REPORT: Increased RE Good for Pacific Northwest

The Pacific Northwest, already on the move toward increased wind power generation, can further diversify its sources of electricity over the next two decades by embracing modest amounts of alternative energy sources without significant impact on the region’s economy, according to recent report by RAND, a non-profit think tank.

Washington, D.C. – September 13, 2002 [] While natural gas will play an increasingly important role in the future electricity supply in the region, there are some potential price and supply risks, according to the RAND report titled “Generating Electric Power in the Pacific Northwest: Implications of Alternative Technologies.” Replacing one fifth of future new electricity generated by natural gas with combinations of energy efficiency and generation by wind and solar sources has a nominal impact on the region’s overall economy, changing the region’s gross product by less than half of 1 percent over a 20-year period, researchers report. “We’re trying to put forward the message that we should look at electricity production like we look at an investment portfolio,” said Mark Bernstein, a RAND analyst and a principal author of the report. “It’s not wise to invest only in a couple stocks, and by the same token we should look at multiple sources of electricity. The Pacific Northwest can diversify its power investments, which would spread the risks and give the region more options in the future.” Funding for the report was by provided by the Pew Charitable Trust. Other authors of the report are: Christopher G. Pernin and Andrea Mejia, of RAND’s Science and Technology group; and Howard Shih, Fred Reuter and William Steger of Consad, a Pennsylvania consulting firm. Researchers conducted a series of analyses to determine the impact on the region’s economy if up to 20 percent of proposed new natural gas power plants were replaced with energy efficiency, and new wind and solar electricity generation. This scenario, researchers found, has both good and bad impacts on the region’s economy. Employment at gas-fired power plants falls and the higher-cost of alternative power slows some economic growth. But employment increases at the region’s companies that make wind-power equipment and the price of natural gas drops as demand on supplies is reduced. Overall, the impacts tend to cancel each other out. RAND researchers also examined the economic impact of removing four hydroelectric power plants along the lower Snake River, a move favored by environmental groups that want to help restore threatened wild salmon that spawn in the river. While such a move would reduce hydroelectric power and disrupt some farming and other businesses, it would not have a major impact on the region’s economy, according to the analysis. For five decades, the states of the Pacific Northwest – Washington, Oregon, Idaho and Montana – have enjoyed a cheap and plentiful supply of hydroelectric power. About 82 percent of the region’s power comes from the hydroelectric dams and just 4 percent from natural gas. The remainder of the power is provided by coal and nuclear plants. But hydroelectric supplies are now fully developed, causing some in the region to consider building natural gas-fired plants to supply future electricity needs. Forecasts predict the power balance will shift quickly. By 2010, hydroelectric sources are expected to provide 64 percent of the region’s needs versus 22 percent for natural gas, according to the report. While natural gas plants are efficient and relatively inexpensive to operate, the power will be more expensive than hydroelectric sources and will create more air pollution. Both natural gas and hydroelectric plants have risk issues – supply from hydroelectric sources can vary by up to 20 percent annually based on rainfall, and the price of natural gas is likely to remain volatile and uncertain in the future. The renewable and efficiency alternatives do cost more to build, but have low, or no future risks they don’t use fuel and have fixed operations costs, according to the RAND report. Diversifying the portfolio with a modest amount of renewables and efficiency reduces future risk of fuel price increases and hydroelectric availability and can be done with little or no impact to the economy.
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