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Report: Is Bigger Always Better? An Arithmetic Lesson for Policy Makers

| Written by John Farrell | No Comments | Updated on Jul 5, 2007 The content that follows was originally published on the Institute for Local Self-Reliance website at

This July 2007 policy brief by John Farrell is a companion piece to the Wind and Ethanol: Economies and Diseconomies of Scale report. Policymakers who promote wind energy and biofuels argue that their policies have two goals: the rapid increase in renewable energy, and the betterment of the rural and agricultural economies.  Yet to date
their policies have been tailored almost entirely to achieve the first goal — more, not better.

Larger wind farms and ethanol plants do produce energy at a lower unit cost, but because they are usually more distant from their ultimate customers, transportation related costs increase.  Thus, the net cost reductions are modest.

Meanwhile, megaplants impose considerable social costs.  By reducing or eliminating the possibility of majority local ownership, they dramatically reduce the facility’s benefit to rural communities and farmers.  Policymakers should design maximum rural benefits.

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About John Farrell

John Farrell directs the Energy Democracy initiative at the Institute for Local Self-Reliance and he develops tools that allow communities to take charge of their energy future, and pursue the maximum economic benefits of the transition to 100% renewable power. More

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