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Renewable energy saves Minnesota Power customers money

April 10, 2017
Duluth News Tribune

By Annie Levenson-Falk

The News Tribune’s March 29 editorial, “Our View: Don’t rush renewables goal,” incorrectly implied that renewable energy is more expensive for Minnesota Power than other energy options. In fact, wind is the cheapest source of power generation — and when utilities get more power from renewables, customers see savings.

As the editorial stated, 25 percent of Minnesota Power’s electricity came from renewable sources in 2015, a full 10 years ahead of the state requirement of 25 percent by 2025. Minnesota overall is projected to be at 37 percent renewable electricity by 2030.

The reason we’re far exceeding the state goal is that renewables are often the cheapest new source of electricity. According to Lazard, a leading financial advisory and asset-management firm, Midwest wind energy cost on average $32 to $51 per megawatt hour in 2016. That compared with $48 to $78 for the least-expensive natural-gas generation. And those prices do not include the federal tax credit for wind, which brings down the cost even further. (That tax credit is reasonably being phased out now.)

According to Minnesota Power’s calculations, meeting the state’s renewable energy standard saved .34 cents per kilowatt hour, trimming more than $2.50 a month off the average customer’s bill. The utility reported that the biggest reasons electric bills increased were the costs of purchased energy and fuel, which renewable generation doesn’t need.

To see what happens when utilities get a lot more renewable power, we can look to our neighbor to the south. According to a report released in March, Iowa’s electricity prices are low because so much of its electricity is generated from wind: 36 percent of the electricity generated last year. Adjusted for inflation, the average cost of electricity in Iowa, per-kilowatt-hour, is now lower now that it was 20 years ago.

In addition, investing too heavily in natural gas — the most common alternative being constructed today — would open consumers up to an enormous risk. Wind, solar, and hydropower don’t require any fuels, so the price is locked in from day one. The cost to the utility to purchase natural gas, on the other hand, is passed directly through to customers. Natural-gas prices are low today, but prices are expected to rise, and natural gas markets are notoriously hard to predict. If gas prices spike, we will see the impact directly on our bills. It is in consumers’ interests to limit our exposure to that risk by not depending on natural-gas power more than is necessary.

It’s true that wind and solar power are intermittent resources, only available when the wind is blowing or the sun is shining. However, the electric grid can handle far greater amounts of wind and solar power without worrying about reliability. Through a combination of improvements in weather forecasting, engineering advancements, and utility programs that help customers shift their electricity usage, the grid has become much more flexible.

This spring, Bruce Rew, the engineer in charge of maintaining the reliability of the electric grid for much of the western Midwest, told Bloomberg News: “Ten years ago we thought hitting even a 25 percent wind-penetration level would be extremely challenging, and any more than that would pose serious threats to reliability. Now, we have the ability to reliably manage greater than 50 percent. It’s not even our ceiling.”

There’s no question: We are transitioning more and more to renewable electricity. It’s the cheapest and cleanest option — and it’s in customers’ best interest for Minnesota Power to increase its use of renewable energy.

 

Annie Levenson-Falk

Annie Levenson-Falk

Annie Levenson-Falk is executive director of the St. Paul-based Citizens Utility Board of Minnesota (cubminnesota.org), an advocate for residential and small-business utility consumers.

 

 

Author: Annie Levenson-Falk

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