Although most states already have a renewable mandate in place, many cities have taken their own initiative on climate policy since the White House announced its withdrawal from the Paris Agreement. With the passage of the 100 percent renewable energy by 2032” mandate, better known as “100 by 32,” residents of the nation’s capital joined them, courtesy of the D.C. Council. Notably absent from the Council’s deliberations, however, were discussions of cost and reliability — the real-world effects of a shift in policy.
Georgetown, Texas, offers an informative and cautionary tale on setting unrealistic renewable energy goals. The city made international news when it claimed to move to a 100 percent renewable energy supply, drawing international praise as a strong signal in the fight to combat anthropogenic climate change. Georgetown Mayor Dale Ross, however, argued that it was about “green rectangles” — dollar bills — more than anything else.
According to Georgetown Utility Systems, the city signed 20- and 25-year power purchase agreements with a wind farm in the Texas panhandle and a solar farm in West Texas. These provide the city a 50/50 blend of wind and solar power which, collectively, are more than twice the local demand in the early years of the contracts. With Georgetown buying more energy than it needs at the present, city leaders had hoped to sell the excess for a profit.
But it turns out that the renewable energy that Georgetown is purchasing is actually more expensive than the renewable energy available on the market, so the city has been forced to sell the excess at a $7 million loss. The city’s electric fund will close 2018 at $1.97 million, a far cry from the projected $8.81.
Apparently, this isn’t the first year that the city has suffered losses — it has had to amend its budget for power purchases for the last three years. The losses have just become so great that the city finally had to go public with them. It also denies that its Jan. 1 base rate increase of $4.80 is related to the losses, but it’s hard to see how — the $7 million loss would have more than covered the revenue from that increase.
In Texas, at least some attention was paid to the tangible effects (the dollars and cents) of going all-in for renewable. The results didn’t match the projections, and the city of Georgetown lost millions, but residents were alerted to the real costs. This equipped residents with more information, which is sparking an honest evaluation of the policy, now that the numbers are in.
The District’s program, in contrast, goes further than Georgetown’s and has been justified in even more abstract terms. The lead sponsor of the initiative, Councilwomen Mary Cheh made it clear: “We’re doing this because it’s a moral imperative … Unless we take action, we will leave a catastrophe to our grandchildren.” Emotional appeals aside, the facts show that taking a hard line on renewables doesn’t always turn out the way proponents want it to.
Germany provides a prime example. Its aggressive Energiewende was supposed to transition the country to an all-renewable future and drastically cut carbon emissions. Instead, German leaders were globally embarrassed in January when they announced an increase in carbon output for the second year in a row. Meanwhile, the United States cut carbon emissions significantly more than its international critics. Innovations in natural gas led by market forces played a substantial role in the U.S., while Germany relied heavily on coal when “the variability of renewables” left them without.
Washington, D.C.’s policy shift involves additional taxes on vehicle registrations, increasing reliance on an unreliable supply of power, and higher electricity costs. These will take money directly out of the pockets of D.C. residents. With a cost of living that already lends D.C. global infamy, residents should heed the warnings of the Texas municipality that tried something similar. When you put aside the political virtue-signaling, it is clear that “100 by 32” is a bad deal for D.C.
Cutter W. González is a policy analyst in the Armstrong Center for Energy and the Environment at the Texas Public Policy Foundation.