Utilizing renewable energy may be a necessity moving forward, but there are numerous complications and tradeoffs that must be acknowledged as well if we are to make informed decisions and craft evidence-based policy.
A new Fraser Institute post, Canadian policymakers should learn from ‘renewable’ experience in California and Texas, takes these two states as case studies for how Canada should and should not approach this issue.
Canada should be wary, authors Jairo Yunis and Elmira Aliakbari warn, of replicating the policy failures of California and Texas, two states where renewable energy has become a larger part of the electricity mix largely due to government subsidies and mandates.
“The costly and disorderly fashion in which renewable energy sources have been introduced into electricity grids have made these jurisdictions vulnerable to unexpected demand surges, including during severe weather events,” they write.
Three problems have become apparent:
- Wind and solar are unreliable sources as they are very weather dependent, meaning both require conventional back-up power such as natural gas.
- The introduction of renewable energy sources into these electricity systems slowed the growth rate of conventional capacity (e.g. gas-fired plants), thus exposing power networks to occasional supply and demand imbalances.
- Renewable energy sources affect affordability. Between 2010 and 2019, the average retail price of electricity in California for all users (industrial, commercial and residential) soared by 30 per cent—or more than six times the rate of increase the rest of the United States experienced over that period.
Renewable power can be a valuable tool, they conclude, but over-development as a result of government subsidies and mandates affects both reliability and affordability. Instead, competition in our electricity markets is preferable and will benefit both consumers and the economy more broadly.