TODAY’S STUDY: The States At Work On New Energy
U.S. Renewables Portfolio Standards; 2017 Annual Status Report
Galen Barbose, July 2017 (Lawrence Berkeley National Laboratory)
Evolution of state RPS programs
Evolution of state RPS programs: Significant RPS-related policy revisions since the start of 2016 include increased RPS targets in DC, MD, MI, NY, RI, and OR; requirements for new wind and solar projects and other major reforms to the RPS procurement process in IL; and a new offshore wind carve-out and solar procurement program in MA.
Historical impacts on renewables development: Roughly half of all growth in U.S. renewable electricity (RE) generation and capacity since 2000 is associated with state RPS requirements. Nationally, the role of RPS policies has diminished over time, representing 44% of all U.S. RE capacity additions in 2016. However, within particular regions, RPS policies continue to play a central role in supporting RE growth, constituting 70-90% of 2016 RE capacity additions in the West, Mid-Atlantic, and Northeast.
Future RPS demand and incremental needs: Meeting RPS demand growth will require roughly a 50% increase in U.S. RE generation by 2030, equating to 55 GW of new RE capacity. To meet future RPS demand, total U.S. RE generation will need to reach 13% of electricity sales by 2030 (compared to 10% today), though other drivers will also continue to influence RE growth.
RPS target achievement to-date: States have generally met their interim RPS targets in recent years, with only a few exceptions reflecting unique, state-specific policy designs.
REC pricing trends: Prices for RECs used to meet general RPS obligations fell in most markets in 2016, as surplus RPS supplies emerged in many regions. Price trends for solar RECs were more varied, with a particularly pronounced drop in MD.
RPS compliance costs and cost caps: RPS compliance costs totaled $3.0 billion in 2015 (the most-recent year for which relatively complete data are available), which equates to 1.6% of average retail electricity bills in RPS states. Though total U.S. RPS compliance costs rose from 2014, future cost growth in most RPS states will be capped by cost containment mechanisms.
Historical impacts on renewables development
…General Trends in RPS Revisions…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; many in recent years…Creation of resource-specific carve-outs: Solar and DG carve-outs are most common (18 states + D.C.), often added onto an existing RPS…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…In addition, although many states have introduced bills to repeal, reduce, or freeze their RPS programs, only two (OH, KS) have thus far been enacted…
RPS Policies Have Been One Key Driver for RE Generation Growth RPS requirements constitute ~50% of total U.S. RE growth since 2000
Total non-hydro RE generation in the U.S. grew by 283 TWh from 2000-2016 – Many factors contributed to that growth (tax credits, other incentives, cost declines, etc.)…RPS policies required 146 TWh increase over that period – Not strict attribution: some of that would have occurred without RPS…Additional RE growth associated with: – Corporate procurement and other voluntary green power markets – Economic utility purchases – Accelerated RPS procurement…
RPS’s Have Provided a Stable Source of Demand for RE Growth Though RPS portion of total RE growth has declined over the past couple years
• Cumulatively, 120 GW of RE capacity added in the U.S. since 2000 – Just over half of that capacity (56%) consist of projects (at least partially) driven by RPS obligations…Over the past decade, an average of 6 GW/year of RE capacity added for RPS demand – Has provided a floor in down years (e.g., 2013)…In the past couple years, the RPS-portion of new RE builds has been lower than previously (44% in 2016 vs. 60-70% in 2008-2014) – Partly due to rebounding wind growth in TX and Midwest, some serving growing demand from corporate procurement – Also the result of net-metered PV in California and some utility-scale PV in non-RPS markets…
Future RPS demand and incremental needs
States Are Starting to Approach Final Target Years Half of all RPS states reach their final target year by 2021…Total U.S. RPS demand roughly doubles by 2030
Under current policies, total RPS demand grows from roughly 235 TWh in 2016 to 450 TWh in 2030…To be sure, increased demand does not 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…
Required Increase in RPS Generation Supply Equates to roughly 50% increase in U.S. renewable energy generation
…150 TWh increase in RPS resources needed to meet RPS demand growth through 2030 – By comparison, current U.S. RE = ~300 TWh…Relatively steady rate of growth at aggregate national level; some regions are lumpy…Greatest incremental needs in: – California (50% statewide RPS by 2030) – Mid-Atlantic (well distributed among states) – Northeast (mostly NY’s 50%-by-2030 CES)…
… EIA-forecasted RE growth projected to well-exceed minimum RPS needs…In aggregate, state RPS targets equate to 10% of U.S. retail electricity sales by 2030…However, to meet those targets, total U.S. RE supply will need to reach 13% of retail sales – Accounts for the fact that not all existing RE supplies are available for future RPS demand…EIA projects much greater RE growth, reaching 18% of retail sales by 2030 – Rapid growth prior to expiration of ITC/PTC…RPS policies clearly just one driver for continued RE growth – Other drivers: tax credits, RE cost declines, corporate procurement…
RPS target achievement to-date
States Have Generally Met Their Interim RPS Targets Exceptions typically reflect unique state-specific issues…Many states/utilities well ahead of schedule, easily meeting interim targets…Others met interim targets only by relying on stockpile of banked RECs from prior years…Relatively few instances where interim targets significantly missed – 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): Unusually low solar ACPs have led to SRECs flowing into neighboring Class I markets – NY (General RPS): Procurement has lagged targets, partly due to budget constraints…
REC pricing trends…RPS compliance costs and cost…
The Future Role & Impact of State RPS Programs Will Depend On…RPS compliance costs and ACPs/cost caps…Legislative and legal challenges to state RPS programs, including possible federal pre-emption…Whether additional states decide to increase and extend RPS targets as they approach their final target year…Other ongoing refinements (e.g., REC banking rules, long-term contracting programs, eligibility rules, etc.)…The many related issues affecting RE deployment (integration, transmission, siting, net metering, etc.)