Study Says Bigger Renewables Not Always Better
Photo Source: National Renewable Energy Laboratory
A thought-provoking new study by the Institute for Local Self-Reliance (ILSR) has found that locally-owned renewable energy projects generally hold more local economic benefits than large-scale ones.
The “Economies and Diseconomies of Scale” concludes that bigger is not always better. The Minneapolis-based ILSR analyzed the costs and return of wind power and ethanol, both major renewable energy sources in the Upper Midwest. While they are both less expensive to produce on a large scale, the costs of having to transmit the energy across long distances can negate those savings. That, coupled with the fact that large projects are generally owned by corporate or out-of-state interests, makes smaller, local projects more beneficial for the immediate community.
ILSR recommends that states follow Minnesota’s example, where law provides a favorable tariff for locally owned renewable energy projects, requires 51 percent ownership by Minnesota residents, and designates 51 percent of financial benefits to local owners. In addition, the federal production tax credit (PTC) for wind should be changed to allow it to be taken against ordinary income rather than only applying to passive income (such as from rent). This would allow greater access to the tax credit and open it up to more individuals to be renewable energy investors.
A carbon-constrained world presents us with many options for change. Do we want to create – and is it realistic – a totally new energy system, one that is locally owned, producing energy for the local area, with the majority of economic benefits going to the local community? Or does the urgency of global warming demand as much renewable energy as possible, as fast as possible, owned by whomever possible?
