In 2002, New Mexico implemented a renewable portfolio standard (RPS) requiring investor-owned utilities to procure from renewable sources 10 percent of the electricity they sell. Utilities were supposed to have met that mandate by 2011.
In 2007, then-Gov. Bill Richardson signed Senate Bill 418, which doubled the mandate to 20 percent by 2020 and added a 15 percent benchmark to be met by 2015. According to the U.S. Energy Information Administration, renewable energy supplied 7.8% of the electricity generated in the state in 2013.
New Mexico’s RPS includes a “diversity” requirement, mandating within the total renewable energy requirements, at least 30 percent must come from wind power, at least 20 percent from solar power, at least 5 percent from other sources (such as biomass and hydroelectric), and at least 1.5 percent from distributed generation. New Mexico’s RPS is among the most stringent in the nation.
According to a February 2011 joint report by the Rio Grande Foundation and American Tradition Institute, New Mexico’s electricity prices will be 6 percent to 32 percent higher by 2020 (on average, 20 percent higher) due to the RPS. It will lead to an estimated average loss of 2,859 jobs and cost families an average of $160 each per year.
New Mexico’s RPS will be less effective at reducing carbon dioxide emissions than the RPS mandates of many other states. New Mexico’s mandate emphasizes wind and solar power, which the Brookings Institution finds to be the two least cost-effective low-CO2 emissions technologies available.
New Mexico’s energy consumption and energy intensity are both higher than the national median, led by the state’s industrial and transportation sectors. Rolling back the New Mexico RPS would help attract business investment, create jobs, and make energy more affordable for consumers.
If the state’s political environment demands lower CO2 emissions, legislators should at least repeal the diversity requirement, which stifles competition and is heavily biased in favor of wind and solar power, which produce far fewer benefits than other low-emission technologies, such as hydroelectric, nuclear, and gas combined cycle technologies.
The following documents provide additional information about renewable energy and the policies that promote it.
Ten Principles of Energy Policy
http://heartland.org/policy-documents/ten-principles-energy-policy
Heartland Institute President Joseph Bast outlines the ten most important principles for policymakers confronting energy issues, providing guidance to help withstand ongoing changes in markets, technology, and policies adopted in other states, supported by a thorough bibliography.
The Economic Impact of New Mexico’s Renewable Portfolio Standard
http://heartland.org/policy-documents/economic-impact-new-mexicos-renewable-portfolio-standard
This February 2011 report by the Beacon Hill Institute, commissioned by the American Tradition Institute and the Rio Grande Foundation, estimates New Mexico’s Renewable Portfolio Standard will raise electricity prices by 20 percent, cost an average of 2,859 jobs, and cost families an average of $160 per year.
The Status of Renewable Electricity Mandates in the States
http://heartland.org/sites/all/modules/custom/heartland_migration/files/pdfs/29330.pdf
The Institute for Energy Research analyzed the practical effects of renewable electricity mandates and found states with mandates have on average 40 percent higher electricity rates than those without such mandates.
Study of the Effects on Employment of Public Aid to Renewable Energy Sources
http://heartland.org/policy-documents/study-effects-employment-public-aid-renewable-energy-sources
Researchers at King Juan Carlos University in Spain found each “green job” created in Spain cost about $750,000. Electricity rates would have to be increased by 31 percent to account for the additional costs of renewables.
How Less Became More: Wind, Power and Unintended Consequences in the Colorado Energy Market
http://heartland.org/policy-documents/how-less-became-more-wind-power-and-unintended-consequences-colorado-energy-marke-0
Bentek Energy, LLC, a leading energy markets information company, evaluates the “must take” provisions of Colorado’s Renewable Portfolio Standard, which forces coal plants to accommodate the intermittency of wind power by “cycling” generating units. The report finds the requirement results in inefficiency and produces significantly greater emissions.
Wind Farms vs. Wildlife
http://heartland.org/policy-documents/wind-farms-vs-wildlife
Clive Hambler, lecturer in biological and human sciences at Oxford University and a trained zoologist specializing in species extinction, describes the extent to which wind turbines kill wildlife.
Five Things CEOs Are Worried About in 2014
http://blogs.wsj.com/five-things/2014/01/03/5-things-ceos-are-worried-about-in-2014/
A Wall Street Journal article on the five things CEOs are worried about that are outside their control in 2014 lists “Keeping Energy Costs Under Control” as number one. The information was polled from the Wall Street Journal CEO Council, a group of 33 CEOs, some from the nation’s biggest companies.
Why Is Renewable Energy So Expensive?
http://www.economist.com/blogs/economist-explains/2014/01/economist-explains-0
A brief but useful essay in a January 2014 blog post for The Economist states countries with the most renewable power generation also have the highest electricity prices, and government efforts to abate this problem have been unsuccessful. The author notes high electricity prices may force many manufacturers to set up in less-“green” countries, which “might mean citizens end up consuming more carbon, through imports.” Such unintended consequences make the construction of more gas-fired power stations a superior strategy for cutting greenhouse gas emissions without raising electricity prices, the author concludes.
A Global Transition to Renewable Energy Will Take Many Decades
http://www.scientificamerican.com/article.cfm?id=a-global-transition-to-renewable-energy-will-take-many-decades
Writing for Scientific American in January 2014, scientist and policy analyst Vaclav Smil notes, “[In the] U.S. and around the world, each widespread transition from one dominant fuel to another has taken 50 to 60 years.” Smil notes there are plenty of reasons to want to reduce dependence on fossil fuels, beyond greenhouse gas emissions, but current environmental policies “have been dismal.” Smil suggests the best way to foster an energy transition is to “avoid picking energy winners,” because such policies distort all-important investment and price signals and impede economic progress.
IER Expert Testifies on Ohio’s Alternative Energy Standard
http://heartland.org/policy-documents/ier-expert-testifies-ohios-alternative-energy-standard
Testimony prepared by Travis Fisher, an economist at the Institute for Energy Research, examines the natural physical limitations of wind and solar power, arguing they might not be the technologies of the future simply because of a lack of scalability rather than a lack of subsidies.
How Wind and Solar Power Are Polluting the Commons
http://seekingalpha.com/article/938671-how-wind-and-solar-power-are-polluting-the-commons
Private lawyer and accountant John Petersen states our nation’s electric grid is an essential commons no less important to an industrial society than our air or water. Regarding renewable power sources, he writes, “the electric current they generate is inherently unreliable and intermittent, which makes it fundamentally destabilizing to the grid. That introduction of massive intermittency into a system that requires absolute stability is, by definition, pollution.”
Why the Best Path to a Low-Carbon Future Is Not Wind or Solar Power
http://www.brookings.edu/blogs/planetpolicy/posts/2014/05/20-low-carbon-wind-solar-power-frank
Charles Frank, a nonresident senior fellow at the Brookings Institution, reports on his research on low-CO2 energy alternatives. Frank finds natural gas combined cycle is the cheapest low-CO2 energy alternative, even cheaper per kWh than power from coal or gas simple cycle plants. The most expensive alternatives are solar and wind. Frank says gas combined cycle, nuclear, and hydroelectric are the most cost-effective options for transitioning to a low-CO2 future.
Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the Environment & Climate News Web site at http://news.heartland.org/energy-and-environment, The Heartland Institute’s Web site at http://heartland.org, and PolicyBot, Heartland’s free online research database, at www.policybot.org.
The Heartland Institute can send an expert to your state to testify or brief your caucus; host an event in your state; or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact Logan Pike, Heartland’s state government relations manager, at [email protected] or 312/377-4000.
Taylor Smith was a policy analyst for The Heartland Institute specializing in energy, climate, and environmental regulation. He is coauthor with James M.
