Locally Owned Wind And Ethanol—Better, Not Bigger
August 26, 2007
From Institute for Local Self-Reliance
Institute for Local Self-Reliance Publishes In-Depth Study of Renewable Energy Facilities
Minneapolis, MN – August 6, 2007). Congress and most state legislatures have developed renewable energy policies with a single objective: more. A new study from the 33-year-old Institute for Local Self-Reliance finds that this single minded focus undermines the possibility of achieving better as well as more.
The study finds that there are indeed small cost reductions from very large scale, absentee owned renewable energy facilities. But that these are overshadowed by the significant loss in potential economic benefits from locally owned and more modestly scaled facilities.
With Congress currently writing a new energy bill, the issue is a timely and important one. "Typically, policy makers focus too much on the quantity of renewable energy production, but this study blows a hole in the assumption that bigger is better," explains John Farrell, Research Associate for ILSR and author of the study. "Large facilities have a special class of costs that small facilities don't, such as shipping vast quantities of electricity or biofuel to distant markets."
The study finds that these transportation-related costs may offset a large part of the reduced production costs from large wind farms and ethanol plants. For the owner of a large facility, a tiny reduction in production costs leads to significantly increased profits. Says Farrell. "But renewable energy policy is not about maximizing profits to owners– it's about maximizing benefits to society. And that occurs from locally owned and widely dispersed production units."
The full report, Wind and Ethanol: Economies and Diseconomies of Scale is available on ILSR's New Rules Project's website, www.newrules.org. [now here]
About ILSR: The Institute for Local Self-Reliance is a nonprofit organization founded in 1974 to advance sustainable, equitable, and community-centered economic development through research and educational activities and technical assistance. More at http://www.ilsr.org
John Farrell directs the Energy Self-Reliant States and Communities program at the Institute for Local Self-Reliance and he focuses on energy policy developments that best expand the benefits of local ownership and dispersed generation of renewable energy.