Monday, August 22, 2016

Clean Air versus Efficiency Charges. Clean Air Wins.

The Clean Energy Standard

New York State recently enacted the Clean Energy Standard, which has supportive subsidies for clean energy producers, including nuclear energy.

Yes, this was a huge change. The number of people who welcomed it was also huge.  You can see pictures of the rally in Albany at this blog post at Environmental Progress: Big New York Victory Shows How Far Nuclear Still Has to Go.  You can see Al Gore and Governor Cuomo congratulating the state in this Twitter stream, which was Storified by Nuclear Energy Institute.

August 1 Albany CES Rally
Michael Shellenberger at center
photograph by Stephen Whiting

 The Price of the Clean Energy Standard

In the Environmental Progress blog post, there's a graph of the amount of the clean energy subsidy for nuclear and renewables.

The current subsidy for New York state renewables is 4.6 cents per kWh.  This is the federal 2.2 cents  per kWh subsidy (the production tax credit), plus the Tier 10 subsidy by New York State of approximately 2.45 cents per kWh.   Over the various years, the New York Tier subsidy has varied between 1.5 and 3.5 cents per kWh, with most of the recent year New York subsidies being close to the current 2.45 cent subsidy.  These subsidies are set by an auction process.

The Clean Energy Standard price supports for nuclear are set depending on the price on the grid and the credit given by the Greenhouse Gas initiative, and so forth.    For Indian Point, the subsidy is zero. It sells into a high-price grid.  For the upstate plants, the subsidy is currently 1.7 cents per kWh.  If the price on the grid goes up, the nuclear subsidies go down.  In contrast, the 4.6 cents per kWh for renewables continue, no matter what the price on the grid might be.

The Price of Efficiency

A question I often get asked is:  why can't we just fund efficiency? Wouldn't that be better?

Well, no.  I will leave out the problem that you can only push efficiency so far, before we go back to candlelight.  Instead, I will look at Vermont's full-speed-ahead attempt to support efficiency.

Vermont has an entire agency, Efficiency Vermont, to promote efficiency. According to a government renewables and efficiency energy website, the funding for this agency has grown from $19 million in 2006 to over $35 million in 2010.

Efficiency Vermont is supported by a surcharge on everyone's electric bill, and that surcharge has been growing.  According to recent newspaper articles, linked below, the agency now has a budget of $50 million per year. There are 600,000 people in Vermont, so that is about $80 per person per year. Most households (one electricity bill) have more than one person, so their "fair share" could be hundreds of dollars a year (say, four times $80 or $320).  On the other hand, commercial and industrial users pay these charges, and this lowers the household cost.  I think the average residential bill for Efficiency Vermont is less than $200 a year.

As you can see, this per-person charge for Efficiency Vermont  dwarfs the charges expected from the New York State Clean Energy Standard.  The Governor's office in New York estimated the Clean Energy Standard cost at  $2 per household per month ($24 per year)   In contrast, Vermont efficiency costs approximately $80 per person per year.

Efficiency for Whom?

I spent a few years serving on my town's Energy Commission.   I am no longer on the commission, but I still appreciate energy efficiency.

Efficiency is getting a bad reputation, though.  In recent years in Vermont, there has been a rebellion against Efficiency Vermont charges,  A typical article from VPR is titled: House Brings Down Budget Axe on Efficiency Vermont.  Or in VTDigger: Amendment to H.40 freezes energy efficiency charge.  These articles state that Efficiency Vermont has a budget of about $50 million per year.

If you read the comments on these articles, you will read notes from people who wanted Efficiency Vermont to help them with the costs of energy improvements to their homes.  Many of them didn't get funded, and they were not happy about it. Many people did not qualify for the grants, for various reasons.  Some could not afford the blower-door tests that Efficiency Vermont required to start the efficiency process.  All in all, an efficiency grant helps me but not you, or you but not me.  If my neighbor has new insulation,  that helps him directly, but all I see of the insulation is a surcharge on my electricity bill.

It is no wonder that at $80 per person per year and only some people benefit--there was going to be pushback from Vermonters.

Clean Energy versus Efficiency

For some people, it's a no-brainer to fund efficiency instead of funding any kind of big nasty power plant.  However, when taxes and surcharges fund a clean energy source, everybody benefits from the clean air.  When efficiency is funded, only some people benefit.

Let's be honest. I  benefited.  I could afford a blower door test.  I could afford to work with a certified contractor.  Yes.  I have new insulation.  Every now and again, I want to thank my neighbors for donating the money (through their electricity bills) for my new insulation.  Well.  Maybe that "thank-you" would not be a good idea. ;-)

In contrast, clean energy benefits everyone. The benefits are as clean and clear as the air we breathe.

The New York State Clean Energy Standard is a great bargain for the people of New York.


Robert Hargraves said...

$50 million/year to Efficiency Vermont could have bought carbon-free electricity from Vermont Yankee at 5 cents/kWh, or 50 x 20 million kWh = 1000 million kWh. Typical household consumes 1000 kWh per month, or~ 10,,000 kWh/year. So that much carbon-free electricity could have supplied 100,000 Vermont households with free electricity. Half the households in Vermont!

Anonymous said...

The thing about efficiency and conservation is that you still need an energy source to be efficient with or conserve. You can have the most "efficient" home or conserve the h*ll out of whatever it is you are using, but you still have to have that "thing", or energy source. Otherwise, without it you'll have a home that is just as dark and cold as the least efficient model.

So then the question is, what will your source be? Should it be one that has over 90% capacity factor, runs all the time, day or night, rain or shine, does not pollute the air, and uses fuel in a most efficient and intense manner? I would certainly say so.