House Renewables Provision Reduces Electricity Costs

November 1, 2007


Washington, D.C. — An ACEEE analysis released today of the House Energy Bill (H. R. 3221) Renewable Electricity Standard (RES) provision shows that the RES reduces electricity rates, avoids the need for conventional powerplant construction, and reduces carbon dioxide emissions. Part of these benefits stem from the RES allowance for energy efficiency to qualify for up to 27% of resource requirements. The analysis also looked at more aggressive renewable and efficiency RES targets, and examined RES policies against a climate policy framework. These scenarios showed even greater benefits from setting RES-type resource targets.


"This analysis dashes the notion that RES raises electricity rates. Our modeling shows that the RES reduces power prices, customer bills, and capacity needs in all parts of the United States," said Policy Director Bill Prindle. "Since renewable and efficiency resource standards also cut carbon emissions, they should be the cornerstones of U.S. energy and climate policy for the power sector."


ACEEE used ICF International's IPM model to calculate energy, capacity, wholesale electricity prices, carbon dioxide emissions, and other impacts of the House RES provision. IPM is widely used by federal and state agencies as well as utilities for resource and policy decision-making. The economic analysis was performed using ACEEE's DEEPER model, which estimates economy-wide job impacts.


Key findings from the analysis include:


  • The House RES would in 2030 reduce carbon dioxide (CO2) emissions by 121 million metric tons (MMT), save 22 billion kilowatt-hours (kWh) of electricity usage, create 41,000 net new jobs, and displace a total of 16,000 MW of conventional powerplant construction. This would save electricity customers $3.1 billion in 2030 and a cumulative $35 billion through 2030.

  • A more aggressive set of renewable and efficiency standards, a 15% RES coupled with a separate 15% Energy Efficiency Resource Standard (EERS), would produce even greater benefits. This "15-15" policy package would by 2030 avoid another 105,000 MW of new powerplants, reduce electricity prices by up to 0.7 cents per kWh, save another 480 billion kWh of electricity usage per year, and reduce annual CO2 emissions by another 590 MMT per year. The "15-15" policy would also create another 166,000 net new jobs in 2030 beyond the House RES.

  • In a climate policy scenario based on the Bingaman-Specter bill, we used IPM in similar fashion, finding that the House RES provision would save another 39,000 MW of powerplant capacity, 223 billion kWh, and 780 MMT of carbon emissions. The more aggressive "15-15" policy package would contribute another 98,000 MW of conventional powerplant capacity avoidance, another 450 billion kWh in energy savings, and another 260 MMT of CO2 emissions.


For electricity price impacts, see http://www.aceee.org/sector/national-policynational/reference-case.pdf for the Reference Case Forecast and http://www.aceee.org/energy/national/climate-policy.pdf for the Climate Policy Framework. A summary of the analysis results can be downloaded free from http://www.aceee.org/sector/national-policynational/RESanalysis11-1.pdf.


The House RES provision reflects the growth of state Renewable Electricity Standards, which are in place in 25 states and the District of Columbia, and Energy Efficiency Resource Standards, which similarly set long-term resource targets for utilities in some 12 or more states. The House RES provision would build on this experience, moderately expanding this policy approach through a national standard, requiring 15% of electricity sales to be provided through renewable sources by 2020. Up to 27% of the resource requirement can be met through energy efficiency.


The American Council for an Energy-Efficient Economy is an independent, nonprofit organization dedicated to advancing energy efficiency as a means of promoting economic prosperity, energy security, and environmental protection. For information about ACEEE and its programs, publications, and conferences, contact ACEEE, 529 14th Street N.W., Suite 600, Washington, D.C. 20045 or visit aceee.org.