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Renewing the West: A National Renewable Electricity Standard Will Benefit the Western United States

 

The Union of Concerned Scientists (UCS) used the 2004 version of the EIA’s National Energy Modeling System computer model to examine the costs and benefits of increasing our use of renewable energy to 20 percent through a national renewable electricity standard—often called a renewable portfolio standard or RPS. Specifically, we evaluated a 20 percent by 2020 renewable standard proposal by Senator Jim Jeffords (I-VT) and the tax credits for renewable energy that were supported by the Senate energy bill conference committee in November 2003. We found that under these policies, the eleven Western states have the potential to meet a significant portion of their electricity needs with renewable energy while generating substantial economic and energy security benefits for the entire region.

Current Electricity Mix

The Western United States is heavily reliant on coal, natural gas, and hydropower to generate their electricity. Reliance on natural gas and hydropower makes the region vulnerable to electricity shortages and price spikes during gas supply shortages or extended periods of drought. Renewable energy sources such as solar and wind energy provide just four percent of the region’s electricity mix.

Consumer Costs and Benefits

The UCS analysis found that increased competition from renewable energy can help reduce the demand on natural gas supplies, leading to lower natural gas and electricity prices. As a result, a 20 percent national standard would reduce both natural gas and electricity costs to Western states consumers. The present value of cumulative consumer energy bill savings (not including transportation) would be $10.6 billion through 2025. All sectors of the economy in the Western states would see significant energy bill savings from increased renewable energy use. The 20 percent standard would result in $3.8 billion cumulative present value savings for industrial consumers, $4.3 billion to commercial customers, and $2.5 billion to residential customers.

Renewable Energy Development

Under a 20 percent national standard, the Western states would increase their total homegrown renewable power (not including hydro) to more than 75,000 megawatts (MW) by 2025. About half of this development would be powered by the region’s strong wind  resources, with significant contributions from a diverse mix of bioenergy, geothermal, solar energy, and landfill gas. This level of renewable development would produce enough electricity to meet the needs of more than 58 million typical homes, and provide 14 percent of the region’s total electricity use in 2010 and 35 percent in 2025.

Economic Development

Renewable energy development would bring significant economic benefits to all of the Western states. Between 2002 and 2025, a 20 percent national standard would produce

• $37.4 billion in new capital investment
  
• $3.3 billion in new property tax revenues for local communities
  
• $642 million in lease payments to farmers, ranchers, and rural landowners from wind power1 

Footnotes

  1.  Results presented are in 2002$. Cumulative results are in net present value using a 7% real discount rate.

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