Renewable Energy Portfolio Standards require the utilities to generate or procure a minimal percentage of energy in their portfolios from renewables energy as defined by the eligible technologies in each statute, namely solar, wind, hydro, geothermal, biomass, and storage. The first stage of the policy occurred in the early 2000s as states began to enact the policies into law with goals of around 20%. But today, we are currently in a new era where state legislatures and Green New Deal advocates are debating whether or not to increase the nominal requirements – the percentages of the energy portfolios to come from renewables – to either 50% or 100% within the next 15 or so years. In terms of the actual energy that has to be produced to meet the standards, the targets are significantly increasing.
The issue is that our current technologies are intermittent, variable, and unpredictable as they depend on the weather and consequently have limited capacity factors. At the scale needed, storage is currently not a viable option as the technology is very expensive and still developing. But it is worth mentioning that utilities in Arizona and Florida are in the process of building batteries in solar energy fields that would be able to compete with natural gas. However, this is because of the favorable technical potentials in those states for solar energy. Because supply and demand have to be equivalent in the power market at any given time, when adding new generation, some existing generation has to be taken offline in the long-term. In the short-run and in emergency situations, the grid regulators have to shut off the connection to the grid from the renewable energy sources (NREL 2018; DOE 2017). This makes it more difficult for those individuals that invested in their renewable energy technologies to recover the costs of their systems, and it also raises transmission costs for everyone else. The generation that is removed in the long-run is often from sources that provide baseload power, the maximal amount of energy needed to satisfy a minimal level of demand. Baseload power sources (coal, natural gas, and nuclear) require time to ramp up and down and thus are relatively less responsive to changes in demand. Because electrons move at the speed of light and that electricity is consumed within the same moment it is produced, the time taken to ramp up and down can be a significant driver of rising costs (Bakke 2016). Over time, operating at lower scales raises costs for utilities (and later the ratepayers) as they now have to operate the power plants at scales that are inefficient. Slightly higher electric rates are not a problem for those in the middle class, but they are a problem for those in poverty who can already barely afford utility rates, as the rates are a higher percentage of lower incomes.
Another issue with the large targets for renewable energy is that they create load uncertainty for nuclear power plant operators. This is an issue as nuclear power is emission-free and virtually safe. This load uncertainty was a major driver for the premature shutdown of the Diablo Canyon plant in California (DOE 2017). Critics often point to the issue of storing the waste, but the issue is political, not an engineering or scientific issue (Mueller 2012). Many of the fears with Yucca Mountain and the Waste Isolation Pilot Plant sites are based on irrational fears of nuclear waste and they ignore the status quo that the waste is stored on site with much higher human health, environmental, and security risks. Also, as we ramp up the renewable energy portfolio standards, the subsidies for the technologies (the Renewable Energy Credits, RECs) will increase in value. The increased costs of the credits will be passed onto ratepayers if there is no cost control mechanisms in place. As cheap natural gas and cheap renewables have been the leading drivers of premature nuclear power plant shutdowns, with their costs influenced by the subsidies, more subsidies for renewable energy will exacerbate the premature nuclear power plant shutdowns. This can be seen in the most recent Alternative Energy Outlook (AEO) where the EIA projects that the share of nuclear energy in our national energy portfolio will drop to 12% by 2050.
So what will replace the lost nuclear capacity? Most likely solar and natural gas in the long-term, as the AEO shows that these are the most economically attractive alternative generation technologies, when considering the capital expenditures and the operating and maintenance costs. But in the short-term, the lost capacity would be replaced by natural gas combined cycle power plants. This is why our emissions rose by 1.7% in 2018.
So, now that I have covered a few of the issues around renewable energy portfolio standards, let me raise the profile of a few solutions. First, as energy consumers, we need to work with the utilities to ensure that the costs of our own decisions are privatized. For example, if a consumer wants to go green, we should allow the utility to purchase RECs, and then have the customer pay for them. The CEO of Duke Energy Corp. acknowledges that it will be a trend in the utility industry to become more customer-oriented. Despite not having a fancy solar panel on your roof, by working with the utility to go green, we can ensure that we can support renewable energy technologies without pushing the costs onto others.
Second, we need to embrace nuclear energy using market-based strategies. The energy industry is already heavily regulated in many ways, and that the point is to use the right combination of incentives to lower greenhouse gas emissions to internalize the externalities. Haratyk (2017) finds that a carbon price of $10/MWh would be enough to ensure that the market would respond to provide the needed incentives to keep nuclear power plants in operation. Alternatively, we can update the renewable energy portfolio standards themselves to include a special tier for nuclear energy. Tiers are used to target specific technologies and just as some RPS policies have tiers for solar and wind, we can create clean energy portfolios so that we can ensure low-carbon generation, which is one of the main intentions of the RPS policies in the first place. Another option is to use Clean Energy Credits. New York, Illinois, Connecticut, and New Jersey currently use this type of policy to provide a subsidy on a per MWh basis to nuclear power plant operators for the zero-emission attribute of the energy. This policy is currently proposed in Pennsylvania. With any of the policies above, we can efficiently and effectively support renewable energy and ensure that our current nuclear power plants would not shutdown so that we can tackle climate change.
Third, we need to keep investing in emerging technologies and updating our existing policies to meet current challenges. We need to find ways around the strategic metals (nickel, cobalt, copper, lithium) shortage that will act as a barrier to research and development for batteries and other storage technologies. We need to lower NEPA barriers to electricity infrastructure, namely transmission lines so that we could increase our grid capacity for renewables. We could also discover more ways to make CCS and direct air capture technologies economically feasible. And we need to think about solutions pertaining to energy efficiency. As the energy grid becomes decarbonized, energy efficiency measures have lower benefits, but energy efficiency can help increase capacity for renewables and provide ancillary services to the grid. Additionally, we need to think about decarbonization beyond the power sector to find economic opportunities at the interconnections between sectors in the broader economic system, broadly in transportation, manufacturing, and agriculture. Lastly, we need to spread our low-carbon technologies to the developing world so that they would not build more coal plants and increase emissions as they develop.
Ryan Block graduated with a Masters of Public Policy degree from the UMD School of Public Policy, specializing in energy and environmental policy. He is interested in decarbonization, modernizing the energy grid, and utility regulation. Ryan is seeking employment within the energy policy field.