- January 14, 2019
- Posted by: guyadmin
- Category: Energy & Water Management
On November 6, 2018, the voters in Nevada passed a ballot initiative- “The Renewable Energy Standards”. If this ballot will pass again in 2020, every utility service who sell electricity in Nevada will have to meet a new Renewable Portfolio Standard that will reach 50% until 2030.
There’s no doubt that this initiative will have good effects on the environment and the people. By creating a healthier environment, it is claimed that 20 million dollars per year will be saved due to less medical expenses. Besides that, the transformation to a cleaner energy regime is supposed to lower the price civilians pay for electricity because clean energy is cheaper than “dirty” energy.
This rises an interesting question- what is the right way to implement this initiative? Should we use a mandate or a free market regime? The ballot suggests a mandate of the state, but some people say that this method is wrong and even harmful.
Michael Schaus, the communication director at The Nevada Policy Research Institute, is one of those people. He claims that the mandate will exclude different sources of clean energy (in Nevada, for example, hydropower will probably be neglected even though it’s one of the cleaner forms of renewable energy), while the market will listen to the consumers, allowing a bigger variety of energy forms and even lower prices.
This argument is not only theoretic- a recent example is the comparison between California and Texas. While both states receive federal subsidies, California is highly regulated and Texas uses a free-market approach. The big difference is shown in the electricity price.Even though California promised that the price will drop, by 2017 the electric rates were the same as before- and 50% higher than the national average, while the rates in Texas dropped by 21% percent and now are 19% lower than the national average.
A competitive market in not perfect either. Companies in a free market regime will do anything in order to cut costs. As a result, when profit margins get slim, investors won’t want to build a new capacity. This means that the amount of reserved energy will get smaller, which will cause power shortages in busier days.
This is not something states like California need to deal with.California actually has the opposite problem– it sometimes produces so much energy it needs to pay other states in order to take it, so it won’t overload the power system.
So how should we insert renewable energy solutions? Do we prefer a higher percentage of clean energy that comes with a higher rate, or do we prefer the opposite?