A study released in July 2016 by the MacIver Institute for Public Policy argues Wisconsin’s renewable portfolio standards (RPS), first enacted in 1998 and requiring each electric utility in the Badger State to generate at least 10 percent of their output from renewable energy sources, have had a negative impact on state taxpayers and ratepayers, as well as on the entire state economy.
Based off data supplied by Timothy Considine, a professor of economics at the University of Wyoming who evaluated the RPS of 12 different states, the study finds Wisconsin’s RPS costs state taxpayers and ratepayers almost $500 million annually. Losses in economic activity due to the RPS are around $1 billion annually, and it will cost the state roughly 10,000 jobs in 2016.
These job losses far outweigh all jobs green-energy advocates say have been or will be created as a result of Wisconsin’s RPS. The study found although Wisconsin Wind Works – “a self-described ‘consortium of manufacturers representing the wind manufacturing supply chain in Wisconsin'” – keeps an online “wind energy-related supply chain database” that lists 7,632 “green energy” jobs, MacIver “could only verify 31 jobs were tied directly to the green energy sector.” The state’s service sector alone is expected to lose over 4,900 jobs in 2016, with “similarly large losses [annually] through 2040.”
Renewable portfolio standards – often referred to as “renewable power mandates” or “renewable energy mandates” – force expensive, heavily subsidized electricity on ratepayers and taxpayers while providing few if any net environmental benefits. The wind and solar power forced upon consumers by renewable power mandates is extremely expensive. A 2014 study by the Brookings Institution found wind power is twice as expensive as the conventional power it replaces. The same study found solar power is three times as expensive as conventional power. These higher costs impose real burdens on electricity consumers: Retail electricity prices in states with renewable power mandates are rising twice as fast as the national average.
Due to RPS, MacIver argues, average electricity costs in Wisconsin will rise by 9.6 percent in 2016, 10 percent in 2020, and by 7–9 percent after 2025. Direct costs from the state’s RPS already reached $361 million in 2016, and by 2040, those costs will be over $500 million. “The stimulus effect from RPS investment is not large enough to offset the massive negative impacts of higher electricity rates,” the study states. “On balance, net annual losses in economic value added from Wisconsin’s RPS goals are $1 billion in 2016, $1.1 billion in 2020, and remain near $1 billion annually through 2040.”
By lowering electricity prices, repealing renewable power mandates will raise living standards, stimulate long-term economic growth, and create a substantial increase in net jobs. Living standards increase because lower-cost electricity frees up money for consumers to purchase additional goods and services that improve their lives. Economic growth and net job numbers increase because the newly available money spent on additional goods and services creates additional jobs throughout the economy.
The following documents provide more information on renewable portfolio standards.
Wisconsin’s Renewable Portfolio Standards: Economic Promises Fall Short
The government push promoting renewable energy costs far more and produces far fewer benefits than promised. This study from Chris Rochester at the MacIver Institute for Public Policy argues Wisconsin’s renewable-energy mandate forces consumers to pay higher electricity costs – $474 million in 2016 alone. Rochester also predicts electric power costs paid by Wisconsinites will increase by $500 million in 2025 due to the renewable power mandate. Higher electric prices caused by the renewable-energy mandates also results in approximately $1 billion in lost economic activity in Wisconsin each year, and even with the modest growth in green-energy jobs, Wisconsin loses 7,000 to 10,000 jobs each year as a result of the costs imposed by the renewable power mandate.
Evaluating the Costs and Benefits of Renewable Portfolio Standards
This paper by Timothy J. Considine, a distinguished professor of energy economics at the School of Energy Resources and the Department of Economics and Finance at the University of Wyoming, examines the renewable portfolio standards (RPS) of 12 different states and concludes while RPS investments stimulate economic activity, the negative economic impacts associated with higher electricity prices offset the claimed economic advantages of these RPS investments.
Ten Principles of Energy Policy
In this Legislative Principles booklet, Heartland Institute President Joseph Bast identifies the ten most important energy issues facing the nation and outlines the energy policy actions that will lead to the highest, most efficient production at the lowest cost to consumers.
Ten State Solutions to Emerging Issues
This Heartland Institute booklet explores solutions to the top public policy issues facing the states in 2016 and beyond in the areas of budget and taxes, education, energy and environment, health care, and constitutional reform. The solutions identified are proven reform ideas that have garnered significant support among the states and with legislators.
Higher State Support for Green Energy Increases Energy Costs for Consumers
Heartland Institute Policy Analyst Tim Benson discusses an analysis by the Daily Caller News Foundation (DCNF), which found, “States which offered rebates, buy-back programs, tax exemptions and direct cash subsidies to green energy were 64 percent more likely to have higher than average electric bills. For every additional pro-green energy policy in a state, the average price of electricity rose by about .01 cents per kilowatt-hour.”
The Status of Renewable Electricity Mandates in the States
The Institute for Energy Research finds states with renewable electricity mandates have on average 40 percent higher electricity rates than those without such mandates.
The High Cost of Renewable-Energy Mandates
The Manhattan Institute conducted an economic analysis of the effects renewable portfolio standards (RPS) had on the average price of electricity in states with mandates compared to those without mandates. The study found residential and commercial electricity rates were significantly higher in states with RPS mandates than in states without them.
Study of the Effects on Employment of Public Aid to Renewable Energy Sources
Researchers at King Juan Carlos University in Spain found each “green job” created in Spain cost about $750,000. Electricity rates would have to be increased by 31 percent to account for the additional cost of renewables.
Study: Consumers Unwilling to Pay More for Renewable Energy
Relatively few consumers are willing to pay extra for renewable energy offered under voluntary “green” pricing programs, according to a report from the Institute for Energy Research.
The Reliability of Renewable Energy: Wind
This study from the Institute of Political Economy at Utah State University shows wind power is not efficient, cost effective, or dependable. At best, the authors say wind power may serve as a supplement to the nation’s energy portfolio. Wind power cannot serve as a source of baseload electricity or peaking power, and the study argues it is a waste of tax dollars because it is not reliable and the financial investments needed to make it reliable outweigh its limited environmental benefits.
Why is Renewable Energy So Expensive?
This brief but useful essay in a January 2014 blog post for The Economist states countries with the most renewable power generation also have the highest electricity prices, and government efforts to alleviate this problem have been unsuccessful.
Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the website of Environment & Climate News at http://news.heartland.org/energy-and-environment, The Heartland Institute’s website at http://heartland.org, and PolicyBot, Heartland’s free online research database, at www.policybot.org.
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