance result in a net reduction in the state’s value added and employment even after accounting for the economic stimulus that building and operating renewable energy facilities provide,” the report states.
Moving the entire country to 100 percent renewable sources would cost around $5.7 trillion, the American Action Forum reports.
‘Energy Mandates Are Disastrous’
Renewable energy mandates hurt citizens and businesses, only benefitting politically powerful special interests and the politicians they support, says Justin Haskins, a research fellow with The Heartland Institute, which publishes Environment & Climate News.
“Renewable energy mandates are disastrous for businesses and families, especially those with low incomes,” Haskins said. “No matter how many times proponents of these policies promise they will benefit everyone, history repeatedly shows all renewable energy mandates do is drive up the cost of energy and reduce economic growth, all while having no meaningful impact on climate change.
“The only winners when these policies are passed are radical environmentalists, the special-interest groups who benefit from cronyism, and the left-wing politicians they support,” Haskins said.
Wind and solar provide intermittent energy, so utilities have to build excess generators (or excess batteries) to ensure a consistent supply of electric power, says Isaac Orr, a policy fellow with the Center of the American Experiment.
“Many people think replacing coal or natural gas with wind and solar power is as easy as building one unit or megawatt (mw) of wind to replace one unit or mw of retiring coal, but this isn’t the case, because wind and solar can only generate electricity if the wind is blowing or the sun is shining,” Orr said. “Because wind and solar have low capacity factors, New Mexico will have to build nearly 8,500 mw of wind or 11,650 mw of solar to replace 5,914 mw of retiring coal and natural gas.
“Based on cost estimates from EIA’s Annual Energy Outlook 2019, it would cost $13.8 billion just to build the wind and $22.9 billion for solar,” Orr said. “The truth is it will be impossible for New Mexico to meet its electric power demand under this mandate without nuclear power or a breakthrough in carbon capture and sequestration technology.”
Timothy Benson ([email protected]) is a policy analyst with The Heartland Institute.
Tim Considine, Evaluating the Costs and Benefits of Renewable Energy Portfolio Standards, Natural Resource Economics, Inc., June 2016: https://heartland.org/wp-content/uploads/documents/costsbenefitsrenewableenergryportfolio_study_6.pdf
Timothy Benson, “Research & Commentary: Renewables Portfolio Standard Expansion Would Disproportionally Harm Low-Income New Mexicans,” The Heartland Institute, February 15, 2019: https://heartland.org/publications-resources/publications/research–commentary-renewables-portfolio-standard-expansion-would-disproportionally-harm-low-income-new-mexicans