Green New Deal’s 100 pct renewable energy goal could cost $424 bln each year: report
A “Green New Deal” (GND) plan that includes a 100 percent renewable energy target to help combat climate change could cost nearly $424 billion annually, according to an analysis by the American Action Forum, more than the entire retail cost of electricity in the United States in 2016.
U.S. Rep. Alexandria Ocasio-Cortez (D-NY) and U.S. Sen. Ed Markey (D-MA) are expected to unveil legislation laying out the Green New Deal in the coming days. So far there are few details about how such a proposal would be carried out.
Philip Rossetti, director of energy at the American Action Forum (AAF), researched what the bill would cost, both in capital expenditures and annual operation and maintenance (O&M), and estimates the price of implementing the GND’s energy target would come to $423.9 billion each year. The GND would move beyond the energy sector to include a job guarantee program, but Rossetti’s research examined only the environmental policy that a 100 percent renewable energy mandate would require.
Rossetti was working off the assumption that capital costs would be paid off eventually, likely in around 20 years, and that share of the expenses would be around $285 billion. The capital costs would include installing solar farms, wind farms, hydroelectricity and other new plants, and storage, among other things. The annual O&M costs would total around $138 billion.
“The Energy Information Administration publishes these estimates of what the O&M costs are for a certain amount of capacity. Then it’s just extrapolating that to how much capacity we would need,” said Rossetti of AAF, a nonprofit organization that leans center-right on economic and fiscal policy issues.
The costs he looked at would cover enough renewable electricity capacity and storage capacity to meet peak electricity in the United States every day, adding in a reserve margin. The current electricity generating capacity in the United States is 1,085 gigawatts (GW), but the AAF report is expecting an additional required 2,979 GW between solar, wind, hydroelectric, and storage needed by 2030.
One of the largest challenges Rossetti believes the industry will face when implementing the GND is the high cost of lithium-ion storage.
The study cites Lazard’s estimates of storage analysis in his research: “Lazard’s analysis estimates that the cost of wholesale, levelized cost of lithium-ion storage (the total lifetime cost relative to energy saved) would be between $204-298 per megawatt hour,” Rossetti said. “For perspective, the levelized cost of a natural gas power plant is $48 per megawatt hour, meaning using battery storage rather than a dispatchable natural gas power plant could cost consumers 4-6 times as much.”
Rossetti also cites another study from Lappeenranta University of Technology in Finland and the nonprofit Energy Watch Group, which found the mandate much more affordable, but only because they assumed a 90 percent decrease in lithium-ion storage price by 2050.
And although home storage will likely become more prevalent by 2050, grid-scale storage would have to provide the majority of the nation’s storage needs.
“There would have to be a lot more of the grid scale storage that we see. When you think about batteries for homes, they’re a lot less efficient in terms of the cost performance for the amount of electricity you generate than grid scale,” Rossetti explained. “So, it’s hard to see a lot of people being able to afford the complete solar panel on the roof and battery storage in their home.”
Although the GND mandates 100 percent renewable energy, there is not yet a deadline for the goal. Draft text of proposed legislation that was released by Ocasio-Cortez calls for a plan to be implemented by Jan. 1, 2020 and executed within 10 years.
By 2030 or 2050, technology will likely have evolved to lower some of the costs of renewables, and many policies are relying on that possibility. However, Rossetti believes enhanced technology has the potential to get the industry closer to the goals.
“New technologies are really the key to changing this outlook, because all these numbers are just looking at what’s available today. We have a certain cost for solar, you have a certain cost for wind, you have a certain cost for storage,” Rossetti said. “Getting a huge amount of renewables on the grid, you need to fix that dispatch ability and storage is the only solution. Innovation on the storage front is, I think, a potential game changer. I don’t think we’re quite there yet, but I think we have a lot of promising opportunities with liquid batteries and all these other new technologies.”
He added, “You need to focus on the innovation if you want to change the outlook of the costs. That’s one of the problems with having a potential mandate is that, if you just say, ‘We’re going to require everyone has to buy solar panels, or wind farms, or whatever,’ then you are undercutting the incentive to actually have a market investment and a new technology. Because people are getting that secured market share regardless.”
AAF’s research determined that a move to 100 percent renewables is not impossible, but is a costly venture and likely not the best way to reach policy goals to lower greenhouse gas emissions. Rossetti believes that climate policy should look at the advantages of customer choice and markets.
“In terms of, ‘Do we need a massive spending package to increase clean energy as a nation? I would say probably not,” he said. “I don’t think that that’s the best approach. What I do think we need is a policy that’s more focused on our environmental and climate objectives and weighs the cost of it, and compares that cost to alternative policies.”
