NCPA - National Center for Policy Analysis


May 27, 2010

The national renewable electricity standard (RES) mandates that a certain percentage of our nation's electricity production come from wind, solar, biomass and other renewable energies.   A new Heritage Foundation study analyzing the costs of an RES finds that a national mandate for pricier, less reliable electricity would be harmful to American families, businesses and the economy. 

For example: 

  • The Heritage analysis models the effects of an RES that starts at 3 percent for 2012 and rises by 1.5 percent per year.
  • This profile mandates a minimum of 15 percent renewable electricity by 2020, a minimum of 22.5 percent by 2025, and a minimum of 37.5 percent by 2035.  

Some studies have attempted to model the economic effects of an RES and found only marginal price increases, but they fail to take into account the true cost of renewable sources.   The Heritage Foundation's Center for Data Analysis projects that an RES would: 

  • Raise electricity prices by 36 percent for households and 60 percent for industry.
  • Cut gross domestic product by $5.2 trillion between 2012 and 2035.
  • Cut national income by $2,400 per year for a family of four.
  • Reduce employment by more than 1,000,000 jobs.
  • Add more than $10,000 to a family of four's share of the national debt by 2035. 

The reality is that if electricity created by wind and other renewables were cost competitive, consumers would use more of it without a federal law to force consumption.   Recent experience with the mandate for renewable fuels like corn ethanol also suggests significant cost increases as well as technical shortcomings, says Heritage. 

Source: Nicolas Loris, "Renewable Energy: Free as the Wind?" Heritage Foundation, May 6, 2010. 

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