Wind power affects US electricity prices “less than one per cent”

US utilities have rubbished claims that adding renewable energy generation to their portfolios will cause domestic energy bills to “skyrocket”, revealing that a series of studies have shown that in most cases renewable energy projects result in price increases of just a fraction of a per cent.

A report by the Minnesota Free Market Institute (PDF) said last month that the state’s renewable electricity standard, which required utilities to generate seven per cent of electricity from renewables in 2010, rising to 12 per cent by 2012, and up to 25 per cent in 2025, would see rates increase by as much as 37 per cent by 2025.

But the Midwest Energy News points out that these predictions run entirely contrary to a slew of research published over the past few years, as well as the opinion of utility companies themselves.

A 2008 study by Lawrence Berkeley National Laboratory (PDF) on the impact of a dozen states’ renewable energy policies found that the cost of electricity rose by over one per cent in just two states, with most cases seeing rises of below one per cent.

Research into a 25 per cent nationwide renewable electricity standard was conducted a year later by the US Energy Information Administration, finding that, while there were variations between states, there were no projected impacts on prices until 2020, with a less than three per cent impact by 2025.

Moreover, by 2030, it predicted little difference in energy rates regardless of whether a national renewables mandate is adopted or not.

US utilities readily identify with this trend. A spokesman for Xcel Energy told the Midwest Energy News that he expected a per kilowatt-hour increase of just $0.003 by 2025 as a result of renewable energy programmes.

The cost of additional wind power in particular is competitive with traditional power sources, he said, adding that diversifying power sources had not only reduced the company’s environmental regulatory risk, but protected customers against rate rises sparked by rising natural gas prices.

“Wind power can be a very effective hedge against the volatile nature of natural gas prices, even taking into account wind’s intermittent nature,” he said.

In the worst case identified, Great River Energy of Minnesota and Wisconsin said that customer bills had gone up just 1.6 per cent, or about $18 a year, for an average homeowner, owing to wind energy purchases.

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