Tim Wohlgemut's Comments

December 16, 2011

Renewable Energy Adoption and the Increasing Cost of Electricity in the U.S.

Dear Tom,
Aside from your slight against our company - you raise an important point, one that we took pains to make clear in the article, that further analysis would be necessary to make significant conclusions from this data. But the questions raised by the data are important regardless.
In the words of American statistician Edward Tufte, "Correlation is not causation - but it sure is a hint." Correlation raises further questions. In this case, it challenges the simplistic assumption that renewables must equal a higher electricity bill.
So if, as the article above demonstrates, those states that deployed the most renewables over the past 5 years (a period that was chosen for our analyses because nearly 80% of US grid tied solar PV and wind capacity was added during that time) experienced less onerous price increases than those that did not, we need to ask "why?"
- Could it be because natural gas prices decreased? There may be a correlation there as well. However, as a percentage of their overall electricity system, the bottom 5 states used almost as much natural gas in 2010 as the top 5 states (average of 25% vs 27%). This begs the question, why didn't renewable energy cause an increase?
- Could it be that states with both natural gas and renewables are able to best realize cost savings? Possibly.
- Could it be that renewables (combined with natural gas, perhaps) provide advantages to an electricity system that allow for cost savings that are not visible if you simply consider the upfront generation costs?
- Could there be another reason (such as subsidies not borne by ratepayers)?
All of these possibilities are well worth considering and deserving of further research. But what is clear is that some states have been able to integrate renewables into their mix at high levels (up to 15% in some cases) without experiencing exorbitant electricity rate hikes.
Tim Wohlgemut
Co-Founder, ClearSky Advisors

Tim Wohlgemut

Tim Wohlgemut

Tim Wohlgemut is the Co-Founder of ClearSky Advisors, a research and advisory firm focused on renewable energy. Tim has advised companies, investors, and governments on their renewable energy strategy and regularly publishes related research....

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