Renewable Portfolio Standards: Costs and Benefits

Transcription

1 Renewable Prtfli Standards: Csts and Benefits Lri Bird, NREL Renewable Energy Markets December 4, 2014 C-authrs: J. Heeter 1, G. Barbse 2, S. Weaver 2, F. Flres 1, K. Kuskva-Burns 1, and R. Wiser 2 1 Natinal Renewable Energy Labratry (NREL) 2 Lawrence Berkeley Natinal Labratry (LBNL) NREL is a natinal labratry f the U.S. Department f Energy, Office f Energy Efficiency and Renewable Energy, perated by the Alliance fr Sustainable Energy, LLC.

2 Overview Cst methds RPS cmpliance csts Benefits f RPS Cnclusin and future wrk Reprt prepared by NREL and LBNL Dwnlad reprt: Acknwledgments: Primary funding supprt was prvided by the U.S. DOE Office f Energy Efficiency and Renewable Energy s (EERE) Strategic Prgrams Office. Participatin by LBNL was c-funded by EERE s Slar Energy Technlgies Office, and the Natinal Electricity Delivery Divisin f the DOE s Office f Electricity Delivery and Energy Reliability. 2

3 Cst Methds and Histrical Cst Data

4 Apprach: Analysis f Histrical Csts Summarize available data n incremental cmpliance csts i.e., utility prcurement csts net f avided csts ver the perid Basic Methdlgy Restructured Markets: Calculate csts based n REC and alternative cmpliance penalty (ACP) prices and vlumes fr each resurce tier Regulated States: Synthesize cst estimates published by utilities and PUCs, based n the varying methds and cnventins used Tw Metrics $/MWh f renewable energy prcured % f average retail rates Imprtant t understand what these data d and dn t represent: Net cst t utility, nt t sciety nr even t ratepayers (e.g., because f regulatry lag, prhibitin n pass-thrugh f ACPs, etc.) Synthesis f available data, nt an applicatin f unifrm methdlgy r set f assumptins 4

5 CT DC DE IL MA MD ME NH NJ NY OH PA RI TX Restructured Markets: % f Retail Rates 5% 4% 3% 2% 1% 0% Estimated Incremental Cst f RPS* (Percent f Average Statewide Retail Electricity Rate) * Incremental csts are estimated frm REC and ACP prices and vlumes fr each cmpliance year, which may differ frm calendar years. If available, REC prices are based n average prices reprted by the PUC (DC, IL, MD, ME, OH, NJ, PA); they are therwise based n published spt market prices, supplemented with data n lng-term cntract prices where available. Incremental csts fr NY are based n NYSERDA's annual RPS expenditures and estimated REC deliveries. Data represent the rate impact if utility csts were fully and immediately passed thrugh Csts were generally <2% f retail rates (10 ut f 14 states in 2012), with an average f 1.4% in 2012, but als varied significantly amng states Trends reflect the same drivers discussed previusly: REC pricing and mix f resurce tiers Als reflect differences in RPS target level hence csts rse ver time in mst states as RPS targets rse 5

6 CT DC DE IL MA MD ME NH NJ NY OH PA RI TX CT DC DE IL MA MD ME NH NJ NY OH PA RI TX Restructured Markets: Csts Breakdwns 5% 4% 3% 2% 1% 0% RPS csts disaggregated int resurce tiers (tp) and RECs vs. ACPs (bttm) Estimated Incremental Cst f RPS ( Avg.)* (Percent f Average Statewide Retail Electricity Rate) Slar/DG Set-Aside Main Tier Secndary Tier(s) * Incremental csts are estimated frm REC and ACP prices and vlumes fr each cmpliance year, which may differ frm calendar years. If available, REC prices are based n average prices reprted by the PUC (DC, IL, MD, ME, OH, NJ, PA); they are therwise based n published spt market prices, supplemented with data n lng-term cntract prices where available. Incremental csts fr NY are based n NYSERDA's annual RPS expenditures and estimated REC deliveries. 5% 4% 3% 2% 1% 0% Estimated Incremental Cst f RPS ( Avg.)* (Percent f Average Statewide Retail Electricity Rate) ACPs & Penalties RECs * Incremental csts are estimated frm REC and ACP prices and vlumes, averaged ver the cmpliance years, based n thse years fr which data are available. Only 2010 data available fr CT and DC. If available, REC prices are based n average prices reprted by the PUC (DC, IL, MD, ME, OH, NJ, PA); they are therwise based n published spt market prices, supplemented with data n lng-term cntract prices where available. Fr IL, ACP csts reflect the requirement that cmpetitive suppliers must meet at least 50% f RPS target with ACPs. NY des nt have ACPs r penalties; all csts are therefre assciated with REC prcurement and prgram administratin. Main tier requirements represented the bulk f RPS cmpliance csts in mst states Exceptins in DC and NJ (high slar requirements and SREC prices) and MA and NH (high secndary tier REC prices) ACP csts generally minimal (reflecting adequate REC supply) Exceptins in MA, NH, and RI, where shrtages led t significant reliance n ACPs in sme years 6

7 AZ CO MI MN MO NC NM OR WA WI Regulated States: % f Retail Rates 6% 5% 4% 3% 2% 1% 0% -1% Estimated Incremental Cst f RPS* (Percent f Average Statewide Retail Electricity Rate) * Incremental csts are based n utility- r PUC-reprted estimates and are based n either RPS resurces prcured r RPS resurces applied t the target in each year. Data fr AZ include administrative csts, which are gruped in "General RPS Obligatins" in the right-hand figure. Data fr CO are fr Xcel nly. Data fr NM in the left-hand figure include SPS ( ) and PNM (2010 and 2012), but include nly SPS in the right-hand figure. States mitted if data n RPS incremental csts are unavailable (HI, IA, KS, MT, NV). 6% 5% 4% 3% 2% 1% 0% DG and/r Slar Set-Aside General RPS Obligatins AZ CO NM These figures include DG/slar setaside csts alng with general RPS bligatins RPS csts at r belw 2% f average rates in 6 f 10 states (left-hand chart) Higher csts in AZ, CO, and NM due partly t slar/dg set-aside csts (righthand chart) with frnt-laded csts assciated with rebates and PBIs Relatively lw csts in a number f states (MI, MO, NC) with lw RPS targets during the analysis perid and/r where targets were met primarily with preexisting renewables 7

8 CT DC MA MD ME NH NJ RI CO DE IL MI MT NM NC NY OH OR TX WA Impact f Cst Cntainment Mechanisms The figure cmpares each state s effective cst cap with actual csts fr the mst-recent year 20% 15% 10% 5% 0% RPS Cst Cntainment Mechanisms* (Equivalent Maximum Percentage Increase in Average Retail Rates) Cst Cntainment Based n ACP Histrical Cmpliance Cst Estimate (Mst-Recent Year) Effective Cst Cap (Max Retail Rate Increase) Other Cst Cntainment Mechanisms * Fr states with multiple cst cntainment mechanisms, the cap shwn here is based n the mst-binding mechanism. MA des nt have a single terminal year fr its RPS; the calculated cst cap shwn is based n RPS targets and ACP rates fr "Other cst cntainment mechanisms" include: rate impact/revenue requirement caps (DE, KS, IL, NM, OH, OR, WA), surcharge caps (CO, MI, NC), renewable energy cntract price cap (MT), renewable energy fund cap (NY), and financial penalty (TX). Excluded frm the chart are thse states currently withut any mechanism t cap ttal incremental RPS csts (AZ, CA, IA, HI, KS, MN, MO, NV, PA, WI), thugh sme f thse states may have ther kinds f mechanisms r regulatry prcesses t limit RPS csts. ACPs generally cap csts at 6-9% f average retail rates; plenty f head-rm currently, but may diminish as targets rise Amng states with sme ther frm f cst cntainment, effective cst caps are mre restrictive (1-4%), and have already becme binding in several states 8

9 RPS Benefits Estimates

10 RPS Benefits Overview Ptential scietal benefits f RPS plicies include: Reduced air emissins, health benefits, fuel diversity, electricity price stability, energy security, and ecnmic develpment. Avided csts f cnventinal generatin included in cst estimates. We reviewed literature n benefits estimates cnducted fr state RPS plicies. We did nt include brader renewable energy benefits literature. Mst studies examined were prepared fr state legislatures. A variety f methds were used t assess impacts; the level f analytical rigr varies as well. 10

11 Range f Benefits Studies Identified State Emissins and Health Ecnmic Develpment Impacts Whlesale Market Impacts Study required? CT a As part f IRP a Study The Brattle Grup et al CEEEP and R/ECON 2011 DPL 2012 DE a As part f IRP IL a a a a IPA 2013 ME a a a a LEI 2012 MA a a EOHED and EOEEA 2011 MI a a a MPSC 2013 NY a a a a NYSERDA 2013b; 2013c OH a a PUCO 2013a a a PUCO 2013b OR a a ODOE 2011 Surce: RPS Cst and Benefit reprt 11

12 Emissins Benefits Tw main estimatin methds: Electric sectr mdeling (CT, OH, DE, IL, NY) Displaced marginal generatr emissin rate (ME) Valuatin based n: Value f avided emissins Human health benefits frm imprved air quality Challenges in cmparing benefits t incremental csts: Allwance prices may already be captured in whlesale electricity prices and estimated RE incremental cst. Emissins benefits are ften frward lking, in cntrast t histrical csts, and may ccur ver lifetime f RE prject. Benefits range frm $10s-100s f millin dllars annually; $4-$23/MWh f renewable generatin Often, the value f CO 2 assumed drives the estimates, because f the magnitude f CO 2 emissin reductins State Estimated Mnetary Impact (millins) Benefits $/MWh f RE CT N/A N/A 2020 OH N/A N/A 2014 ME $13 $7 Annual Perid DE $980 - $2,200 N/A IL $75 $ NY N/A N/A $312 - $2,196 $3 $ $48 $

13 Ecnmic Develpment Impacts State CT Estimated Mnetary Impact (millin) Negative t psitive GSP impact Benefit $/MWh f RE Perid N/A Thrugh 2020 IL $3003 $14 Cnstructin $140 $16 Annual, during prject lifespan ME $1,147 $24 Cnstructin $7.3 $4 Annual, during prject lifespan MI $159.8 N/A Cnstructin NY $1,252 $13 Prject lifespan OR $921 $9 Prject lifespan Nt estimated N/A Prject lifespan Ecnmic impacts f RPS include: Jbs, direct investment frm cnstructin and peratin f facilities, tax revenues, and indirect and induced spending Changes in electricity prices can have ecnmic impacts Appraches t assessing ecnmic impacts: Input-utput mdels r case studies (IL, ME, MI, OR) Ecnmic mdeling (CT, NY) Net r grss impacts is a key issue Net impacts cnsider shifts in emplyment Typically assessed ver prject lifetime One-time cnstructin benefits n rder f $100s f millins; annual nging benefits ver prject lifetime in $10s t $100s millins Benefit equivalent t $22-$30/MWh f renewable generatin 13

14 Whlesale Market Price Suppressin Renewable energy can depress whlesale market prices by displacing mre expensive generatrs frm the dispatch stack Typically assessed thrugh dispatch mdeling Scenaris with and withut RE Effect may be temprary Effects may be captured in incremental cst estimates Embedded in whlesale prices Market price suppressin $ /MWh (ttal market effect) Benefit equivalent t $2-$50/MWh f renewable generatin State ME Estimated Mnetary Impact $4.5 millin ($0.375/MWh reductin in whlesale prices) Benefit Perid $/MWh f RE $ MA $328 millin ~$ IL MI $177 millin ($1.3/MWh reductin in whlesale prices) 2% decline in whlesale prices frm wind, net imprts, and decrease in lad. $ N/A 2011 NY $455 millin $5 Prject lifespan OH ($ /MWh reductin in whlesale prices) N/A

15 Cnclusins and Future Wrk Cmparisns f incremental RPS cst data acrss states are limited by different methds emplyed; cst estimates rely n available data. Over the perid, average estimated incremental RPS cmpliance csts were abut 1% f retail electricity rates Restructured markets incremental cst estimates range frm well belw $10/MWh t upwards f $60/MWh Regulated markets incremental csts were typically near r belw $20/MWh In mst states, future incremental RPS cmpliance csts are limited by cst cntainment mechanisms. States have mst cmmnly estimated RPS benefits assciated with avided emissins ($4-23/MWh f renewable generatin), ecnmic develpment ($22-30/MWh), and/r whlesale electricity price suppressin ($2-50/MWh). Cmparisn f benefits t csts is challenging because f differences in methds and analytical rigr, variatin in the timeframe f analysis, the limited benefits analyzed, and because incremental csts may be capturing sme benefits. Future wrk culd be dne t cmprehensively assess csts and benefits, using similar methdlgies and level f rigr. Onging RPS cst assessment and standardizatin effrts in sme states might als be useful t ther states (CA, DE, MN, OR, WA). 15