NC poised to lead the nation on affordable electricity

A Bloomberg report today — portions of which aired this morning on WRAL’s News on Fox 50 — highlights the effect that the shale gas revolution is having on electricity. It opens this way:

More than half the U.S. states with laws requiring utilities to buy renewable energy are considering ways to pare back those mandates after a plunge in natural gas prices brought on by technology that boosted supply.

The report notes that the current debate over capping the renewable energy portfolio standard (RPS) here has North Carolina positioned to lead the nation in protecting electricity consumers from expensive electricity. Tellingly, the article notes the fall in U.S. investment in renewable power and energy efficiency, all because “government support waned.” Government support and purchasing mandates are pretty much all that’s keeping expensive renewable sources in the mix.

In my report on North Carolina’s RPS, I discussed the game-changing impact of cheap, plentiful natural gas:

When SB 3 with its RPS mandate was passed in 2007, the revolution in extracting oil and natural gas from shale rock formations though the combination of horizontal drilling and hydraulic fracturing was just beginning to be realized. Since then, it has become impossible to ignore. The long-sought “energy security” prize of the U.S. becoming energy independent has suddenly become quite achievable …

Along with boosting energy security, the shale gas boom is also responsible for lowering energy-related carbon emissions in the U.S. It is furthermore boosting manufacturing and job creation. As economist James Pethokoukis observed, despite U.S. government policies heavily favoring “green” energy industries, nearly 20 percent of the good-paying jobs actually being created in the U.S. are in oil and gas.

Facts on the ground concerning shale gas essentially cover purposes (b) through (d) of the state’s justification for its renewables mandate: it boosts “energy security,” encourages private investment and job creation, and lowers energy-related carbon emissions. Two other findings (refer back to Charts 4 and 5) underscore the cost-competitiveness of plentiful natural gas in comparison with wind and solar. These concern the amount of federal subsidies and the amount of acreage to produce equivalent amounts of power: wind and solar require far, far more amounts of federal subsidies and land to produce equivalent amounts of power as natural gas (see Table 3).

Table 3. How much do wind and solar take to produce the same amount of power as natural gas?

Resource Wind Solar (photovoltaic)
Federal subsidies
(to produce 1 MWhr)
88 times more subsidies
than natural gas
1,212 times more subsidies
than natural gas
Acres of land (to produce 1,000 MW) 1,364 times more land
than natural gas
318 times more land
than natural gas

Source: U.S. Energy Information Agency, author’s calculations

Jon Sanders / Research Editor and Senior Fellow, Regulatory Studies

Jon Sanders studies regulatory policy, a veritable kudzu of invasive government and unintended consequences. As director of regulatory studies at the John Locke Foundation, Jo...