March 7, 2017
Consumers have seen flat or declining energy costs as renewable energy becomes a greater part of the energy mix of Minnesota and the nation.
The report points out that in the United States, renewable energy, greater energy efficiency and low natural gas and gasoline prices have combined to drive down energy costs – as a percent of total household spending – to its lowest level in decades, according to business council president Lisa Jacobson.
Energy spending in 2016 represented 3.9 percent of household expenditures, the first time the figure dropped below 4 percent ever, based on data from the Bureau of Economic Analysis, she said.
The bureau began reporting on energy in 1959. “Consumers have never paid less of their household family income for energy, ever, on record,” Jacobson said. “It’s amazing.”
The national movement toward clean energy continues, she said, and Minnesota’s leadership in that area remains, especially in energy efficiency and renewable energy.
The investments in clean energy made by utilities does not seem to have an impact on energy prices, contradicting dire predictions made by some opponents of clean energy policy in the past.
“What we can say looking at data is that we’ve been making significant investments nationally, and so has Minnesota, and it has been beneficial to consumers and businesses,” Jacobson said.
The report points to another continuing trend – the decoupling of energy consumption from a growing economy. Since 2007 the national economy has grown by 12 percent while energy demand has fallen by 3.6 percent, she said.
Prices haven’t increased, either. Consumers across the nation actually pay four percent less per kilowatt hour for electricity today than they did in 2007 after taking into account inflation, the report said.
Not any one factor takes credit for the favorable story of falling consumption and prices. “It’s the combination of energy efficiency, renewables, natural gas” along with cheap gasoline and fuel efficient vehicles, Jacobson said. “You won’t have gotten (this result) if there hadn’t been this mix.”
Since 1992 more than 90 percent of all investments in energy production nationally have been in renewables and natural gas, Jacobson said.
In the past 10 years more than half of investments have been in renewable energy, the report noted.
Legislators should learn that Minnesota has been benefiting from the long-term investments it has made in clean energy, she said.
The mix has created pricing that “is below the national average,” Jacobson said. “You can’t say (the mix) is not creating good economic benefits…you can grow the economy and protect the environment.”
Minnesota’s statistics only went through 2015. Rachel Jiang, a power and environmental markets analyst with Bloomberg, pointed to several findings in the Minnesota report, among them:
- From 2010 to 2015 renewable energy jumped from 14 percent of annual generation to 22 percent.
- Coal-fired generation declined from 52 percent in 2010 to 43 percent in 2015, with coal expected to head downward.
- Natural gas accounts for 32 percent of installed capacity, up from 8 percent in 2010. It provided 13 percent of electricity generation in 2015.
- Only Iowa ranked higher than Minnesota in the Midwest for electricity efficiency spending as a percent of statewide electricity revenue.
- Wind and solar are both becoming competitive with subsidies. Even without subsidizes, wind prices can compete with the cost of new combined cycle natural gas plants.
- Minnesota continues to have a slightly dirtier emissions rate than the national average and below average in-state generation and electricity demand.
- The state scored high in efficiency budgets and efforts, and below average on reliance on gas and renewables.
Since 2015 Minnesota’s energy landscape has changed, said Jiang. The new additions of wind farms, utility scale solar projects and community solar gardens will boost the amount of electricity coming from renewable energy, Jiang said.
Photo: Michael Janke