January 18, 2011
For several years, electric cooperatives have worked to increase our capacity to generate electricity from renewable resources. Nationally, cooperatives receive approximately 11 percent of their power from renewable resources, with about 9 percent coming from hydropower and 2 percent coming from other renewable resources. Currently, 755 co-ops – nearly 90 percent – offer renewable-energy options to member-consumers. In 2008, co-ops had 65 percent growth in their non-hydro renewable capacity.
Cooperatives use several tools to invest in renewable electricity. For example, cooperatives worked with Congress to create the Clean Renewable Energy Bonds Program – CREBs – in the Energy Policy Act of 2005. CREBs give the not-for-profit utility sector an incentive for building renewable electricity projects because most co-ops cannot use the production tax credit available to for-profit entities. Many cooperative-owned projects are underway already using CREBs and with funding provided through the American Recovery and Reinvestment Act, even more projects should be possible. Moreover, thanks to amendments to the 2007 Farm Bill, cooperatives have greater access to Rural Utilities Service funding for building or acquiring renewable generation resources.
Renewable electricity supplies aren’t uniformly available
Electric co-op member-consumers’ demand for power has grown and continues to expand at twice the national average for utilities – more than 2 percent per year because people are moving into electric co-op service areas, which means electric co-ops have to have more electricity generation to meet new consumer demand.
In some parts of the country, significant renewable resources are not readily available and cannot help meet the new capacity needs. For example, the Southeast lacks adequate wind or solar resources and there isn’t enough biomass to make up the difference. The Midwest can’t rely on consistent sunshine for solar power. Even where sun and wind are plentiful, the intermittent nature of the supply means it must be backstopped with other electricity generation, usually natural gas turbines.
To overcome the challenges of limited supply of renewable electricity in some regions, the renewable energy standard should include a transition period, funding for high-voltage transmission lines, federal siting language and 4 million megawatt-hour exemption.
Renewable energy is costlier
Electricity produced from renewable resources can be considerably more expensive than electricity produced from traditional sources. Furthermore, purchasing renewable electricity from out-of-state sources will be burdensome and result in transferring massive amounts of money from local member-consumers’ electricity bills to out-of-state producers. Even where renewable resources are plentiful, renewable electricity often costs more to generate. While new coal and natural gas-fired plants produce electricity, on average, for less than 7 cents per kilowatt-hour, generating electricity from new renewable electric plants is significantly more expensive. For example, electricity produced with biomass costs more than 9 cents per kilowatt-hour. Moreover, wind energy costs 11 cents per kilowatt-hour and solar thermal energy costs 21 cents per kilowatt-hour before taking into account generous production and investment tax credits.
The nation lacks adequate high-voltage electric transmission lines to deliver increased renewable electricity supplies
Another important factor is that electric cooperatives would often be required to pay additional transmission fees to use the grid to import renewable power from other states. Transporting significant new quantities of renewable power between the “have and have-not” regions will require significant, lengthy and costly upgrades to the cross-country transmission system. Transmission to handle the new renewable energy supplies should be in place before policies can be developed to accommodate the new demand for renewable energy. Congress is not moving quickly enough to solve the tough questions of siting, planning and cost allocation.
A recent study examined the current grid serving the eastern half of the country against goals like the renewable energy standard. The study concluded that if the “U.S. wants to get 20 percent of its electricity from renewable [resources] by 2024, … it would be necessary to build a new electricity circulatory system, including 15,000 circuit miles of extremely high voltage lines.” Such a system would cost up to $100 billion.