Even though oil is not a significant source of fuel for electricity generation, recent spikes in oil prices have increased fears that affordable supplies of fossil fuels are running short, heightening interest in renewable energy in Texas. After all, it isn't likely that we will run out of sunlight, water and wind.
However, abundant supplies of renewable resources do not guarantee abundant supplies of affordable energy. Even with sizable subsidies, renewable energy is generally more expensive than energy produced from nonrenewable sources. We rely on oil, natural gas, coal and even nuclear power today because they provide us with more efficient and affordable energy than renewable alternatives. And they are likely to do so for many years to come.
Here's why. In Texas, most renewable energy comes from the wind, with west Texas the best place to find it. Unfortunately, the greatest need for energy is along I-35 and the Texas Gulf Coast. At over $1 million a mile, it is very expensive to build the infrastructure necessary to get west Texas electricity to the customers who can use it.
And years of federal subsidies for wind-generated energy have not greatly reduced this cost.
For instance, for every thousand kWh of energy produced in the late 90's, the United States government spent more than $4,700 on wind research and development. By comparison, the federal R & D investment in nuclear and coal power was only 5 cents per thousand kWh. Even with these large investments of tax dollars, wind power costs 20 to 30 percent more – and still accounts for less than 1 percent of the electricity generated in the U.S.
When the Texas Legislature deregulated the electric industry in 1999, it rightly focused its efforts on promoting competition as a way to lower prices for consumers while encouraging the growth and maintaining the reliability of power production. But in order to satisfy environmentalists and to encourage a diversified mix of electricity providers, the legislature set a goal of adding 2,000 megawatts of renewable energy to our production capacity by 2009.
Regardless of whether this mandate was a wise decision, Texas is set to reach that goal several years early, and proponents of renewable energy are using this "success" to push for increasing the goal. This would be costly and would not improve either reliability or the environment.
Because of intermittency problems, i.e., the wind isn't always blowing when the system needs electricity, wind farms need conventional power plants to supplement the power they do supply. Bringing a conventional power plant on line to supply power is not as simple as turning on a switch; therefore most "redundant" fossil fuel power stations must run, even if at reduced levels, continuously. This redundancy is expensive – comparable to an individual having to constantly maintain and idle a second car because 60 percent of the time the "primary" car didn't run.
Wind power's intermittency problems also mean that it is not as "clean" a source of energy as it is promoted. Combined with the pollutants emitted and CO2 released in the manufacture and maintenance of wind towers and their associated infrastructure, substituting wind power for fossil fuels does not improve air quality very much.
Perhaps unaware of these realities, the Texas Legislature is considering an even larger role for renewable energy. One legislative proposal would increase the goal to 5,000 megawatts, another to 10,000 megawatts. Both proposals would be costly to Texas consumers, who would pay an additional $536 million annually for the increase to 5,000 megawatts, and $1.1 billion annually for the increase to 10,000 megawatts.
Renewable energy sources may be a sound alternative to fossil fuels someday – if and when it is, companies will bring it online without any encouragement from government. In the meantime, state policy makers should approach energy the way doctors approach a patient: First, do no harm.
Bill Peacock is the Economic Freedom Policy Analyst at the Texas Public Policy Foundation, an Austin-based research institute. He may be reached at firstname.lastname@example.org. H. Sterling Burnett, Ph.D. is a Senior Fellow with the National Center for Policy Analysis in Dallas. He may be reached at email@example.com.