State Renewable Portfolio Standards

Transcription

1 State Renewable Portfolio Standards Current Status and Trends April 16, 2018 Warren Leon Executive Director

2 Clean Energy States Alliance CESA is a national, nonprofit coalition of public agencies and organizations working together to advance clean energy Facilitates information sharing Provides technical assistance Coordinates multi-state collaborative projects 2

3 State-Federal RPS Collaborative Funded by the US Department of Energy and the Energy Foundation Managed by CESA Encourages information sharing among RPS program managers Monitors and reports on RPS news, trends, and best practices Free monthly newsletter Regular webinars 3

4 Table of Contents 1. RPS basics 2. The current state of RPSs across the country 3. The projected future RPS market 4. RPS prices and costs 5. RPS benefits 6. General observations about RPSs: strengths, weaknesses, and considerations for RPS design Many of the charts and related information comes from Lawrence Berkeley National Laboratory s U.S. Renewables Portfolio Standards: 2017 Annual Status Report 4

5 What Is an RPS? A requirement that retail electricity suppliers get a specified minimum share of their electricity from eligible clean energy electricity generators The % usually increases over time Most often use tradable renewable energy certificates (RECs) to facilitate compliance 5

6 What Is a REC? When a renewable energy generator generates a MWh of electricity, it produces two things for sale: 1 MWh of generic electricity 1 REC: a certificate that symbolizes the generation s renewable energy attributes The REC can be traded separately from the electricity Whoever owns the REC can claim that they have purchased and/or are using renewable electricity A REC that meets the requirements of a state s RPS can be used for RPS compliance Otherwise, the REC can be sold in the voluntary market 6

7 Overview of the State of State RPSs RPSs in a large number of states 29 states plus DC 8 more states have voluntary goals Outside the broader southeast (WV to LA), only 4 states without either an RPS or voluntary goals Leading to considerable renewable energy generation Catalyzed far-reaching changes, altering the decisionmaking and operations of electricity regulators, utilities, the energy industry, and other stakeholders Much variation among states in goals, technologies, timing, other provisions 7

8 WA: 15% x 2020* OR: 50%x 2040* (large utilities) CA: 50% x 2030 NV: 25% x 2025* Renewable Portfolio Standard Policies UT: 20% x 2025* AZ: 15% x 2025* MT: 15% x 2015 CO: 30% by 2020 (IOUs) * NM: 20%x 2020 (IOUs) ND: 10% x 2015 SD: 10% x 2015 KS: 20% x 2020 OK: 15% x 2015 MN:26.5% x 2025 (IOUs) 31.5% x 2020 (Xcel) IA: 105 MW MO:15% x 2021 WI: 10% 2015 IL: 25% x 2026 MI: 15% x 2021* IN: OH: 12.5% 10% x x NY:50% x 2030 VA: 15% x 2025 NC: 12.5% x 2021 (IOUs) SC: 2% 2021 DC ME: 40% x 2017 NH: 25.2 x 2025 VT: 75% x 2032 MA: 15% x 2020(new resources) 6.03% x 2016 (existing resources) RI: 38.5% x 2035 CT: 27% x 2020 NJ: 50% x 2030 PA: 18% x 2021 DE: 25% x 2026* MD: 25% x 2020 DC: 50% x 2032 HI: 100% x 2045 Renewable portfolio standard Renewable portfolio goal * TX: 5,880 MW x 2015* U.S. Territories NMI: 20% x 2016 Guam: 25% x 2035 PR: 20% x 2035 USVI: 30% x 2025 Extra credit for solar or customer-sited renewables Includes non-renewable alternative resources 29 States + Washington DC + 3 territories have a Renewable Portfolio Standard (8 states and 1 territories have renewable portfolio goals) 8

9 States make regularly and significant revisions to their RPSs Year of RPS Enactment CO HI IL MA CT MD DC NH MI ME PA NJ NY DE NC MO IA MN AZ NV WI TX NM CA RI MT WA OR OH KS VT IA MN AZ MN NM CT NJ CT AZ CA DC HI CO CA MA CO IL CA DC MA NJ WI NV MN NM CO CA CO DE IL DE CT MD CT MA CT IL MD NV PA NV CT CT HI ME IL DC NJ MD OH HI MA TX HI DE MA MN MA DE NH MN OR KS MI NJ MD MD NV MD IL NM MT WI VT NY WI ME NJ OR NJ MA NY NM OR Year of Major Revisions MN RI NY MD OH NV RI NJ NC Source: Berkeley Lab Current as of July 2017 NM PA TX WI Most RPSs have been in place for at least 10 years 9

10 General Trends in RPS Revisions Creation of resource-specific carve-outs: Solar and DG carveouts are most common (18 states + D.C.), often added onto an existing RPS Increase and extension of RPS targets: More than half of all RPS states have raised their overall RPS targets or carve-outs since initial RPS adoption Long-term contracting programs: Often aimed at regulated distribution utilities in competitive retail markets; sometimes target solar/dg specifically Refining resource eligibility rules: Particularly for hydro and biomass, e.g., related to project size, eligible feedstock, repowered facilities Loosening geographic preferences or restrictions: Sometimes motivated by concerns about Commerce Clause challenges or to facilitate lower-cost compliance Note: Although many states have introduced bills to reduce, repeal, or freeze their RPS, only two (Kansas, Ohio) have been enacted 10

11 States Have Generally Met Their Interim RPS Targets CT MA ME NH NY RI DC DE IL MD NJ OH PA IA MI MN MO WI AZ CA CO HI MT NM NV OR WA NC TX AZ CO DC DE IL MA MD MO NC NH NJ NM NV NY OH PA 100% 80% 60% 40% 20% Percentage of RPS Obligations Met with RECs or RE For most-recent compliance year available in each state 0% 100% 80% 60% 40% 20% 0% General RPS Obligations Northeast Mid-Atlantic Midwest West Solar/DG Carve-Out Source: Berkeley Lab Notes: General RPS Obligations refers to the non-carve-out portion of RPS requirements in each state. For New England states, it refers to Class I obligations. Many states/utilities well ahead of schedule, easily meeting interim targets Others met interim targets by relying on stockpile of banked RECs from prior years Some state-specific conditions create a few exceptions: DC (Solar): In-district eligibility requirements limit pool of supply IL (General RPS & Solar): Alternative retail suppliers required to meet 50% of RPS with ACPs NH (Solar): Solar/DG data is from 2015, when there was a Class II Rec shortage. Low solar ACP prices led to Class II RECs flowing into neighboring Class I markets NY (General RPS): Procurement has lagged targets, partly due to budget constraints 11

12 RPSs Are a Major Driver of Renewable Energy Growth Nameplate Capacity (GW) Annual Renewable Capacity Additions Non-RPS RE Capacity Additions (left) RPS Capacity Additions (left) RPS Percent of Annual RE Builds (right) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% Source: Berkeley Lab Notes: RPS Capacity Additions consists of RE capacity contracted to entities with active RPS obligations or sold on a merchant basis into regional RPS markets. 0% RPS requirements constitute ~50% of total U.S. RE growth since 2000 Other RE growth associated with: Corporate procurement and other voluntary green power markets Economic utility purchases Accelerated RPS procurement Significant variations among regions In New England, almost all capacity additions serve the RPS market 12

13 TWh Projected RPS Demand through Projected RPS Demand (TWh) California Non-CA West Mid-Atlantic Northeast Midwest Texas Southeast Source: Berkeley Lab Notes: Projected RPS demand is estimated based on current targets, accounting for exempt load, likely use of credit multipliers, offsets, and other state-specific provisions. Underlying retail electricity sales forecasts are based on regional growth rates from the most-recent EIA Annual Energy Outlook reference case. Under current policies, total RPS demand roughly doubles, growing from roughly 235 TWh in 2016 to 450 TWh in 2030 Increased demand does not necessarily equate to required increase in supply Some utilities/regions ahead of schedule, others are behind Some growth in demand will likely be met with banked RECs Much Northeast growth linked to NY s 30% by 2030 target 13

14 IA MT NC TX WI ME CO PA MI CT DE AZ WA MN NJ NH MD OR NM MO OH VT NV CA IL MA HI RI NY DC Percent of Applicable Retail Sales RPS Procurement Needs by % Residual RPS Procurement Needs by 2030 (Percent of Applicable Retail Sales) 25% 20% 15% Source: Berkeley Lab 10% 5% 0% 8 states effectively have no remaining need; 8 others have needs >10% retail sales Numbers based on 2016, so some of these needs have already been filled 14

15 States Reaching Their Maximum Targets Source: Holt, When Renewable Portfolio Standards Max Out, CESA, states have already reached their maximum target 15 more states will reach their max by 2025 Options Sunset the RPS Leave targets unchanged but extend compliance period Increase RPS targets (8 states have done that since 2015) 15

16 The Context for Understanding RPS Costs and Benefits It is easier to count the costs than the benefits The easiest thing to focus on is electricity prices, but even that isn t easy. Factors to consider: Renewable integration costs. Some portion of incremental integration and transmission costs may be socialized by the network operator and not reflected in REC prices Merit-order (price suppression) effect. At least within the short-run, low marginal-cost resources (like wind and solar) put downward pressure on wholesale prices, and in turn retail prices. This benefits consumers and reduces income for generators. MA found this to be greater than the cost of all RECs in Other considerations on the benefits side Creation of local businesses and jobs Environmental benefits (with associated economic benefits) 16

17 $/MWh $/MWh $/MWh REC Price Trends $80 New England Class I CT MA ME NH RI $60 $40 $20 $ Source: Berkeley Lab 17 $40 REC prices can be volatile and are sensitive to sudden changes in $30 eligibility rules. REC prices are a function of ACP $20 rates and current/expected supply and demand. $10 Prices have declined in New England in recent years. SREC prices are very state-specific, because markets are primarily instate and are shaped by ACP price. Mid-Atlantic/PJM Tier I DC DE IL MD $800 NJ OH PA $ $700 $600 $500 $400 $300 $200 $100 Solar Renewable Energy Certificates (SRECs) DC DE MA (I) MA (II) MD NH NJ OH PA $

18 AZ CA (CPUC) CA (IOUs) CO MI MN MO NC NM OR WA WI DC DE IL MD NJ OH PA CT MA ME NH NY RI TX % of Retail Electricity Bills Recent RPS Compliance Costs 12% 11% 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Costs as % of Average Retail Electricity Bill The numbers are estimated based Restructured States on REC and Regulated ACP expenditures. States Based on REC+ACP Expenditures They Based ignore on Utilityother or PUC-Reported factors that Costs 12% work in opposing directions: 11% 10% renewable integration costs and 9% merit-order effect. 8% 7% ACPs may be credited to 6% ratepayers or recycled through 5% 4% incentive programs 3% 2% Variation among states reflects 1% differences in: 0% -1% RPS target levels Mid-Atlantic/PJM Northeast Resource tiers/mix Source: Berkeley Lab, based on spot market data and sample long-term contract data. For New Hampshire, the % should be lower for 2017, when REC prices were much lower. NH PUC reports actual RPS costs to be about 1% in the years from Wholesale electricity prices Available renewable energy resources Other factors 18

19 CT DC MA MD ME NH NJ RI VT CO DE IL MI MO MT NM NC OH OR TX WA % of Retail Electricity Bills Future RPS Compliance Costs 20% 15% 10% 5% Current Costs Compared to Maximum Future Cost (% of Average Retail Electricity Bill) For New England, offshore wind Historical Compliance Cost (Most-Recent Year) Cost Cap (Equivalent Max Rate Impact) development will be a big factor in determining whether there is a surplus or shortage of RECs 0% ACP-Based Cost Containment Other Cost Containment Mechanisms Source: NREL and Berkeley Lab Notes: Each state s cost containment mechanism was translated into the equivalent maximum allowed rate impact for the final year in the RPS. For states with an ACP, this corresponds to a scenario in which the entire RPS obligation in the final RPS year is achieved with ACPs or RECs priced at the ACP rate. 19

20 Historical Benefits of RPSs From: Wiser et al, A Retrospective Analysis of the Benefits and Impacts of U.S. Renewable Portfolio Standards, National Renewable Energy Laboratory and Berkeley Lab,

21 Observations about RPSs: Strengths of RPS as a policy It is straight-forward concept with appeal to the public It uses a market-based approach It is a long-term policy It is a flexible policy mechanism Most states have undergone at least one major revision RPSs have had modest costs up to now They have created jobs and contributed to local economic development 21

22 Observations about RPSs: Weaknesses of an RPS as a policy There can be significant volatility in the price of renewable energy certificates An RPS can have free riders For an RPS to work well, it needs to be fine-tuned over time, but that can be difficult 22

23 Considerations for RPS Design Review progress regularly It is easy to have unintended consequences Assess possible RPS modifications carefully Consider potential interactions with other states RPSs Assess implications of ACP rates (encourage others to reduce rates) Maintain flexibility The New Hampshire renewable thermal carve-out has been path-breaking and influential Keep in mind the implications of the Commerce Clause of the US Constitution For guidance: Commerce-Clause-paper Final.pdf More on RPS design: Leon, Designing the Right RPS, CESA,

24 Contact Information Clean Energy States Alliance 50 State Street, Suite 1 Montpelier, VT Warren Leon wleon@cleanegroup.org 24