• <div class="header-image" style="background-image: url(/live/image/gid/4/2635_V6N3_Header.rev.1522162449.jpg);">​</div><div class="header-background-color"/>

Barriers to a Renewable Revolution

September 19, 2015
In its 2015 New Energy Outlook, Bloomberg New Energy Finance predicted an explosion in global renewable energy investment. Between now and 2040, an $8 trillion investment in renewables will translate into renewable-powered electricity powering 54% of electricity consumption in OECD countries and 46% globally.[1] Bloomberg’s predictions, made under assumptions of minimal government support, still conclude that global temperatures will rise above 2 degrees Celsius—which means that global warming’s harshest impacts—floods, storms, and expanded disease—will come to pass.[2]

by Shams Haidari

It’s a bleak scenario, and one that demands that we examine why the switch to renewables is not happening at a faster rate. This blog post aims to contribute to that conversation, providing a brief explanation for why renewables represented a mere 10% of US energy use in 2014.[3]

The barriers toward a renewable revolution can be broadly categorized into two groups—one, the high costs still associated with renewables; two, the structure of US utilities. This blog will focus on public policies that have the potential to encourage innovation and, ultimately, bring down the cost of renewable energy. While the cost of renewables is decreasing, renewable energy is still too expensive to compete with fossil fuels in the absence of government support.

The price of renewable energy has decreased dramatically. Solar energy has become the poster child for this phenomenon. A single watt of solar electricity in 1977 cost $76.77—today, solar energy costs $0.60/watt.[4] More generally, in its 2015 Annual Energy Outlook, the International Renewable Energy Agency predicted, “renewable energy sources [sic] has reached parity or dropped below the cost of fossil fuels.[5] Support—at both the state and federal level—has been partly responsible for the rate of renewable energy development.

Individual states have a number of tools to support renewables. Renewable Portfolio Standards (RPSs) set minimum percentages of electricity that must come from renewables; some states set up public funds to invest in renewable projects; and Output-Based Renewable projects create caps on emissions from electricity plants—effectively forcing utility providers to turn toward renewables.[6] However, states are not uniformly invested in renewable development and their degree of interest can vary over time. Recently, The Washington Times referenced the end of RPS policies in West Virginia and Kansas and proposed changes in North Carolina and Michigan as evidence of a general decreased commitment to renewables.[7]

At the federal level, the U.S. stands out for not having a permanent policy to promote renewable technology development and to discourage fossil fuel use.[8] Rather, the U.S. organizes subsidies and credits for renewables on a year-by-year basis and often lumps those subsidies into larger bills. [9] As a result, programs intended to support renewables are often vulnerable to shifts in the political climate or even to changes in public opinion toward other government policies.

The federal government’s other recourse in promoting renewables is to regulate greenhouse gas emissions. However, federal interest in emissions has been inconsistent. The Environmental Protection Agency (EPA) under the Bush Administration insisted that it was not empowered to set emissions regulations for greenhouse gases. [10] The EPA’s continued inaction led Massachusetts to sue the EPA. The court case, Massachusetts v. Environmental Protection Agency (2006) ended with a Supreme Court ruling in Massachusetts’ favor.

In contrast, the Obama Administration has taken an aggressive approach to environmental controls. In June 2013, Barack Obama unveiled his three-pronged Climate Action Plan, aimed at decreasing carbon emissions, prepping for global warming’s impacts, and creating global efforts for a greener future.[11] In pursuit of his first goal, the EPA introduced a draft version of what would become the Clean Power Plan (CPP) in June 2014. The CPP represents the first federal regulation of power plant emissions. The draft version set a goal of reducing carbon emissions by 30% from their 2005 levels and aimed to accomplish the goal by providing emissions reductions standards to each state.[12] States would then be able to craft a specific plan to achieve their assigned reduction goals.

On August 3rd, 2015, the Obama Administration released the final version of the plan. While it maintained the same emphasis on state-created emission reduction programs, it increased the U.S.’ emission reduction target to 32%.[13] The final version is also less encouraging to natural gas than its draft form. Natural gas—which has only recently begun to challenge coal as the dominant fuel for power generation[14]—has been touted as a useful “bridge fuel” in the transition from coal to renewables. However, CPP includes a Clean Energy Incentive Program to promote renewables and the state emissions targets were created with the understanding that renewables could replace natural gas.[15] As the Sierra Club’s Executive Director, Michael Brune, noted, this could mean that “the bridge—the natural gas bridge—has just been declared closed.”[16]

Despite the President’s commitment to CPP’s success, the path toward its enactment is still unclear. Most famously, before the final plan was even revealed, Senator Mitch McConnell asked state governors to disregard their assigned emissions standards.[17] For all of the past support that renewables have received, the stand against future support could stall their progress in the U.S. energy market.

The price of generating renewable energy might be going down, but renewables are still the expensive energy choice when compared to fossil fuels. Large windmills and colonies of solar panels are often built far away from residential or industrial areas, so their use requires extensive transmission networks.[18] Renewable energy sources also need to be connected to back up energy sources to compensate for shifting wind patterns, the loss of sunlight at nighttime, and other weather changes.[19] These challenges represent additional costs and cause renewable energy plants to operate at a lower capacity than their fossil fuel counterparts. In a 2014 report for The Brookings Institution, Charles R. Frank, Jr., calculated the capacity of gas combined cycle, nuclear, hydro, solar, and wind plants to replace coal plants. Gas combined cycle plants achieved a respectable 91.6% and nuclear came in second, with 89.1%. Wind, solar, and hydro were distant losers—capable of replacing only 26.1%, 15.1%, or 33.9% of a corresponding coal plant’s power generation.[20]

These numbers indicate that renewables are not ready to compete with fossil fuels and make the lack of uniform support for renewables particularly troubling. The cost of generation has decreased, but the development of infrastructure that can support a renewables-based utility market and of technology that can increase the renewable reliability are necessary precursors to the development of a larger U.S. renewable market.

  [1]“Executive Summary” in New Energy Outlook 2015, Seb Henbest, available here: /; Tom Randall, “The Way Humans Get Electricity Is About to Change Forever,” Bloomberg Business, June 23, 2015.

  [2]Randall, “The Way Humans Get Electricity Is About to Change Forever.”

  [3] “FREQUENTLY ASKED QUESTIONS: How Much U.S. Energy Consumption and Electricity Generation Comes from Renewable Sources,” U.S. Energy Information Administration, March 31, 2015; the U.S. Energy Information Administration includes hydroelectric, geothermal, solar, wind, and biomass in its definition of renewables: “Table 10.1 Renewable Energy Production and Consumption by Source (Trillion Btu),U.S. Energy Information Administration/Monthly Energy Review July 2015, July 2015.

  [4] Zoe Schlanger, “Two Numbers: Solar Energy’s Price Drop, Ahead of Schedule, Could Help Save the Planet,Newsweek, July 15, 2015.

  [5]“Press Releases,” International Renewable Energy Agency, January 17, 2015, .

  [6]“State Climate and Energy Program: Renewable Energy,” United States Environmental Protection Agency”l.

  [7]Valerie Richardson, “Renewable Energy Standards Reconsidered as States Question Mandates, Fret over Costs,The Washington Times, July 16, 2015.

  [8]Kelly Sims Gallagher, “Why & How Governments Support Renewable Energy,” Daedalus 42 No. 1 (Winter 2013): 59.

  [9]John Light, “Wind Power Could Get Its Tax Breaks Back,Grist, July 22, 2015.

  [11]“President’s Climate Action Plan Tracker,” Sabin Center for Climate Change Law.

  [12]Adam Vaughan, “Obama’s Clean Power Plan Hailed as US’s Strongest Ever Climate Action, The Guardian, August 3, 2015, 

  [13]Ibid.; for a more complete list of differences between the proposed and final CPP, see MJB&A, “Summary of EPA’s Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units (the ’111(d) rule’), MJB&A, August 6, 2015, ; for government documents related to the creation and structure of the CPP, see: “Clean Power Plan for Existing Power Plants,” U.S. Environmental Protection Agency, last updated August 6, 2015.

  [14]Scott Jell, “Electricity from Natural Gas Surpasses Coal for the First Time, But Just for One Month,” Today in Energy, July 31, 2015.

  [15]Rachel Cleetus, “Four Ways the Final Clean Power Plan Limits the Rush to Natural Gas,The Equation (blog), August 7, 2015.   

  [16]Scott Detrow and Elizabeth Harball, “Final Clean Power Plan Shifts Toward Renewables and Away from Natural Gas,” ClimateWire, August 4, 2015.

  [17]Jody Freeman and Richard J. Lazarus, “Larry Tribe and Mitch McConnell’s Flagrant Constitutional Error,Politico, March 25, 2015, 

  [18]“The Economist Explains: Why Is Renewable Energy So Expensive,” The Economist, January 5, 2014..

  [19]Ibid.

Student Blog Disclaimer
  • The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Penn Wharton Public Policy Initiative’s strategies, recommendations, or opinions.

PENN WHARTON PPI
RESOURCE SPOTLIGHT:

  • <h3>HUD State of the Cities Data Systems</h3><p><strong><img width="200" height="200" alt="" src="/live/image/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg" class="lw_image lw_image482 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg 2x, /live/image/scale/3x/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg 3x" data-max-w="612" data-max-h="613"/>The SOCDS provides data for individual Metropolitan Areas, Central Cities, and Suburbs.</strong> It is a portal for non-national data made available through a number of outside institutions (e.g. Census, BLS, FBI and others).</p><p> Quick link: <a href="http://www.huduser.org/portal/datasets/socds.html" target="_blank">http://www.huduser.org/portal/datasets/socds.html</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Federal Aviation Administration: Accident & Incident Data</h3><p><img width="100" height="100" alt="" src="/live/image/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg" class="lw_image lw_image80 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg 2x, /live/image/scale/3x/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg 3x" data-max-w="550" data-max-h="550"/>The NTSB issues an accident report following each investigation. These reports are available online for reports issued since 1996, with older reports coming online soon. The reports listing is sortable by the event date, report date, city, and state.</p><p> Quick link: <a href="http://www.faa.gov/data_research/accident_incident/" target="_blank">http://www.faa.gov/data_research/accident_incident/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>National Center for Education Statistics</h3><p><strong><img width="400" height="80" alt="" src="/live/image/gid/4/width/400/height/80/479_nces.rev.1407787656.jpg" class="lw_image lw_image479 lw_align_right" data-max-w="400" data-max-h="80"/>The National Center for Education Statistics (NCES) is the primary federal entity for collecting and analyzing data related to education in the U.S. and other nations.</strong> NCES is located within the U.S. Department of Education and the Institute of Education Sciences. NCES has an extensive Statistical Standards Program that consults and advises on methodological and statistical aspects involved in the design, collection, and analysis of data collections in the Center. To learn more about the NCES, <a href="http://nces.ed.gov/about/" target="_blank">click here</a>.</p><p> Quick link to NCES Data Tools: <a href="http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4" target="_blank">http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4</a></p><p> Quick link to Quick Tables and Figures: <a href="http://nces.ed.gov/quicktables/" target="_blank">http://nces.ed.gov/quicktables/</a></p><p> Quick link to NCES Fast Facts (Note: The primary purpose of the Fast Facts website is to provide users with concise information on a range of educational issues, from early childhood to adult learning.): <a href="http://nces.ed.gov/fastfacts/" target="_blank">http://nces.ed.gov/fastfacts/#</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>The Penn World Table</h3><p> The Penn World Table provides purchasing power parity and national income accounts converted to international prices for 189 countries/territories for some or all of the years 1950-2010.</p><p><a href="https://pwt.sas.upenn.edu/php_site/pwt71/pwt71_form.php" target="_blank">Quick link.</a> </p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Congressional Budget Office</h3><p><img width="180" height="180" alt="" src="/live/image/gid/4/width/180/height/180/380_cbo-logo.rev.1406822035.jpg" class="lw_image lw_image380 lw_align_right" data-max-w="180" data-max-h="180"/>Since its founding in 1974, the Congressional Budget Office (CBO) has produced independent analyses of budgetary and economic issues to support the Congressional budget process.</p><p> The agency is strictly nonpartisan and conducts objective, impartial analysis, which is evident in each of the dozens of reports and hundreds of cost estimates that its economists and policy analysts produce each year. CBO does not make policy recommendations, and each report and cost estimate discloses the agency’s assumptions and methodologies. <strong>CBO provides budgetary and economic information in a variety of ways and at various points in the legislative process.</strong> Products include baseline budget projections and economic forecasts, analysis of the President’s budget, cost estimates, analysis of federal mandates, working papers, and more.</p><p> Quick link to Products page: <a href="http://www.cbo.gov/about/our-products" target="_blank">http://www.cbo.gov/about/our-products</a></p><p> Quick link to Topics: <a href="http://www.cbo.gov/topics" target="_blank">http://www.cbo.gov/topics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Federal Reserve Economic Data (FRED®)</h3><p><strong><img width="180" height="79" alt="" src="/live/image/gid/4/width/180/height/79/481_fred-logo.rev.1407788243.jpg" class="lw_image lw_image481 lw_align_right" data-max-w="222" data-max-h="97"/>An online database consisting of more than 72,000 economic data time series from 54 national, international, public, and private sources.</strong> FRED®, created and maintained by Research Department at the Federal Reserve Bank of St. Louis, goes far beyond simply providing data: It combines data with a powerful mix of tools that help the user understand, interact with, display, and disseminate the data.</p><p> Quick link to data page: <a href="http://research.stlouisfed.org/fred2/tags/series" target="_blank">http://research.stlouisfed.org/fred2/tags/series</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>The World Bank Data (U.S.)</h3><p><img width="130" height="118" alt="" src="/live/image/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg" class="lw_image lw_image484 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg 2x, /live/image/scale/3x/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg 3x" data-max-w="1406" data-max-h="1275"/>The <strong>World Bank</strong> provides World Development Indicators, Surveys, and data on Finances and Climate Change.</p><p> Quick link: <a href="http://data.worldbank.org/country/united-states" target="_blank">http://data.worldbank.org/country/united-states</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>USDA Nutrition Assistance Data</h3><p><img width="180" height="124" alt="" src="/live/image/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg" class="lw_image lw_image485 lw_align_right" srcset="/live/image/scale/2x/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg 2x, /live/image/scale/3x/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg 3x" data-max-w="1233" data-max-h="850"/>Data and research regarding the following <strong>USDA Nutrition Assistance</strong> programs are available through this site:</p><ul><li>Supplemental Nutrition Assistance Program (SNAP) </li><li>Food Distribution Programs </li><li>School Meals </li><li>Women, Infants and Children </li></ul><p> Quick link: <a href="http://www.fns.usda.gov/data-and-statistics" target="_blank">http://www.fns.usda.gov/data-and-statistics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Internal Revenue Service: Tax Statistics</h3><p><img width="155" height="200" alt="" src="/live/image/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg" class="lw_image lw_image486 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg 2x" data-max-w="463" data-max-h="596"/>Find statistics on business tax, individual tax, charitable and exempt organizations, IRS operations and budget, and income (SOI), as well as statistics by form, products, publications, papers, and other IRS data.</p><p> Quick link to <strong>Tax Statistics, where you will find a wide range of tables, articles, and data</strong> that describe and measure elements of the U.S. tax system: <a href="http://www.irs.gov/uac/Tax-Stats-2" target="_blank">http://www.irs.gov/uac/Tax-Stats-2</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>National Bureau of Economic Research (Public Use Data Archive)</h3><p><img width="180" height="43" alt="" src="/live/image/gid/4/width/180/height/43/478_nber.rev.1407530465.jpg" class="lw_image lw_image478 lw_align_right" data-max-w="329" data-max-h="79"/>Founded in 1920, the <strong>National Bureau of Economic Research</strong> is a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works. The NBER is committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community.</p><p> Quick Link to <strong>Public Use Data Archive</strong>: <a href="http://www.nber.org/data/" target="_blank">http://www.nber.org/data/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>NOAA National Climatic Data Center</h3><p><img width="200" height="198" alt="" src="/live/image/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg" class="lw_image lw_image483 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg 2x, /live/image/scale/3x/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg 3x" data-max-w="954" data-max-h="945"/>NOAA’s National Climatic Data Center (NCDC) is responsible for preserving, monitoring, assessing, and providing public access to the Nation’s treasure of <strong>climate and historical weather data and information</strong>.</p><p> Quick link to home page: <a href="http://www.ncdc.noaa.gov/" target="_blank">http://www.ncdc.noaa.gov/</a></p><p> Quick link to NCDC’s climate and weather datasets, products, and various web pages and resources: <a href="http://www.ncdc.noaa.gov/data-access/quick-links" target="_blank">http://www.ncdc.noaa.gov/data-access/quick-links</a></p><p> Quick link to Text & Map Search: <a href="http://www.ncdc.noaa.gov/cdo-web/" target="_blank">http://www.ncdc.noaa.gov/cdo-web/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>MapStats</h3><p> A feature of FedStats, MapStats allows users to search for <strong>state, county, city, congressional district, or Federal judicial district data</strong> (demographic, economic, and geographic).</p><p> Quick link: <a href="http://www.fedstats.gov/mapstats/" target="_blank">http://www.fedstats.gov/mapstats/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>