The Los Angeles Times is talking about the dark side of all the huge, utility-scaled projects shooting up across California’s desert. Experts are predicting that consumers’ utility bills could go up by 50 percent as renewable energy produced in the state boosts electricity rates 10 – 20 percent.
Last year, California Governor Jerry Brown approved legislation that requires the state to use renewables for 33 percent of its power by 2020.
It’s an ambitious goal and one of the highest renewable portfolio standards (RPS) in the country. In order to meet that goal, transmission companies are upgrading power lines around the state over the next several years. These upgrades will allow more than 22,000MW of additional clean power to be transmitted throughout California.
But all this clean energy isn’t coming free. Major companies like Google, Morgan Stanley, JPMorgan Chase, General Electric and Warren Buffett’s Berkshire Hathaway have invested in renewable energy projects, but these projects still rely on government subsidies from the federal government to get projects off the ground.
Clean energy advocates fiercely defend federal subsidies, arguing that the oil, gas and nuclear industries have received similar financial support for decades and that the renewable energy industry deserves similar support in order to even the playing field.
Daniel Poneman, deputy secretary of the U.S. Department of Energy, agrees. “We are driving clean energy projects that would otherwise not have gotten built at a commercial scale with innovative technology,” said Poneman.
Representatives from the Energy Department defend the initial high cost of renewables like solar energy, pointing out that the cost of electricity generated from conventional sources is guaranteed to rise while solar for example will move towards grid parity.
But in the mean time, subsidies for solar and other clean energy technologies are at the taxpayers’ expense. Additionally, solar developers engineer power purchase agreements (PPAs) with utilities, meaning utilities agree to purchase clean energy at a significantly higher rate for a set number of years. The clean energy initially costs two to four times as much as conventional electricity, at least in the beginning.
Some believe the practice of utilizing federal subsidies and then passing on costs to ratepayers is nothing short of a ripoff.
“What’s happening in California is a tragedy, on every front,” said Bill Powers told the Los Angeles Times. Powers is a San Diego-based electrical engineer who assists government entities, nonprofits and developers as a power plant consultant.
“It’s a huge waste of money…. I see a lot of this as just an old fashioned rip-off,” Powers added.