A new study out of Canada’s Fraser Institute shows the big price tag that can accompany a little renewable energy. Looking at Ontario’s experience with renewable energy standards and feed-in tariffs, Gerry Angevine and colleagues at the Fraser Institute show how much renewables can crank up the cost of power:
It is estimated that, at the time of writing, contracts for over 140 terawatt hours (TW-hs) of electricity from renewable energy sources had been agreed to under the Ontario program, at a total cost of $28.4 billion (nominal dollars)—implying a weighted average electricity price of 20.31 ¢/kW-h. If the same amount of electricity had been contracted for at a rate of 7.3 ¢/kW-h (the average competitive residential rate as of December (2010), the price tag for the 140 TW-hs of electricity would have been approximately $10.2 billion. This implies that Ontario energy users could be burdened with an extra cost of at least $18 billion over the next 20 years. We estimate that residential electricity customers alone will be faced with an average annual increase in their electricity bill of $285 million (nominal dollars). Results from a Statistics Canada Input-Output (I/O) Model simulation indicate that a drop in discretionary personal spending of that magnitude could lead to a loss of close to 41,000 full time equivalent (FTE) jobs across the country over a 20-year period.
Instead of mandating the deployment of renewable power generation technologies, a market-based approach is required to determine the most efficient mix of technologies for electric generation. This will help to ensure that electricity consumers are able to enjoy electricity prices that are generally as low as possible and foster innovation, economic growth, and prosperity.
Green energy: doubling electricity rates and killing jobs in an economy near you.