Renewable Electricity Standards:

Transcription

1 Renewable Electricity Standards: A Review of State Experience PURC Annual Conference, February 6, 2008 Jeff Deyette Analyst, Clean Energy Program Union of Concerned Scientists

2 What is a renewable electricity standard? A requirement on retail electric suppliers to supply a minimum percentage or amount of their retail load with eligible sources of renewable energy Typically backed by specific penalties for non-compliance Often uses a tradable renewable energy credit (REC) mechanism to facilitate compliance Never designed exactly the same in any two states

3 15% by % by % by 2010 Renewable electricity standards 20% by % by % by % by % by States + D.C. 10% by % by ,880 MW (~5.5%) by % by % by % by % by 2025 VT: 10% of 2005 sales by % by % by % by 2021 NH: 23.8% by 2025 ME: 30% by % by 2017 RI: 16% by 2019 MA: 4% by 2009 CT: 23% by 2020 NJ: 22.5% by 2020 MD: 9.5% by 2022 DE: 20% by 2019 DC: 11% by 2022 VA: 12% by 2022 Standard Standard and Goal Voluntary Goal HI: 20% by ~ 46% states of U.S. have load requirements covered of by 20% state or standards higher

4 IA Renewable electricity standards MA (2003) ME (2000) CT (2000) NJ (2001) TX (2002) timeline IA MN AZ NV PA WI NM CA RI MT WA (2002) (2001) (2000) (2002) (2003) (2007) (2008) (2012) ( ) Enactment Major Revision Year of First Requirement MN AZ NV NM CT MN CO (2007) HI (2005) MD (2006) NY (2006) NJ NM PA DC (2007) DE (2007) NV TX NJ WI HI CA AZ IL (2008) NC (2012) OR (2011) NH (2012) 2007 MN NM CO MD CT PA DE ME CA TX

5 What drives new state renewable electricity standards? Largely adopted as part of electric restructuring legislation (now more than half are in regulated states) Growing recognition of benefits: Fuel diversity & hedge against natural gas prices Economic development and jobs Carbon reductions and other environmental benefits Growing recognition of effectiveness

6 Renewable electricity standards: a primary driver of new renewables Renewable portfolio standards have emerged as an effective and popular tool for promoting renewable energy. Council on State Governments Enacting renewable portfolio standards is the #1 driver of renewable energy development. Goldman Sachs RPS will be the most important driver for new renewables in the U.S. and Canada over the next ten years. Navigant RPSs or purchase mandates are the most powerful tool that a state can use to promote wind energy. NREL

7 Renewable energy expected from state standards* 70,000 HI Megawatts 60,000 50,000 40,000 30,000 20,000 10,000 0 New renewable energy supported: - 55,700 MW by 2020 * Additional 19,000 MW by 2020 supported IF voluntary renewable energy goals achieved in CA, IA, MO, ND, TX, VA, & VT CA NV AZ & NM OR & WA CO & MT TX MN IA & WI IL NC MD PA DC & DE NJ NY CT, RI & NH MA ME *Projected development assuming states achieve annual renewable energy targets.

8 CO 2 reductions equivalent to 21.8 million cars off the road One for each licensed driver in New England + NY

9 States considering new or higher renewable electricity standards Indiana: 10% by 2018 Michigan: 10% by % by 2025 Ohio: 12.5% by 2025 California: 33% by 2020, 50% by 2025? 10,000 MW by 2025 Florida: 20% by 2020 Existing Standard New Standard Higher Standard Total potential: up to 42,700 MW

10 RES design components Structure Who s obligated: IOUs, ESPs, Munis, Coops? Percentage vs. capacity Target levels/ramp-up rate Start date/end date Single requirement or multiple tiers Resource diversity (set-asides or multipliers) Application: product vs. company-based Funding mechanisms Eligibility Resource types (define) In-state vs. out of state Generation deliverability vs. RECs only New vs. existing (define) Customer-sited resources Other Issues Interaction with other policies (i.e. state funds) Interaction with green power programs Compatibility with RPS programs in other states/federal Administration Oversight (PUC, Energy office, both?) Compliance verification (REC trading or other) Resource eligibility certification Enforcement mechanisms Filing requirements Cost caps Cost recovery Contract standards Flexibility mechanisms Program review Source: Wiser, et al., U.S. DOE LBNL, 2004.

11 RES design diversity: obligated entities & requirement types Who s Obligated? Investor-owned utilities Municipal utilities/rural Co-ops Exempted/Opt-out Subject to lower targets Develop own requirements Other Exemptions Utility size Rate freeze Certain large customers 23 states cover 75% or more of retail load Requirement Types Single Tier 5 states Multiple Tier Resource class and/or vintage Non-renewables (EE/IGCC) 9 states Set-asides Resource (solar or DG) Community-wind 16 states

12 RES design diversity: resource diversity (solar incentives) 2X credit 0.75% by 2013, 2.4X credit 4.5% DG by % by 2020, X credit 4% by 2020 PA: 0.5% solar PV by 2020 NY: % customersited DG by 2013 NH: 0.3% by 2014 NJ: 2.12% by 2020 DE: 2% by 2019, 3X credit through 2014 MD: 2% by 2022 DC: 0.386% by 2021, 1.1X credit through 2009 NC: 0.2% solar by 2022 Set-aside requirements Set-aside with credit multiplier Credit multipliers Set-asides provide support for 5,800 MW by 2020

13 RES design diversity: resource eligibility Landfill gas, Ocean/Wave/Tidal, RE Fuel Cells Co-generation, Energy Efficiency, Fuel Cells, Solid Waste Incineration

14 RES design diversity: enforcement mechanisms 5 /kwh 5 /kwh TBD 1 /kwh 4.5 /kwh ME: 5.7 /kwh NH: 5.7 /kwh MA: 5.7 /kwh RI: 5.7 /kwh CT: 5.5 /kwh DE: /kwh MD: 2 /kwh /kwh Penalty 5 /kwh Administrative Penalty ACP ACP/Admin. Penalty Normal Regulatory Enforcement Not Applicable (Central Procurement)

15 UCS renewable electricity standard online database and toolkit Summary-level maps, graphics Detailed state summaries Searchable database 34 design, implementation elements Coming: Best practices search Model language search

16 Renewable energy development: What are we learning in practice? Many states just getting underway, but some notable successes to date Texas: 4,600 MW of new capacity (97% wind) Minnesota: 1,350 MW (mostly) wind & biomass New York: 1,160 MW (mostly) wind, biomass, & small hydro Colorado: 1,060 MW of wind 7 years ahead of 2015 targets New Mexico: 500 MW of wind Others: Iowa, Wisconsin

17 Wind power is faring well under state standards 10,000 Annual US Wind Development (MW) 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 Other (economical, green power, IRP, etc.) RPS-related Renewable Energy Fund-related Half of all US wind power capacity built from was RPS-related Source: Wiser, LBL

18 Other technologies can also benefit California RPS New, Repowered, or Re-Started Capacity, by Technology Solar Thermal 42.4% Geothermal 12.5% Biomass 6.3% Biogas 1.6% Small Hydro 0.3% Wind 36.9% Source: California Energy Commission

19 Impact of solar PV set-asides has already been substantial Incremental Installed PV Capacity Outside of California (kw) 35,000 30,000 25,000 20,000 15,000 10,000 5,000 Annual PV Additions Driven by Solar Share Requirements, Compared to Other (non-california) PV Installations 0 Roughly 48 MW of PV has been supported by RPS set-asides so far Other, Excluding CA Pennsylvania Colorado Nevada New York Arizona New Jersey Source: Wiser, LBL

20 However, it s not all good news Under-compliance in Arizona, California, Massachusetts, and Nevada so far Low cost caps/broad eligibility in Hawaii, Maryland, and Montana could lead to significantly reduced new renewable development Public acceptance/siting concerns Growing transmission concerns

21 U.S. DOE: Projected cost of state renewable electricity standards is typically modest Change in Rates in 1st Peak Target Yr. 9% 6% 3% 0% -3% -6% 21 of 30 analyses predict rate increases 1% Median retail rate increase: +0.7% Median Median retail change rate increase in retail = +0.7% rates: /kwh Median change in retail rates = analyses find rate savings 6 analyses predict rate savings Many of the analyses assume low natural gas prices ($3 - $5 range) Average retail (% - left axis) Average retail ( /kwh - right axis) Change in Rates in 1st Peak Target Yr. (2003 /kwh) Source: Lawrence Berkeley National Laboratory (Chen, Wiser, and Bolinger), 2006.

22 What are we learning in practice? U.S. DOE Cost estimates % 0.2% 0.1% MA: 1.2% CT: 0.3% NJ: 0.5% MD: 0.1% 0.4% Short-term RECs Bundled contracts (costs unknown) Not applicable Source: Wiser, Lawrence Berkeley National Laboratory, 2007 Where bundled contracts predominate savings or at worst, very modest rate increases.

23 Designing a RES for Florida: Keys to success Broad applicability Carefully balanced supply-demand conditions Sufficient duration & stability of targets Sufficient and credible enforcement Well-defined & stable resource eligibility rules Well-defined & stable treatment of out-of-state resources Source: Wiser, et al., U.S. DOE LBNL, 2004.

24 Designing a RES for Florida: Keys to success (cont.) Flexible verification mechanisms (i.e. tradable RECs) Appropriate compliance flexibility Well-defined contracting standards & cost recovery mechanisms Product-based compliance Commitment to long-term policy stability Source: Wiser, et al., U.S. DOE LBNL, 2004.

25 Final Thoughts The renewable electricity standard is an effective and popular primary long-term driver of new renewable energy development in the U.S. Florida can use the renewable standard to effectively deliver new renewable energy and its associated benefits at low cost Common pitfalls can be avoided with careful attention to details during design and implementation the devil is in the details!!! Thank you.