Maryland Governor Martin O’Malley just announced plans to introduce legislation that would require large utilities in his state (such as Pepco and Baltimore Gas & Electric) to buy wind power under long-term energy contracts. The legislation is designed to attract investors by providing public financing to fund the state’s embryonic wind energy industry. The involvement of utilities would ensure investors there is long-term demand at locked-in prices for the renewable power generation they build.  

The offshore wind farm would encompass 300 turbines that could satisfy about 30 percent of Maryland’s energy needs, according to the O’Malley administration. He says the wind farm, which spans 206-square-miles in the Atlantic, would employ 4,000 temporary manufacturing and construction jobs, as well as 800 permanent positions.

At least two other states–Delaware and New Jersey–already have similar incentives for offshore wind development. Maryland has a renewable portfolio standard (RPS) requiring utilities to acquire 20 percent of their power from renewable sources by 2022. However, offshore wind is currently much more expensive to develop than other forms of renewable energy, which is why Atlantic Coast states are boosting incentives for the industry. Currently there are 24 states plus the District of Columbia that have RPS quotas in place.

These targets, usually 10 percent to 25 percent of all power transmitted, range as high as 40 percent with a deadline of just six years from now (2017) in Maine to 33 percent in California by 2030.Together these states account for more than half of the electricity sales in the United States. In addition, five other states (North Dakota, South Dakota, Utah, Virginia and Vermont) have nonbinding goals for adoption of renewable energy goals.

As of right now, renewable energy accounts for about 3 percent of total U.S. energy output. Some claim the adoption of public incentives to develop renewable energy source would drive down energy costs for consumers. I don’t see how.

 In an article entitled Renewable Irony in the Huffington Post by Richard Schmalensee and Robert Stavins, they note that, “Those who believe that renewable electricity standards would create a huge number of green jobs have forgotten the lesson of Detroit: a large domestic market does not guarantee a healthy domestic industry. At the end of 2008, for instance, the U.S. led the world in installed wind generation capacity, but half of new installations that year were accounted for by imports. And a recent Lawrence Berkeley Laboratory study of the impacts of the economic stimulus package incentives for renewable electricity investments estimated that about 40 percent of the (gross) jobs created by new wind-energy investments were outside the United States, where many wind turbines are manufactured.” They note the better route is to excel at creating and producing renewable energy technology.

And as nascent power sources, aka wind and solar, come online, all but a few of these power sources will be more expensive per kilowatt than traditional generation (coal, natural gas and nuclear). As a result, consumers and business will pay more for their energy as they continue to slake a thirst for electricity that increases year after year. Remember, most of us buy our power from regulated monopolies, which while regulated by their respective states, are allowed to build a minimum profit into their approved electric rates. As the cost of electricity rises, our electric bills increase proportionately.

More renewable energy is good. But how we get there without sapping consumer spending in a recovering economy is a dilemma. Government incentives to bring renewable generation sources online make our electric bills look better, but we’re still footing the tab. What we need are new technologies that make renewable power cheaper to produce. Perhaps that’s where our elected official should be focusing our incentives?

Photo courtesy ABC News