Critique of Utah State Report

Ohio’s Energy Mandates Study Committee (EMSC) report (a) uses a Utah State University (USU) report (b) to justify continuing Ohio’s freeze on our renewable energy goals. The USU report is deeply flawed in its attempts to show negative effects on a state’s economy due to a legislated renewable energy portfolio.

Since twenty one states have had renewable energy portfolios for over ten years, USU should be able to make a comparison of states with and without portfolios, based on current and past economic performance.  They make no such comparison. Instead the USU report relies on predictions of the future.  This is a poor approach, since predictions in this field are notoriously inaccurate, as Sen. Seitz pointed out in his sponsor testimony for 130-SB310.

As noted below, the USU predictions contain numerous errors. The chief problems are ignoring any research in conflict with theirs and using obsolete data.

Specifically:

  1. USU assumes that Ohio law requires construction of wind farms to satisfy the law. Actually the law is satisfied by purchase of renewable energy certificates (c).
  2.  USU uses cost data by the Energy Information Administration, as reported in the Annual Energy Outlook (AEO) (d). Specifically, they use 2013 predictions of costs for 2018 and assume that these predictions hold through 2026. Although 2014 data were available, they did not use them or explain why they used the older data in a field characterized falling prices. The 2015 AEO, which was not available when the USU report was written, shows wind to be competitive with fossil fuels, making the construction of wind farms cost-neutral in the USU approach.
  3. Cost data are also available annually from the investment firm of Lazard (e) and are lower than those from EIA. USU did not explain why they used the EIA data in preference to the Lazard data.
  4. The American Tradition Institute (ATI) issued an earlier report using the same computer program as USU (f). The table below shows that there is great disagreement between the two studies, which USU does not explain.
ATI USU Percent Change
Total Net Cost, Final Year, $ billion 1.427 0.281 -80
Total Net Cost, Final Ten Years, $ billion 8.629 1.923 -78
Electricity Price Increase, Final Year, ¢/kWh 0.97 0.20 -79
Percentage Increase 9.3 1.86 -80
Total Employment (Jobs) (9,753) (3,590) 63
Investment, $ million (79) (52) 34
Real Disposable Income, $ million (1,097) (258) 76

 

  1. USU used two different prediction techniques and their results varied significantly (e.g. job losses of 3,600 and 29,000). When two results differ, at least one is wrong. The conclusion of the USU report favors the 3,600 number, while the EMSC report uses the 29,000 number and we do not know which, if either, is correct.
  2. Since wind farms need to be constructed and operated, the portfolio creates jobs, which the USU report ignores.

In conclusion, with so many problems, it is difficult to see how the USU report can be used to justify continuing Ohio’s renewable energy freeze.

References

(a) Kristina Roegner & Troy Balderson, The Energy Mandates Study Committee Co-Chairs’ Report September 30, 2015

(b) Randy T Simmons, et al. Renewable Portfolio Standards: Ohio, April 2015

(c) Galen Barbose, U.S. Renewables Portfolio Standards 2016 Annual Status Report, Report LBL-1005057, April 2016

(d) Energy Information Administration, Annual Energy Outlook, issued annually

(e) Lazard’s Levelized Cost of Energy Analysis – Version 9.0, November 2015

(f) American Tradition Institute, The Cost and Economic Impact of Ohio’s Alternative Energy Portfolio Standard, April 2011