Bioenergy, Hydropower, Project Development, Solar, Wind Power

Report: Update on State Renewable Portfolio Standards

According to a new report, “Renewables Portfolio Standards in the United States: A Status Report with Data through 2007,” released by the Lawrence Berkeley National Laboratory, a growing number of states are supporting renewable electricity through the creation of renewable portfolio standards (RPS). The report provides a comprehensive overview of early experience with these state-level RPS policies.

“These [RPS] programs have emerged as one of the most important drivers of renewable energy deployment in the U.S.,” notes report author Ryan Wiser, of Berkeley Lab. “But, as the popularity and importance of these RPS’ has increased, so too has the need to keep up with the design, early experience and projected impacts of these programs.”

Collectively, the RPS policies that are in place today in 25 states and Washington D.C. apply to nearly 50% of the U.S. electricity load, and four new states joined the RPS roster in 2007. “Many of these policies have been established recently and each is designed differently,” says co-author Galen Barbose, “As a result, experience is decidedly mixed.”

The design of an RPS can and does vary; in fact no two policies are exactly alike. But at its heart an RPS simply requires retail electricity suppliers (also called load-serving entities, or LSEs) to procure a certain minimum quantity of eligible renewable energy. An RPS establishes numeric targets for renewable energy supply, applies those targets to retail electricity suppliers and seeks to encourage competition among renewable developers to meet the targets in a least-cost fashion. RPS purchase obligations generally increase over time, and retail suppliers typically must demonstrate compliance on an annual basis.

Mandatory RPS policies are backed by various types of compliance enforcement mechanisms, and many — but not all — such policies include the trading of renewable energy certificates (REC).

The study reports numerous key findings, some of which include:

  • Over 50% of non-hydro renewable capacity additions in the U.S. from 1998 through 2007 occurred in states with RPS policies, and 93% of these additions came from wind power.

  • Existing state RPS policies, if fully achieved, would require roughly 60 gigawatts (GW) of new renewable capacity by 2025, equivalent to 15% of projected electricity demand growth from 2000 through 2025.

  • Solar set-asides in state RPS policies are becoming more common, and these policies have supported over 165 megawatts (MW) of new solar capacity so far; a total of roughly 6,700 MW of solar capacity would be needed by 2025 to fully meet these set-asides.

  • The early-year renewable energy purchase targets in the majority of state RPS policies have been fully or almost-fully achieved, with overall average compliance at 94% in 2006.

  • Nonetheless, a number of states have struggled to meet even their early-year RPS targets, and many states have been reluctant to penalize non-compliance.

  • Renewable energy certificate (REC) tracking systems continue to expand, and all but four states allow unbundled RECs to count towards RPS compliance.

  • The cost of RPS policies varies by state, but in most states, these programs have, so far, increased electricity rates by 1% or less; in several states, the renewable electricity required by RPS policies appears competitive with fossil generation.

Report author, Ryan Wiser, says that since no two state policies are identical, one can always point to state-level RPS experiences that are both positive and negative. But that overall, “the proof is in the pudding — renewable energy development in the U.S. is primarily being spurred by attractive federal tax incentives and state-level RPS policies,” he says.

The report is in large part a state-level look at RPS policies; however, the authors note that different versions of a federal RPS have passed both the house and the senate at different times. Since the two houses have yet to agree on specifics, nothing has reached the President’s desk yet.

Wiser thinks more action at the federal level will probably be necessary. “State RPS policies, while impressive, are still modest in scope if the goal is to significantly diversify the nation’s electricity supplies, and to significantly drive down carbon emissions,” he says. “If those are our goals, then federal action appears necessary, whether through a federal RPS, a long-term extension of renewable energy tax incentives, or through federal climate-change policy.”

Wiser believes that all policies deserve attention and debate, “proponents of feed-in tariffs, tax incentives, and RPS policies should all be heard,” he says.

“But, let’s also recognize that our existing mix of state and Federal policies — primarily federal tax incentives and state RPS programs — are beginning to have a significant impact on renewable energy markets in the U.S.,” says Wiser.