Renewable energy has grown rapidly over the last decade. Non-hydro renewable energy accounted for 10 percent of total electric generation in the United States in 2018, and is expected to increase to 13 percent by 2020. In part, this growth has been spurred by a rapid decline in the cost of renewable electricity. Since 2010, the benchmark price for solar electricity has fallen by 84 percent, while the price of wind energy has dropped by half.
The increased competitiveness of wind and solar in particular has led to an increase in criticism of those energy sources. That may seem paradoxical, but makes sense from a political economy point of view. As long as wind and solar remained a marginal player in the electric system, there was little reason for ideological and economic opponents of wind to spend time and effort attacking it. Once they became real players in the market, however, that calculus changed.
While a variety of anti-wind and anti-solar arguments have been made, ranging from the use of government subsidies to aesthetic considerations, the most sustained arguments against renewables have involved electric reliability. Renewable energy, it is claimed, threatens to destabilize the electric grid, leading to blackouts and other harms to consumers. Some have even suggested that the electric market must be protected from wind and solar power via special taxes or other restrictions inconsistent with a free-market electric system.
In light of this, the present brief provides a high-level overview, aimed at the non-technical reader, of some of the arguments put forward to show that renewable energy harms electric reliability. Speaking generally about the topic is complicated by the fact that different regions of the country have vastly different electric regulatory systems. While some states use market competition to determine generation mix, other states operate according to a vertically integrated utility model, where such decisions are made more centrally. States where competition is practiced may also use different mechanisms such as capacity markets or scarcity prices to deal with reliability risk. Despite this, it is possible to make some general comments on the issues with renewables and reliability that may help quiet some concerns and provide a framework for further study.
It is important not to dismiss the real challenges that can come from integrating renewable energy into the electric grid. Nevertheless, many of the arguments on this score are overblown and often involve misunderstandings of how the grid operates. In addition, they risk leaving the false impression that markets are unable to provide reliable and affordable electric power. Electric markets rely on a variety of resources to deliver cheap, reliable power to consumers, including renewables and demand-side resources like demand response. Proper market design is perfectly capable of achieving these goals. In light of this, instead of scapegoating individual energy sources, we should simply let markets work as intended.
