UI IE 4550 - Renewable Portfolio Standards in the United States

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Renewables Portfolio Standards in the United States 1Renewables Portfolio Standards in the United States 2 Executive Summary................................................................................................ 1 Introduction............................................................................................................. 2 Four States Added RPS Policies in 2007, Raising the Total to 25 States and Washington D.C. .................................................................................................... 3Eleven States Significantly Revised their RPS in 2007........................................... 5Forty-Six Percent of Load in the U.S. Will Ultimately Be Covered by Existing RPS Policies............................................................................................................ 5The Design of State RPS Policies Continues to Differ Widely................................ 6Resource Eligibility Is Expanding Beyond Traditional Renewable Sources to Include Energy Efficiency and Other Supply-Side Technologies.......................... 11Operational Experience Remains Limited............................................................. 12Renewables Portfolio Standards Are Increasingly Motivating Renewable Energy Development............................................................................................. 12State RPS Policies Are Primarily Supporting Wind Power, Though Some Resource Diversity Is Apparent............................................................................. 13The Future Impacts of Existing State RPS Policies Are Projected To Be Relatively Sizable.................................................................................................. 14 Solar-Specific RPS Designs Are Becoming More Prevalent................................. 16Compliance with State RPS Mandates Has Been Strong in General, Though Important Exceptions Exist.................................................................................... 20The Use of Renewable Energy Certificates and Certificate Tracking Systems Is Expanding.......................................................................................................... 24REC Prices Have Been Highly Variable Across States......................................... 26The Price Impacts of State RPS Policies Are Not Always Observable, But Have Been Modest in Most Cases So Far............................................................ 29States Are Increasingly Recognizing Transmission as a Key Limitation to Achieving RPS Targets......................................................................................... 32Federal RPS Policies Received Consideration in the U.S. Congress in 2007...... 34Conclusions........................................................................................................... 34Appendix................................................................................................................ 35LBNL-154ERenewables Portfolio Standards in the United States 1 Executive Summary As the popularity of renewables portfolio standards (RPS) has grown, so too has the need to keep up with the design, early experience, and projected impacts of these programs. This report – the first in a regular series – seeks to fill this need by providing basic, factual information on RPS policies in the United States. Key findings of this inaugural edition are as follows: • Mandatory RPS policies have been created in 25 states and Washington D.C.; four additional states have non-binding goals • In 2007, four states established new RPS policies, 11 states significantly revised pre-existing RPS programs (mostly to strengthen them), and three states created non-binding renewable energy goals • Forty-six percent of nationwide retail electricity sales will be covered by the mandatory state RPS policies established through the end of 2007, once these programs are fully implemented • RPS policy designs vary widely among states, and a “common” design has not yet emerged • Resource eligibility in state RPS programs has expanded beyond traditional renewables, with three states now allowing demand-side energy efficiency to meet at least a portion of their RPS requirement; additional states have stand-alone mandatory energy efficiency portfolio standards • Eleven states now have four or more years of operational experience with an RPS, though many other state programs are just getting underway • Though not an ideal metric, over 50% of the non-hydro renewable capacity additions in the U.S. from 1998 through 2007 occurred in states with RPS programs (~8,900 MW); 93% of these additions came from wind power, 4% from biomass, 2% from solar, and 1% from geothermal • Assuming that full compliance is achieved, current mandatory state RPS policies will require the addition of roughly 60 gigawatts (GW) of new renewables capacity by 2025, equivalent to 4.7% of projected 2025 electricity generation in the U.S., and 15% of projected electricity demand growth • Solar-specific RPS designs are becoming more common, with 11 states and Washington D.C. adopting solar or distributed generation (DG) set-asides so far; these policies have already supported 102 MW of photovoltaics and 65 MW of solar-thermal electric capacity, and a total of roughly 6,700 MW of solar capacity would be needed by 2025 to fully meet existing set-aside requirements • The early-year renewable energy targets in the majority of state RPS policies have been fully or almost-fully achieved through the application of renewable electricity or renewable energy certificates (REC) towards RPS targets; the overall average level of RPS “compliance” in 2006 was 94%, and nine states achieved renewable energy deliveries, as a proportion of RPS targets, of above 95% • Several states have struggled to meet early-year RPS targets, however, and alternative compliance payments of more than $18 million were paid in 2006; financial penalties have been applied in two states • Renewable energy certificate tracking systems continue to expand and, as of the end of 2007, all but four RPS states allowed unbundled RECs to count towards RPS compliance • Renewable energy certificate markets remain fragmented, and prices have varied dramatically across states, and over time, reflecting variations in RPS design • The electricity rate increases associated with existing


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UI IE 4550 - Renewable Portfolio Standards in the United States

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