Today, renewable energy champions Senators Tom Udall (NM) and Ed Markey (MA) teamed up with a few others to introduce S. 1264, a bill that would establish a national renewable electricity standard (RES) that requires the nation’s largest power providers to supply at least 30 percent of their electricity from renewable energy sources by 2030. It’s a strong plan that would for the first time establish a meaningful long-term national renewable energy policy. A new UCS analysis shows that a 30 percent by 2030 national RES would benefit consumers, spur the economy, and help accelerate the nation’s transition to a low-carbon energy future.
A renewable electricity standard (RES) requires electric utilities to gradually increase the amount of renewable energy—such as wind, solar, and geothermal—in their power supplies over time. It uses a market-based approach that stimulates competition among developers and multiple technologies to provide the greatest amount of clean power for the lowest price, and an ongoing incentive to drive down costs. RES policies have been a successful driver of renewable energy at the state level for more than two decades. A strong national RES would cement this progress and ensure that the entire nation contributes to—and reaps benefits from—the clean energy transition.
Describing our analysis
To examine the economic and environmental impacts of a 30 percent by 2030 national RES on the U.S. electricity sector, we used the National Renewable Energy Laboratory’s (NREL) Regional Energy Deployment System (ReEDS) model. Our analysis compares a Business as Usual scenario, which assumes no new state or federal policies beyond those which existed at the end of 2014, with a 30 percent by 2030 national RES scenario that is modeled after the key policy provisions in S. 1264. See our technical appendix for more details on the scenarios as well as information about modifications we made to some cost and performance assumptions of energy technologies in ReEDS based on project-specific data and recent studies.
Here are the highlights of our results:
Benefits for consumers
Investing in greater amounts of renewable energy can provide important benefits for consumers. Costs of developing wind and solar facilities have fallen dramatically in recent years and these technologies are increasingly cost competitive with coal and natural gas generation in some regions of the country. In addition, renewable energy helps diversify the power mix and expands competition in the U.S. electricity market. This reduces the demand for fossil fuels, especially natural gas, which leads to lower and more stable natural gas prices.
Under the 30 percent RES scenario, natural gas prices in the power sector are 7.8 percent lower in 2030 than business as usual. Lower natural gas prices help keep electricity prices stable for the power sector and consumers, even as investments in renewable energy increase significantly.
Electricity prices are virtually unchanged from 2015-2030 between the 30 percent RES and business as usual scenarios (see Figure 1). In 2020, electricity prices are less than 0.1 percent higher under the 30 percent RES than business as usual, and in 2030, retail power prices are just 0.2 percent higher. However, the reduction in natural gas prices more than offsets the small increase in electricity prices, resulting in a net savings on combined consumer natural gas and electricity bills. In fact, cumulative consumer electricity and natural gas bills would be $25 billion (or 0.5 percent) lower from 2015-2030 under the 30 percent RES than business as usual.
Energy consumers in all sectors of the economy would benefit, but how does this translate for homeowners? Well, for a typical household that uses some 600 kilowatt-hours of electricity a month; their annual electricity bills would be $0.72 in higher in 2020, and $1.69 higher in 2030. However, for the more than 50 percent of U.S. homes that also use natural gas for heating, these slightly higher electricity bills would be more than offset by the savings they’ll see in their lower natural gas bills. Under the 30 percent RES, consumers will save $10.11 on the typical annual natural gas bill compared with business as usual in 2020, and $37.50 in 2030.
Energy diversity and economic growth
A 30 percent national RES would diversify our nation’s power supply as renewable energy generation would be 57 percent higher than business as usual by 2030, with wind and solar primarily driving growth (Figure 2). By contrast, natural gas generation is down by 27 percent in 2030, and coal generation is 6 percent less than under business as usual. Displacing natural gas by prioritizing renewable energy development can help our nation overcome the numerous and complex risks that are linked with natural gas overreliance, including persistent price volatility and rising global warming emissions.
Sustained investments in new capacity installations drive the growth in renewable energy generation. Under the 30 percent RES, total U.S. wind power capacity increases to 180 gigawatts (GW) in 2030, nearly three times today’s levels and 80 GW higher than business as usual. Solar photovoltaics also benefits from the national RES, growing to 152 GW by 2030, which is nearly 13 times over today’s levels and 27.3 GW greater than business as usual. This nationwide commitment to renewable energy development represents a significant opportunity to spur innovation and economic growth. Under the 30 percent RES, local economies would be boosted in the following ways:
- $294 billion in cumulative new capital investments from 2015-2030; $106 billion more than business as usual
- Nearly $4.3 billion in annual operation and maintenance payments in 2030
- $2.6 billion in cumulative property taxes received by local governments from 2015-2030
- $830 million in cumulative wind power land lease payments to rural landowners from 2015-2030
Fewer power sector carbon emissions
Investing more in renewable energy is a smart and cost-effective way to cut carbon dioxide (CO2) emissions in the power sector. Power plants are responsible for nearly 40 percent of the total U.S. CO2 emissions, constituting the nation’s largest source of this heat-trapping gas. And under business as usual, power plant CO2 emissions continue to grow unabated (Figure 3). But our analysis found that by implementing a 30 percent national RES, these emissions are reduced by nearly 11 percent in 2030. Cumulatively, the 30 percent RES would reduce CO2 emission from the power sector by 1.5 billion metric tons between 2015 and 2030.
The monetary value of these CO2 reductions can be calculated using the U.S. government’s estimates for the social costs of carbon (SCC). The SCC is a calculation of the dollar amount of damages to public health and the environment caused by emitting an additional metric ton of CO2 in a given year. Under the 30 percent RES, net societal benefits from reducing CO2 emissions reach $12.7 billion in 2030, and cumulative societal benefits are $40.4 billion from 2015 to 2030.
These levels of emission reductions represent good progress, but a national RES is no substitute for the comprehensive climate and energy policies needed to achieve the deep carbon reductions over the long term to meet U.S. climate goals. A previous UCS analysis showed that it is possible to cut U.S. power sector emissions in half by 2030, and that prioritizing renewable energy along with investments in energy efficiency offers the best opportunity to make these reductions quickly and affordably.
This summer the EPA will finalize its Clean Power Plan, the first-ever standards to limit carbon emissions from existing power plants, that would reduce power plant CO2 emissions by 30 percent below 2005 levels by 2030. While the Clean Power Plan can and should be strengthened before it is finalized, bolstering it with complementary policies like a national RES and stronger state RESs makes a lot of sense. In fact, the 30 percent RES would cost-effectively deliver more than one-third of emission cuts required under the Clean Power Plan by 2030. That fact, combined with the consumer and economic benefits that a strong national RES would deliver, should make S. 1264 a top priority as the Senate considers new legislation to modernize America’s energy system.
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