Renewables Portfolio Standards in the United States: A Status Update Galen Barbose Lawrence Berkeley National Laboratory Renewable Energy Markets 214 December 4, 214 This analysis was funded by the National Electricity Delivery Division of the Office of Electricity Delivery and Energy Reliability and by the Solar Energy Technologies Office of the Office of Energy Efficiency and Renewable Energy of the U.S. Department of Energy under Contract No. DE- AC2-5CH11231.
RPS Policies Exist in 29 States and DC Apply to 56% of Total U.S. Retail Electricity Sales WA: 15% by 22 OR: 25% by 225 (large utilities) 5-1% by 225 (smaller utilities) CA: 33% by 22 NV: 25% by 225 AZ: 15% by 225 MT: 15% by 215 CO: 3% by 22 (IOUs) 2% by 22 (co-ops) 1% by 22 (munis) KS: 2% of peak demand by 22 NM: 2% by 22 (IOUs) 1% by 22 (co-ops) MN: 26.5% by 225 Xcel: 31.5% by 22 WI: 1% by 215 IA: 15 MW by 1999 MI: 1% by 215 IL: 25% by 225 MO: 15% by 221 VT: 2 by 217 NY: 3% by 215 PA: 8.5% by 22 NJ: 22.5% by 22 OH: 12.5% by 224 MD: 2% by 222 ME: 4% by 217 MA: 11.1% by 29 +1%/yr RI: 16% by 219 DE: 25% by 225 DC: 2% by 22 NH: 24.8% by 225 CT: 23% by 22 NC: 12.5% by 221 (IOUs) 1% by 218 (co-ops and munis) HI: 4% by 23 TX: 5,88 MW by 215 Source: Berkeley Lab Notes: Compliance years are designated by the calendar year in which they begin. Mandatory standards or non-binding goals also exist in US territories (American Samoa, Guam, Puerto Rico, US Virgin Islands) 2
1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 213 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 213 Nameplate Capacity (GW) Nameplate Capacity (GW) A Substantial Portion of RE Capacity Additions Have (At Least Partially) Been Driven by RPS U.S. Non-Hydro Renewable Energy Capacity Cumulative Non-Hydro RE Capacity Annual Non-Hydro RE Capacity Additions 9 18 8 7 Non-RPS RPS 16 14 Non-RPS RPS 6 12 5 1 4 8 3 6 2 4 1 2 Of the 75 GW of non-hydro renewable capacity additions from 1998-213, 61% (46 GW) serve entities with RPS obligations 3
1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 213 Nameplate Capacity (MW) State RPS Have Largely Supported Wind, Though Solar Has Become More Prominent RPS-Related* Renewable Energy Capacity Additions from 1998-213, by Technology Type Annual RPS Capacity Additions Cumulative RPS Capacity Additions 14, 12, Geothermal Biomass 1% 5% 1, Solar 8, Wind 16% 6, 78% 4, 2, * Renewable additions are counted as RPS-related if and only if the entity receiving RECs from the project is subject to RPS obligations, and the project commenced operation after enactment of the RPS. On an energy (as opposed to capacity) basis, wind energy represents approximately 76%, biomass 12%, solar 8%, and geothermal 4% of cumulative RPS-related renewable energy additions, if estimated based on assumed capacity factors. 4
More than Half of All RPS Programs Have a Solar or DG Set-Aside 17 states + D.C. have solar or DG set-asides, sometimes combined with credit multipliers; 3 other states only have credit multipliers WA: 2x multiplier for DG OR: 2 MW solar PV by 22 2x multiplier for PV installed before 216 NV: 1.5% solar by 225 2.4x multiplier for PV until 215 MN: 1.5% solar by 22 for IOUs CO: 3% DG by 22 for IOUs (half from retail DG) 1% DG by 22 for coops 3x multiplier for munis/coops for solar installed before July 215 AZ: 4.5% customer-sited DG by 225 (half from residential) MI: 3x multiplier for solar NY: 878 GWh retail DG by 215 NJ: 4.1% solar electric by 227 PA:.5% solar PV by 22 OH:.5% solar electric by 224 IL: 1.5% solar PV by 225, 1% DG by 215 (5% <25 kw) MO:.3% solar electric by 221 NH:.3% solar electric by 214 MA: 456 GWh customer-sited solar PV (no specified target year) DE: 3.5% solar by 225 3x multiplier for solar installed before Jan. 215 (applies only to solar used for general RPS target) MD: 2% solar by 22 DC: 2.5% solar by 223 NC:.2% solar by 218 Set-aside Set-aside with multiplier Multiplier NM: 4% solar electric by 22.6% customer-sited DG by 22 (2x multiplier for all solar) TX: 2x multiplier for all non-wind Source: Berkeley Lab Note: Compliance years are designated by the calendar year in which they begin Differential support for solar/dg also provided via long-term contracting programs (CT, DE, NJ, RI) and via up-front incentives/srec payments 11 states created solar/ DG setasides since 27: DE, IL, MA, MD, MO, MN, NC, NH, NM, OH, OR 5
Annual Grid-Connected PV Installations for Solar/DG Set-Asides (MW ac ) Percent of U.S. Annual Grid-Connected PV Installations (%) Impact of Solar/DG Set-Asides is Substantial: 6-8% of Non-CA PV Additions Since 25 Dip in set-aside capacity additions in 213 reflects depressed SREC pricing and reduced or eliminated incentives in a number of states 1,4 1,2 1, 8 6 4 2 Percent of U.S. grid-connected PV capacity additions, excluding California [right axis] Percent of Total U.S. grid-connected PV capacity additions [right axis] 2 21 22 23 24 25 26 27 28 29 21 211 212 213 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % NH MO DC IL DE OH MD NY PA NM NV MA NC CO AZ NJ *PV capacity additions are attributed to the solar/dg set-aside only if installation occurred no more than one year before commencement of set-aside compliance obligations in the host state and if eligible for the set-aside and not applied towards general RPS obligations. 6
1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 213 Nameplate Capacity (MW) General RPS Obligations Also Driving Significant Solar Additions in California and Elsewhere Sizable number of large solar projects (9 PV + 2 CSP, 1-3 MW each) added to meet general RPS obligations in CA & AZ in 213 5, Annual Solar Capacity Additions Solar for General RPS Obligations 4, Non-RPS RPS Set-Asides General RPS Obligations AZ 462 MW 3, NC 295 MW 2, NV 227 MW 1, CA 338 MW Others 61 MW Substantial solar capacity in excess of set-aside requirements also built and applied towards general obligations in NC and NV 7
Future RPS Requirements are Sizable, But Within Recent RE Growth Rates 98 GW of RE capacity required by 22 (123 GW by 235) to meet RPS requirements Depending on availability of existing RE capacity, will require incremental build of 3-7 GW/yr. through 22 and 1-2 GW/yr. thereafter By comparison, RPSdriven additions averaged 6 GW/yr. since 28 (1 GW/yr. for all RE) CA IL NJ OH MN TX MA CO MD WA MO PA OR NC AZ NY MI KS WI NV CT NM HI DE DC NH MT RI ME IA 22 235 RPS Demand (Est. Nameplate GW) 5 1 15 2 25 3 35 4 Note: Values shown in figures represent required renewable capacity beyond what was supplied to each state at the time its RPS was enacted. The values do not represent incremental renewables required relative to current supply. HI CA MA MN NH NJ CT NV OR CO DC MD IL DE RI NM KS WA OH MT MO WI ME AZ PA MI NY NC TX IA 22 235 RPS Demand (Percent of Statewide Retail Sales) % 5% 1% 15% 2% 25% 3% 35% 4% 8
RE Capacity Capacity (MW) RE Currently Under Development May Be Enough to Meet Future RPS Demand in Some Regions Future RPS Requirements Compared to Current RPS Supply plus New RE Capacity Under Construction and Under Development 12, 35, 25, 7, 7, 1, 3, 2, 6, 6, 8, 6, 4, 25, 2, 15, 1, 15, 1, 5, 4, 3, 2, 5, 4, 3, 2, 2, 5, 5, 1, 1, West Mid-Atlantic Midwest New England New York RE Under Development (RPS States) RE Under Construction (RPS States) RPS Capacity Additions to-date RPS Requirement (22) RPS Requirement (235) Notes: RE under development and under construction refer only to RPS states within each region and therefore do not include additional new RE from other states in the region or from outside the region. RPS requirements in MW terms reflect regionally specific assumptions about RPS resource mix and capacity factors. Data source for RE Under Construction and Under Development: SNL Energy. 9
AZ CA CO CT DC DE HI IA IL KS MA MD ME MI MN MO MT NC NH NJ NM NV NY OH OR PA RI TX WA WI Compliance with RPS Targets Has Generally Been Strong 1% 9% 8% 7% 6% 5% Percent of Main Tier RPS Target Met with Renewable Electricity or RECs (including available credit multipliers and banking, but excluding ACPs) 4% 3% 2% 1% % 21 211 212 213 Note: Percentages less than 1% do not necessarily indicate that full compliance was not technically achieved, because of ACP compliance options, funding limits, or force majeure events. 1
Avg Monthly REC Price (213$/MWh) Avg Monthly REC Price (213$/MWh) REC Prices in Compliance Markets Vary with Supply-Demand Balance Rising Class I REC prices in Northeastern states reflect tightening supply, while pricing in Mid-Atlantic states and TX remain low Depressed SREC prices in most states show enduring over-supply of solar, muting the cost impacts of rising set-aside targets Main Tier/Class I RECs SRECs $8 $7 $6 $5 $4 $3 $2 CT Class I DC Tier I DE Class I IL Wind MA Class I MD Tier I ME New NH Class I NJ Class I OH In-State PA Tier I RI New TX $8 $7 $6 $5 $4 $3 $2 DC DE MA MD NH NJ OH PA $1 $1 $ 21 211 212 213 214 $ 21 211 212 213 214 Sources: Spectron, SRECTrade, Flett Exchange, PJM-GATS, and NJ Clean Energy Program. Depending on the source used, plotted values are either the mid-point of monthly average bid and offer prices, the average monthly closing price, or the weighted average price of all RECs transacted in the month, and generally refer to REC prices for the current or nearest future compliance year traded in each month. 11
Estimated Incremental RPS Costs (% of Average Retail Rates) CT DC DE IL MA MD ME NH NJ NY OH PA RI TX AZ CO HI MI MN MO NC NM OR WA WI RPS Target (% of Retail Sales) RPS Compliance Costs Thus Far Low, But Face Upward Pressure from Rising Targets RPS compliance costs have been equal to less than 3% of average retail rates in most states 8% 6% 4% 2% % -2% -4% Estimated Incremental RPS Costs (Most-Recent Year) RPS Target or Procurement (Most-Recent Year) RPS Target (Final Year) 4% 3% 2% 1% % -1% -2% Costs have risen as targets ramp up Restructured Regulated * For most states shown, the most-recent year RPS cost and target data are for 212 or 213. MA does not have single terminal year for its RPS; the final-year target shown is based on 22. Excluded from the chart are those states without available data on historical incremental RPS costs (CA, KS, HI, IA, MT, NV). The values shown for RPS targets and costs exclude any secondary RPS tiers (e.g., for pre-existing resources). For most regulated states, data for the most-recent historical year reflect actual RPS procurement percentages in those years. Final-year RPS targets (closed circles) constitute, on average, roughly a three-fold increase in RPS obligations compared to most-recent year targets (open circles) Future RPS costs will depends on many factors: RE technology costs, natural gas prices, federal tax incentives, environmental regulations, and RPS cost caps 12
CT DC MA MD ME NH NJ RI CO DE IL MI MT NM NC NY OH OR TX WA Most States Have Capped Rate Impacts Below 1% and Many Below 5% The figure compares each state s effective cost cap with actual costs for the most-recent year 2% 15% 1% 5% % RPS Cost Containment Mechanisms* (Equivalent Maximum Percentage Increase in Average Retail Rates) Cost Containment Based on ACP Historical Compliance Cost Estimate (Most-Recent Year) Effective Cost Cap (Max Retail Rate Increase) Other Cost Containment Mechanisms * For states with multiple cost containment mechanisms, the cap shown here is based on the most-binding mechanism. MA does not have a single terminal year for its RPS; the calculated cost cap shown is based on RPS targets and ACP rates for 22. "Other cost containment mechanisms" include: rate impact/revenue requirement caps (DE, KS, IL, NM, OH, OR, WA), surcharge caps (CO, MI, NC), renewable energy contract price cap (MT), renewable energy fund cap (NY), and financial penalty (TX). Excluded from the chart are those states currently without any mechanism to cap total incremental RPS costs (AZ, CA, IA, HI, KS, MN, MO, NV, PA, WI), though some of those states may have other kinds of mechanisms or regulatory processes to limit RPS costs. Where ACPs used, they generally cap costs at 6-9% of average retail rates Among states with some other form of cost containment, effective cost caps are more restrictive (1-4%) and have already become binding in several states 13
The Future Role and Impact of State RPS Programs Will Depend On The outcome of ongoing and future legislative and legal challenges Outcome of EPA carbon emissions regulations Whether cost caps become binding (which in turn depends on RE costs, gas prices, PTC/ITC, etc.) How other related issues and barriers affecting RE deployment are addressed (transmission, integration, siting, net metering, etc.) How policymakers re-tune RPS in response to all of the above and to changing market conditions more generally 14
Thank You! For further information: LBNL RPS publications and resources: rps.lbl.gov LBNL renewable energy publications: emp.lbl.gov/reports/re Contact information: Galen Barbose, glbarbose@lbl.gov, 51-495-2593 15