Renewables Could Cut US South Energy Costs, Report Says

Washington, 20 December (Argus) — Future electric rates in the southern U.S. could be significantly lower if the region taps in to the broad, diversified renewable energy portfolio available to it, according to new estimates of potential renewable energy capacity, costs and incentives.

A report released last week by the Georgia Institute of Technology and Duke University suggested the right public policies could bolster renewable energy development in the South. Renewable energy currently provides about 4pc of the region's electric generation, but that could grow to 30pc by 2030 if a federal renewable electricity standard (RES) and a price on carbon were adopted, the report said. Under this scenario, greenhouse gas emissions could be cut by 55pc.

But to cultivate renewable energy in the South, federal and state subsidies must be extended, regulatory processes be streamlined and the transmission infrastructure improved, the report cautioned. The region has some of the lowest US electricity rates, so “there is resistance to developing new technologies that seem much more costly than coal-based electricity,” said Etan Gumerman of Duke University's Nicholas Institute for Environmental Policy Solutions and a co-lead researcher on the study.

The South consumes about 44pc of total US energy production, largely because of its energy-intensive industrial base, and the majority of that is generated by coal, the study said. Lawmakers in the region have argued their states lack renewable resources, saying an RES would drive up electric rates because utilities will have to purchase renewable energy from outside the region.

But the study found increased use of renewables does not drastically increase electric rates. With the right policy changes, the region's electric rates could be about 7pc lower in 2030 than what they would be without policy changes. The lower rates could save consumers $23bn/yr. The lower energy bills would come partially from customer-owned renewable energy systems displacing energy consumption, particularly in the industrial and residential sectors, the report said.

The low levelized cost of wind development could make it the preferred renewable energy source for the South. Biopower, plentiful in supply, has been seen as more cost-effective, but the study found the region has more wind capacity than previously estimated.

Many states already have hydropower capacity on line — notably Alabama, Arkansas and Tennessee — and there is significant potential for growth. Small conventional and low-power hydro resources could supply up to 5GW of new power, which the report says would eliminate the need for up to five new coal or nuclear plants.

Utility-scale solar projects are lagging across the region — they are not expected to meet even 1pc of electricity generation by 2030. But with Recovery Act funding, the region's solar capacity will grow by 200pc to 120MW. And distributed solar, such as solar water heating, could attribute for 6.3pc of the states' generation by 2030, the report said.