Guest op-ed: Ogden City’s electricity choice: The costs of clean vs polluting electricity
My colleagues and I recently published a study of about 23 Utah cities and counties, including Ogden City, pursuing 100% net-renewable electricity by 2030 via the Community Renewable Energy Act (CREA). If you read the Standard-Examiner’s coverage of our study (“While Ogden mulls clean energy transition costs, USU study provides some foreshadowing,” Nov. 5), you may have gotten the wrong impression that renewable energy is prohibitively expensive due to an out-of-date cost estimate we cited from a 2017 study. As I explain below, the price of renewable energy has continued to drop since then.
CREA is landmark legislation that allows the 23 eligible Utah cities and counties to purchase renewable energy on behalf of their residents and businesses. Should all communities and all of their electric customers decide to participate, it would represent about 37% of Utah’s electric load. CREA has been widely touted as a model for other communities across the country to pursue their own paths toward 100% net-renewable electricity.
The “net” here means that the communities commit to making sure that the equivalent of 100% of their annual electric consumption is matched by renewable electric generation on Rocky Mountain Power’s grid. Eligible sources include solar, wind, geothermal and hydroelectric power as well as energy efficiency, demand management and energy storage.
Ogden officials may reportedly pull out of the program, citing cost concerns. But before they do, I think they should consider where the economic trends are heading.
Electricity rates depend on many factors, such as load growth, the cost of fuel, how quickly power plants are depreciated and how much profit our state regulators allow the utility to earn. For these reasons, it’s impossible to accurately forecast rates into the future — for the renewable program or for standard fossil fuel rates. But some key trends give us clues as to how costs are likely to shape up by 2030.
Our study referenced some cost projections developed two years prior to the passage of CREA by Salt Lake City-based Energy Strategies LLC. The consulting firm was commissioned by Park City, Salt Lake City and Summit County in 2017 to evaluate various pathways for each of their respective communities to achieve 100% net-renewable electricity and potential rate impacts.
The cost projections considered a host of assumptions and concluded that electricity could be 9% to 14% higher over the standard fossil fuel rate by 2032. For an average Park City resident, this would translate into a $15 to $17 increase in a monthly electricity bill.
While the actual costs and benefits of renewable electricity remained unknown in 2017 and would be dependent on any number of future regulatory and electricity resource decisions, the purpose of the figures was to encourage public discourse of possible rate impacts and to demonstrate to Rocky Mountain Power that the cities were serious about pursuing clean electricity. Today, those figures are out of date.
Since 2017, wind and solar prices have continued to decline dramatically, becoming increasingly cost competitive with and, in many circumstances, less expensive than traditional fossil fuel electricity sources.
These remarkable cost reductions are evident in how Rocky Mountain Power’s parent company — PacifiCorp — assessed the cost of Utah solar in 2017 versus 2019. In 2017, for example, PacifiCorp’s 20-year plan assessed that Utah solar would cost $51.39 per megawatt-hour (MWH) (in 2016 dollars, Table 6.2, p. 111). Just two years later, PacifiCorp assessed that power from a Utah solar plant would cost only $31.31 per MWH (in 2018 dollars, Table 6.2, p. 142) – representing a 39% decrease!
Indeed, in 2019, PacifiCorp announced that closing 20 of its 24 coal-fired power plants over the next 20 years — some decades ahead of their scheduled retirements — and replacing them with wind and solar would save $300 million to $500 million. In short, Rocky Mountain Power already recognizes that renewables are increasingly economical, and many analysts expect renewable energy prices to continue to fall.
Aside from being cost competitive, another economic benefit of renewable electricity is its price stability. For wind and solar plants, the “fuel” is free and is therefore not susceptible to the price volatility and boom and bust cycles associated with fossil fuels.
By contrast, fossil fuel power plants face strong headwinds in the form of reduced subsidies and the prospect of carbon taxes. While the U.S. does not have a national carbon tax, 13 states do and several more are considering one. The forthcoming Biden administration has already signaled that it plans to cut federal subsidies for fossil fuels and will reengage the U.S. in global efforts to protect the climate. In a world that is increasingly facing up to carbon emissions, fossil fuels are a risky and expensive bet.
Consequently, by 2030, Ogden residents and businesses may well look back on CREA as having been the most fiscally responsible, price-stable and least risky electricity choice for Ogden’s businesses and residents.
Recent polling shows that Utahns want a stronger transition to cleaner energy and air. CREA represents the most significant and affordable pathway for Utahns to reduce carbon emissions to curb pollution and the worst impacts of climate change. Will Ogden residents and businesses be able to choose affordable clean energy and reduce air pollution, while creating jobs and economic development here in Utah? Only if city officials give them that choice and allow participation in CREA a chance to succeed.