RAND Study on Cost effects of increasing RE use

Bernstein, M.A., J. Griffin, R. Lempert (2006). Impacts on U.S. Energy Expenditures of Increasing Renewable Energy Use. Santa Monica: RAND Corporation.
In Z:// drive under RAND 2006 RE use and RE expend

• This report was pulled off of RAND's website. Why?
• Assesses impact of 25% of electric and motor vehicle energy by renewables by 2025 on total national energy expenditures and air pollution. Conducted for Energy Future Coalition, 25X25' alliance.
• Based on 1,500 simulation runs, covering variety of cost scenarios. RE shown to lower total energy expenditures in almost all cases where current energy price and technology trends continue.
• Even with bad assumptions, percent price increase is small: "Indeed, the most extreme of the 1,500 scenarios produced no more than a 6-percent change in energy expenditures, or about $75 billion in 2025. This includes the most favorable scenario for nonrenewable energy simulated—in which the costs of renewable energy technology rise 30 percent during the next 20 years, while natural gas, oil, and coal prices fell 50 percent from current projections." p. xii (12) "Similarly, in the best-case scenarios for renewable energy, our renewables case could reduce energy expenditures by about 3 percent, or $40 billion." Relatively narrow range.
• EIA uses National Energy Modeling System (NEMS) to make energy market forecasts. This study uses simplified version that requires less processing time.
• Assume most favorable renewable sites are used first; therefore costs increase after a point in some of the projections.
• p6 (24): Table of Technologies and Issues (sort of a pros and cons list for each)
• p7: "...the global market for wind, solar, and biofuels is about $40 billion, according to Clean Edge, a Bay Area marketing firm (Makower, Pernick, and Wilder, 2006)."
• Assumes significantly higher costs as wind penetration increases, since cost of transmission from site of good wind resource to site of use is assumed to increase. In fact, wind section is mostly discussion of problems: intermittancy, aesthetic problems, bird killing, noise.
• Assessment of solar PV more favorable: intermittant, but more predictable. Installed close to source, though many small modules will require changes in planning and management of grid.
• Section on ethanol also favorable. Says recent review by Farrell et al. (2006) in Science shows that corn ethanol production produces more energy than it consumes. Unlike past studies, "the Farrell et al. analysis accounted for the economic value of by-products from corn ethanol production, notably dried distiller grains (used for animal feed), gluten feed, and corn oil" p.10, but unsure whether these markets will remain robust if ethanol production amped up. Seems that these byproduct markets necessary for ethanol to yield positive net energy benefits. Also, soil erosion and nutrient runoff are significant environmental costs.
• Notes that corn-based ethanol production can only expand so far before impinging on food supply. Hopeful about cellulosic ethanol, though "Cellulosic ethanol is currently produced only on a precommercial demonstration
• scale in one plant in Ottawa, Canada." p.11
• Renewables help curb price volatility in energy markets: "Some recent studies (e.g., Berry, 2005; Bolinger and Wiser, 2005a; Owens, 2003; Awerbuch, 2003) have attempted to assess the value that renewables can provide to reduce volatility." p.12
• "the EIA (EIA, 2003b) has used NEMS to estimate the effects of an RPS of 10 percent in 2020, concluding that it would have a negligible impact on energy expenditures within the United States (slight increases in the price of electricity would be offset by reductions in the price of natural gas)." p17
• Cost assumptions begin on p.46 in the appendix