A Sensible Strategy for Renewable Electrical Energy in North America

A Sensible Strategy for Renewable Electrical Energy in North America is the fourth in a series published by the Fraser Institute on developing a continental energy strategy. It analyzes the economics of technologies used to generate electricity, technical issues, and, using Ontario?s Feed-in-tariff (FIT) program as a case study, some of the broader effects that renewable energy policies are likely to have on the North American economy.

Key findings

• Recent studies by the International Energy Agency and others indicate that the cost of electricity from renewable energy technologies is generally greater than that from fossil-fuel combustion or nuclear power.
• Official forecasts suggest that at least 80% of the net increase in electric generation capacity in North America during the present decade will involve renewable energy technologies as a result of so-called portfolio standards, ?feed-in tariffs? (FITs) that guarantee electricity producers attractive prices, and other incentives and subsidies that are being pursued by governments without regard to cost.
• Consequently, electricity consumers in North America face much higher electricity costs in the future. The impact will be especially large in Ontario, where the government is promoting renewable energy development with an exceedingly generous FIT program.
• Ontario?s energy users could be burdened with an extra cost of at least $18 billion over the next 20 years and many, if not most, of the jobs that the Ontario government claims will be created by its ?Green Energy Initiative? will likely be offset.
• A number of policy reforms are needed including abandonment of renewable energy portfolio targets and of subsidies and incentives for all types of electric generation. Further, a market-based approach is required to determine the most efficient mix of technologies used for electric generation.