Idea of the Day: Renewable Integration Credit

August 26, 2009

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Utilities that use large amounts of solar or wind power may sometimes encounter specific additional costs due to the variable nature of these energy sources. These costs include keeping generators on reserve to provide system balancing; wear and tear on baseload plants; construction of rapid-start natural gas power plants; new engineering and controls for generation, storage, and system management; and other direct costs resulting from integrating high volumes of low-carbon but intermittent energy.

Establishing a tax credit to offset these additional costs, designed to increase with rising renewable energy production and going beyond compliance with the national renewable energy standard, or RES, would provide a strong incentive for utilities to maximize their renewable potential. In addition, offsetting these direct costs would protect consumers by ensuring that higher rates of clean energy do not translate into higher bills.

For more on this topic see:

• Natural Gas: A Bridge Fuel for the 21st Century, by John Podesta and Timothy E. Wirth.