The World's #1 Renewable Energy Network for News, Information, and Companies.
Untitled Document

Does RPS Still Run the Renewable Energy Engines?

Renewable energy deployment has increased in recent years thanks to two primary turbo chargers: federal tax policies that incentivize investment and state renewable portfolio standards (RPS) that require utilities to procure increasing amounts of renewable energy to serve their load obligations.

But the stimuli that supported this significant growth may not prove as effective going forward.  First, the federal investment tax credit (ITC) reverts from 30% back to its original 10% level in 2017, thereby reducing the ability of solar projects to raise specialized investments called "tax equity" designed specifically to take advantage of tax credits and depreciation benefits.  Further, the stimulative impacts of the Section 1603 program — which allowed the ITC to be received in the form of a cash payment — are winding down as projects "under construction" are completed.

Second, state RPS requirements no longer challenge the deployment capabilities of the industry. Once considered ambitious targets, RPS standards are now relatively easy goals to meet as the wind and, in particular, solar industries are capable of developing generating capacity at scales unheard of even just a few years ago. Data provided by Lawrence Berkeley National Laboratory (LBNL) indicate the current state RPS mandates will require roughly 6 GW of incremental annual additions from 2012–2020 (see Figure 1 to the right). Relative to the 5–10 GW of wind additions per year from 2009–2011 and the 3 GW of solar capacity that industry is on target to deploy in 2012, the state RPSs aren't gunning the renewable engines the way they used to.

RPS targets appear to be particularly out-of-date with respect to solar requirements. Recent figures from the Solar Energy Industries Association (SEIA) indicate solar deployment in the first half of 2012 was twice as high as during the comparable period in 2011 and that 2011 deployment was more than double 2010 deployment.

Even states with the most aggressive RPS requirements are not a particular challenge for the deployment capabilities of the industry. Let's take New Jersey: This state's solar set-aside is one of the country's largest, both in percent of total load and in energy required. New Jersey requires more solar energy via its solar set-aside than Nevada, a state with more than 12 times the total square mileage and a roughly 50% better solar resource. Per legislation signed in July 2012, New Jersey's solar mandates require its jurisdictional utilities to procure roughly 300 MW per year of new solar-generating assets through 2020 [5].

However, solar developers and installers have proven themselves capable of deploying far greater amounts. In the first half of 2012 alone, New Jersey solar installations reached 275 MW, or 550 MW on an annual basis.

Grid integration technical challenges remain, however, as RPS requirements are still escalating based on prior legislation. But the capabilities of modern electric grids are improving at rapid rates. For example, Denmark can currently integrate 29% of its annual energy requirement from wind installations alone (almost nine times more than current U.S. achievements).

In another example, Germany recently successfully integrated enough solar energy to meet roughly one-half of its daily requirements (versus <1% annual solar penetration in the U.S. market). In a recent report, NREL found that a more flexible U.S. electric system is capable of supporting renewable energy penetration rates of 80% and higher. Accordingly, meeting state RPS targets—and beyond—is technically achievable.

While RPS requirements were designed to push the capabilities of the industry to expand rapidly, the industry leapfrogged the requirements and can now develop at a scale unforeseen by policymakers. Is a policy tune-up needed to keep the industry barreling down the highway? Or does the industry have sufficient momentum to maintain its own growth and reach grid-parity with traditional sources of electric generation?

This article was originally published on NREL Renewable Energy Finance and was republished with permission.

Lead image: Green world via Shutterstock

Untitled Document

RELATED ARTICLES

Suntech Parent Company Buys Majority Share of US-based Suniva

Ehren Goossens Shunfeng International Clean Energy Ltd., the Hong Kong-based solar company controlled by billionaire Zheng Jianming,...

Sunrise in Pakistan as the Country Delves into Solar PV

Robert Harker Pakistan has joined the list of countries that are exploring solar power as a means to bridge critical energy generat...

Global Renewable Energy Roundup: China, Kenya, Turkey, India Seeking More Renewables

Bloomberg News Editors China is being encouraged by three industry groups to double the nation’s solar-power goal for 2020 to make up for sh...

Why Smarter Grids Demand Smarter Communications Networks

Mark Madden

Historically, utility networks and communications networks have had little in common.

PRESS RELEASES

Intersolar AWARD „Solar Projects in India“ – Applications being accepted until September 18

The Intersolar AWARD in the category Solar Projects in India honors projects in the fie...

OFS Announces Commercial Availability of InvisiLight® MDU Optical Solution for Multiple Dwelling Units

OFS, a leading-edge designer, manufacturer and supplier of innovative fiber optic netwo...

New local energy partnership brings innovative solar tracker to Washington State

A new partnership will bring the innovative AllEarth Solar Tracker solar electric syste...

30 days to GRC Annual Meeting & GEA Geothermal Energy Expo

The Geothermal Resources Council (GRC) has announced that it is only 30 days to go to t...

FEATURED BLOGS

Cronimet / THEnergy study: In solar for mines size does not always matter - Reducing CAPEX with energy efficiency and load shifting

Munich, September 2015. Mining companies are constantly gaining interest in solar solutions because frequently solar ...

Final Program Now Available for GRC Annual Meeting & GEA Geothermal Energy Expo

GRC Annual Meeting & GEA Geothermal Energy Expo - Final Program from

Vacancy? No Problem!

Have you ever tried to sell an efficiency product or service to a prospect that owns or manages a building with high ...

Shedding Some Light on a Taxing Situation for Community-Shared Solar

For renters and for property owners with inadequate roof space, the many benefits of solar electricity may seem out o...

FINANCIAL NEWS

CURRENT MAGAZINE ISSUE

Volume 18, Issue 4
1507REW_C11

STAY CONNECTED

To register for our free
e-Newsletters, subscribe today:

SOCIAL ACTIVITY

Tweet the Editors! @jennrunyon

FEATURED PARTNERS



EVENTS

Doing Business in South Africa – in partnership with GWEC, the Glob...

Wind Energy in South Africa has been expanding dramatically, growing fro...

Intersolar Europe 2016

Exhibition: June 22-24, 2016; Conference: June 21-22, 2016 Intersolar Eu...

Intersolar North America 2016

Exhibition: July 12 - 14, 2016; Conference: July 11 - 13, 2016 Intersola...

COMPANY BLOGS

Pushing Beyond The Cushion

Efficiency projects are all too often viewed as “optional” o...

Less Is More

When you’re giving a presentation, one of the easiest things to do...

Captivology

One of the biggest challenges we face as efficiency sales professionals ...

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS