Supporting Solar Power in Renewables Portfolio Standards: Experience from the United States Ryan Wiser and Galen Barbose Lawrence Berkeley National Laboratory Edward Holt Ed Holt & Associates October 2010 This work was supported by: the Office of Energy Efficiency and Renewable Energy (Solar Energy Technologies Program) and the Office of Electricity Delivery and Energy Reliability (Permitting, Siting, and Analysis Division) of the U.S. Department of Energy under Contract No. DE- Environmental Energy Technologies Division Electricity Markets and Policy Group AC02-05CH11231; the National Renewable Energy Laboratory under Contract No. DEK-8883050; and the Clean Energy States Alliance.
Key Report Findings State RPS programs have not yielded a significant diversity of renewable resources thus far, though there are signs that this may be changing in some regions Many states have adopted RPS policy designs explicitly aimed at supporting greater renewable resource diversity, and solar energy in particular The design of solar and distributed generation (DG) set-asides varies widely across states Solar and DG set-asides have played a significant role in the recent growth of the U.S. solar market Compliance with solar/DG set-aside targets has been mixed, highlighting the importance of careful policy design The estimated retail rate impacts of solar/DG set-asides have thus far been relatively modest, though compliance costs have reached or are approaching 1% in some states State RPS programs, including both those with and without solar/DG set-asides, are poised to drive significant growth in the U.S. solar market A variety of emerging issues will affect the impact of RPS policies on solar growth Environmental Energy Technologies Division Electricity Markets and Policy Group 2
Presentation Overview 1. State RPS Policy Background 2. Supporting Resource Diversity within an RPS 3. Solar/DG Set-Aside Design Variations 4. Solar/DG Set-Aside Impacts and Expectations 5. Conclusions and Lessons Learned Environmental Energy Technologies Division Electricity Markets and Policy Group 3
What Is a Renewables Portfolio Standard? Renewables Portfolio Standard (RPS): Renewables Portfolio Standard (RPS): • 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 with penalties of some form Often accompanied by a tradable renewable energy credit (REC) program, to facilitate compliance Never designed the same in any two states Environmental Energy Technologies Division Electricity Markets and Policy Group 4
State RPS Policies: 29 States and D.C. ( 7 More States Have Non-Binding Goals) MN: 25% by 2025 WA: 15% by 2020 ME: 40% by 2017 MT: 15% by 2015 Xcel: 30% by 2020 NH: 23.8% by 2025 ND: 10% by 2015 VT: 20% by 2017 MI: 10% by 2015 MA: 11.1% by 2009 +1%/yr OR: 25% by 2025 (large utilities) WI: 10% by 2015 NY: 30% by 2015 SD: 10% by 2015 RI: 16% by 2019 5-10% by 2025 (smaller utilities) PA: 8.5% by 2020 CT: 23% by 2020 NV: 25% by 2025 IA: 105 MW by 1999 NJ: 22.5% by 2021 DE: 25% by 2025 KS: 20% of peak UT: 20% by 2025 IL: 25% by 2025 OH: 12.5% by 2024 DC: 20% by 2020 demand by 2020 MD: 20% by 2022 VA: 15% by 2025 CO: 30% by 2020 (IOUs) MO: 15% by 2021 CA: 20% by 2010 10% by 2020 (co-ops and munis) OK: 15% by 2015 NC: 12.5% by 2021 (IOUs) 10% by 2018 (co-ops and munis) AZ: 15% by 2025 NM: 20% by 2020 (IOUs) 10% by 2020 (co-ops) AK: 50% by 2025 TX: 5,880 MW by 2015 Mandatory RPS HI: 40% by 2030 Non-Binding Goal Existing RPS policies will apply to 56% of U.S. electricity demand Source: Berkeley Lab once fully implemented; require 73 GW of new RE capacity by 2025 Of the 37 GW of RE capacity added from 98-09, 23 GW occurred in states with active or impending RPS compliance obligations Environmental Energy Technologies Division Electricity Markets and Policy Group 5
State RPS’ Have Largely Supported Wind: Resource Diversity Limited So Far RPS-Motivated* Renewable Energy Capacity Additions from 1998-2009, by Technology Type Annual RPS-Motivated Capacity Additions Total RPS-Motivated Capacity Additions (1998-2009) 7,000 Geothermal Nameplate Capacity (MW) 6,000 Biomass 5,000 Solar Geothermal Wind 1.4% 4,000 Biomass Wind 3,000 3.2% 93.9% Solar 2,000 1.5% 1,000 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 *Renewable additions are counted as “RPS-motivated” if and only if they are located in a state with an RPS policy and commercial operation began no more than one year before the first calendar year of RPS compliance obligations in the host state. Environmental Energy Technologies Division Electricity Markets and Policy Group 6
RPS Resource Diversity Is Greater in Some Regions, but Still Remains Limited RPS-Motivated* Renewable Energy Capacity Additions from 1998-2009, by Region and Technology Type 100% 10,000 % of Capacity Additions (Nameplate MW) 90% Capacity Additions (Nameplate MW) 80% 8,000 Solar 70% Geothermal 60% 6,000 Biomass 50% Wind 40% 4,000 30% Total MW (right axis) 20% 2,000 10% 0% 0 New England New York California Non-CA West Midwest Texas & Mid-Atlantic *Renewable additions are counted as “RPS-motivated” if and only if they are located in a state with an RPS policy and commercial operation began no more than one year before the first calendar year of RPS compliance obligations in the host state. Environmental Energy Technologies Division Electricity Markets and Policy Group 7
Why Have We Seen So Little Renewable Resource Diversity Under State RPS? By design, most RPS policies originally designed to be technology- neutral, stimulating competition among all eligible resources RPS programs of this design are not likely to provide much impetus for more-costly technologies, or for smaller projects: - Cost barriers: only the lowest-cost technologies can compete effectively - Solicitation barriers: smaller projects not always able to easily participate in competitive solicitations 10 of 30 state RPS policies provide no differential support for solar/distributed energy; experience shows that: These RPS policies are unlikely to provide meaningful support to customer-sited PV in the near term With the exception of the Southwest, these policies are unlikely to greatly benefit utility-scale solar (PV and CSP) in the very near term But… with solar costs declining, some of these “facts” may change Environmental Energy Technologies Division Electricity Markets and Policy Group 8
Declining Solar Costs May Increase RPS Resource Diversity in Some Regions More than 21,000 MW of contracts Wind power is facing with new renewable generators increased competition in signed in California since 2002* CA from solar; the same is true elsewhere in the Wind 53% Southwest and, to a lesser Solar 41% extent, in other regions Geothermal 3% Increased competition Biomass/MSW 3% largely driven by price reductions for utility- Small hydro <1% scale solar Ocean <1% *Based on CPUC RPS contract database for IOUs and LBNL analysis of contract announcements by POUs Environmental Energy Technologies Division Electricity Markets and Policy Group 9
Presentation Overview 1. State RPS Policy Background 2. Supporting Resource Diversity within an RPS 3. Solar/DG Set-Aside Design Variations 4. Solar/DG Set-Aside Impacts and Expectations 5. Conclusions and Lessons Learned Environmental Energy Technologies Division Electricity Markets and Policy Group 10
RPS Policies Are Increasingly Being Designed to Support Resource Diversity Set Asides : A requirement that some portion of the RPS come from certain technologies, technology types, or applications Credit Multipliers : Provides selected technologies or applications more credit than other forms of generation towards meeting the RPS Set-Asides Credit Multipliers General Technology Specific Technology Specific Application Class I vs. II: CT, DC, Solar Energy: DC, DE, IL, Distributed Generation: Solar Energy: DE (general MA, MD, ME, NJ MA, MD, MO, NC, NH, NJ, AZ, CO, NM, NY RPS), MI, CO (POUs), NM, NV, OH, OR, PA Community Ownership: NV (PV), OR MN (goal), MT (wind), Wind Energy: IL, ME (goal), Wind Energy: DC, MD, DE OR (goal, community MN, NJ (offshore), NM (offshore) and small scale) Existing Biomass/Methane: Methane: DC, MD NH Fuel Cells: DE Existing Hydropower: NH Waste Tires: NV Geothermal or Biomass: NM Non-Wind: TX Swine Waste: NC Distributed Generation: Poultry Waste: NC NV (PV), WA Non-Wind: TX (goal) Community Ownership: CO, ME No Differential Support : CA, IA, KS, WI Environmental Energy Technologies Division Electricity Markets and Policy Group 11
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