Getting power from the sun and the wind is an environmental advocate's dream. Clean and renewable energy — what’s not to love? However, some state government agencies are concerned that renewable energy is cost-prohibitive. During the recession, the last thing any government official wanted to do was raise someone’s power rates, but these decisions were based solely on short-term projections.
Today, fossil fuel and natural gas are cheaper energy sources, however this may not always be the case. Unfortunately renewable energy companies are facing stiff competition from those selling cheaper and dirtier energy. An article in The New York Times, "Cost of Green Power Makes Projects Tougher Sell," looks at the difficulties some utility companies have faced while trying to expand their renewable energy use.
Michael Polsky owns Invenergy, a wind energy company that has recently gone through a financial boom. However, the recession and resulting unemployment crisis has put his company’s growth in a holding pattern. Invenergy’s deal with a Virginia-based utility company fell through because of the premium associated with wind energy.
“The ratepayers of Virginia must be protected from costs for renewable energy that are unreasonably high,” the regulators said. Wind power would have increased the monthly bill of a typical residential customer by 0.2 percent.
While I understand that millions of Americans are still unemployed and still others are trying to get back to stable ground after a period of unemployment, an increase of 0.2 percent is negligible. I pay $175 per month for electricity, based on my monthly usage average over the past 12 months. If my area were involved in the proposed renewable energy deal, I would pay an extra $0.35 per month. That, in my opinion, is not enough of an increase to be concerned about.
What is concerning, however, is that there will inevitably come a time that fossil-fuel based electricity costs rise. Perhaps renewable energy will be a less expensive option at that time, but if utility companies don’t already have contracts in place, their customers can’t take advantage of cheaper, cleaner energy.
The proposed rate increase in Virginia is negligible, but The New York Times article also discusses a failed wind power-purchase deal in Rhode Island. State residents pay about 9.5 cents per kilowatt-hour but the wind energy would cost about 24.4 cents per kilowatt-hour. This is a significant difference and in this case, wind energy is cost-prohibitive.
However, without some sort of national renewable energy legislation, renewable energy may continue to be truly cost-prohibitive in parts of the country and merely perceived to be too expensive in others.