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The Treatment of Solar Electricity in Renewables Portfolio - - PowerPoint PPT Presentation

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The Treatment of Solar Electricity in Renewables Portfolio Standards Ryan H. Wiser Lawrence Berkeley National Laboratory RHWiser@lbl.gov (510.486.5474) Prepared for the U.S. Department of Energy April 2007 Environmental Energy Technologies

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Environmental Energy Technologies Division • Energy Analysis Department

The Treatment of Solar Electricity in Renewables Portfolio Standards

Ryan H. Wiser

Lawrence Berkeley National Laboratory

RHWiser@lbl.gov (510.486.5474) Prepared for the U.S. Department of Energy April 2007

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Environmental Energy Technologies Division • Energy Analysis Department

Presentation Overview

  • 1. Overview of RPS Policies and Proposals
  • 2. The “Problem” for Solar Electricity
  • 3. EIA Analysis of Federal RPS Proposals
  • 4. State RPS Experience with Solar
  • 5. Conclusions

Focus on solar photovoltaics and solar thermal electric, but not solar hot water, solar heating/cooling, day-lighting, etc.

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Environmental Energy Technologies Division • Energy Analysis Department

What Is a Renewables Portfolio Standard?

Renewables Portfolio Standard (RPS):

  • A requirement on retail electric suppliers…
  • to supply a minimum percentage or amount
  • f 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

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Environmental Energy Technologies Division • Energy Analysis Department

State RPS Policies: 21 States and D.C.

Additional renewable energy “goals” established in IL, IA, VT, and ME ~40% of Nation’s electrical load covered by an RPS

WI: 10% by 2015 NV: 20% by 2015 TX: 5880 MW by 2015 PA: 8% by 2020 NJ: 22.5% by 2021 CT: 10% by 2010 MA: 4% by 2009 ME: 30% by 2000 NM: 20% by 2020 CA: 20% by 2010 MN: 25-30% by 2020-25 IA: 105 aMW MD: 7.5% by 2019 RI: 16% by 2019 HI: 20% by 2020 AZ: 15% by 2025 NY: 24% by 2013 CO: 10% by 2015 MT: 15% by 2015 DE: 10% by 2019 DC: 11% by 2022 WA: 15% by 2020 WI: 10% by 2015 NV: 20% by 2015 TX: 5880 MW by 2015 PA: 8% by 2020 NJ: 22.5% by 2021 CT: 10% by 2010 MA: 4% by 2009 ME: 30% by 2000 NM: 20% by 2020 CA: 20% by 2010 MN: 25-30% by 2020-25 IA: 105 aMW MD: 7.5% by 2019 RI: 16% by 2019 HI: 20% by 2020 AZ: 15% by 2025 NY: 24% by 2013 CO: 20% by 2020 MT: 15% by 2015 DE: 10% by 2019 DC: 11% by 2022 WA: 15% by 2020 WI: 10% by 2015 NV: 20% by 2015 TX: 5880 MW by 2015 WI: 10% by 2015 NV: 20% by 2015 TX: 5880 MW by 2015 PA: 8% by 2020 NJ: 22.5% by 2021 CT: 10% by 2010 MA: 4% by 2009 ME: 30% by 2000 NM: 20% by 2020 CA: 20% by 2010 MN: 25-30% by 2020-25 IA: 105 aMW MD: 7.5% by 2019 RI: 16% by 2019 HI: 20% by 2020 AZ: 15% by 2025 NY: 24% by 2013 CO: 10% by 2015 MT: 15% by 2015 DE: 10% by 2019 DC: 11% by 2022 WA: 15% by 2020 PA: 8% by 2020 NJ: 22.5% by 2021 CT: 10% by 2010 MA: 4% by 2009 ME: 30% by 2000 NM: 20% by 2020 CA: 20% by 2010 MN: 25-30% by 2020-25 IA: 105 aMW MD: 7.5% by 2019 RI: 16% by 2019 HI: 20% by 2020 AZ: 15% by 2025 NY: 24% by 2013 CO: 10% by 2015 MT: 15% by 2015 DE: 10% by 2019 DC: 11% by 2022 WA: 15% by 2020 WI: 10% by 2015 NV: 20% by 2015 TX: 5880 MW by 2015 PA: 8% by 2020 NJ: 22.5% by 2021 CT: 10% by 2010 MA: 4% by 2009 ME: 30% by 2000 NM: 20% by 2020 CA: 20% by 2010 MN: 25-30% by 2020-25 IA: 105 aMW MD: 7.5% by 2019 RI: 16% by 2019 HI: 20% by 2020 AZ: 15% by 2025 NY: 24% by 2013 CO: 20% by 2020 MT: 15% by 2015 DE: 10% by 2019 DC: 11% by 2022 WA: 15% by 2020

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Environmental Energy Technologies Division • Energy Analysis Department

Actual and Expected Impacts of State RPS Policies on Renewable Energy Are Sizable

Source: UCS

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n e c t i c u t H a w a i i M a r y l a n d M a i n e New Renewables Required by 2020 (MW)

Potential effect of existing state RPS policies is 46 GW of new renewable energy capacity by 2020 From late 1990s through 2006, state RPS’ have helped support ~5.5 GW

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Environmental Energy Technologies Division • Energy Analysis Department

Federal RPS Proposals

  • Federal RPS policies have been proposed on

numerous occasions, and by many different parties, but have not been signed into law

  • Sen. Bingaman federal RPS proposals have passed

Senate on multiple occasions

  • Standard levels of 10-20% have been discussed, but

with numerous exemptions

  • Design details vary among Federal RPS proposals, but

result could be far more renewable energy additions than under state RPS policies alone

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Environmental Energy Technologies Division • Energy Analysis Department

Presentation Overview

  • 1. Overview of RPS Policies and Proposals
  • 2. The “Problem” for Solar Electricity
  • 3. EIA Analysis of Federal RPS Proposals
  • 4. State RPS Experience with Solar
  • 5. Conclusions
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Environmental Energy Technologies Division • Energy Analysis Department

The Problem for Solar Electricity Under Traditional State or Federal RPS Policies

  • RPS can be effective in supporting the least-

cost renewable energy projects

  • Traditional RPS design is not likely to provide

adequate support for emerging technologies, and smaller projects, due to...

– Cost barriers – Solicitation barriers

  • Unique aspects of solar therefore imply that a

traditional RPS is unlikely to provide much support for customer-sited solar, in particular

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Environmental Energy Technologies Division • Energy Analysis Department

Issues Associated with the Treatment of Solar Electricity in RPS Requirements

  • Eligibility

– Are all forms of solar electricity eligible? – Are customer-sited generators eligible? – Are metering/tracking systems in place?

  • REC Ownership

– Do owners of solar systems “own” their RECs – Do efficient mechanisms exist to trade small quantities of RECs?

  • Solar Support

– Does the RPS contain a solar share or credit- multipliers? Remainder of presentation focuses on this, as these issues critically affect how solar fares under an RPS Presentation assumes that these issues are adequately resolved

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Environmental Energy Technologies Division • Energy Analysis Department

Presentation Overview

  • 1. Overview of RPS Policies and Proposals
  • 2. The “Problem” for Solar Electricity
  • 3. EIA Analysis of Federal RPS Proposals
  • 4. State RPS Experience with Solar
  • 5. Conclusions
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Environmental Energy Technologies Division • Energy Analysis Department

EIA Analysis of Federal RPS Proposals

  • U.S. Energy Information Administration (EIA) has analyzed

potential impacts of Federal RPS proposals, including:

– 2007 analysis of proposed clean energy standard from Sen. Coleman

  • 20% standard includes renewable energy, nuclear, carbon capture-and-

storage, carbon sequestration; no special treatment for solar

– 2005 analysis of proposed RPS from Sen. Bingaman

  • 10% standard for renewable energy; 3x credit for small distributed

generation projects, including solar

  • Both separate potential impacts into three categories:

– solar thermal electric – central-station PV used in the electric power sector – end-use PV used in grid-connected customer applications

  • Both analyses show that solar is unlikely to fare well under a

traditionally designed Federal RPS

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Environmental Energy Technologies Division • Energy Analysis Department

Coleman Clean Energy Standard: Virtually No Incremental Solar Generation

By 2030, EIA estimates just 1.7 GW of end-use PV, 0.4 GW of utility-scale PV, and 0.6 GW of solar-thermal electric capacity under Coleman proposal; no incremental capacity or generation relative to AEO 2006 reference case

100 200 300 400 500 600 700 2 6 2 8 2 1 2 1 2 2 1 4 2 1 6 2 1 8 2 2 2 2 2 2 2 4 2 2 6 2 2 8 2 3 Total Non-Hydro, Non-MSW Renewable Energy (GWh)

PV - End Use PV - Electric Power Sector Solar Therm al Electric Geotherm al Biom ass W ind

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Environmental Energy Technologies Division • Energy Analysis Department

Bingaman Renewables Portfolio Standard: Little Incremental Solar Generation

By 2025, EIA estimates just 5.5 GW of end-use PV, 0.4 GW of utility- scale PV, and 0.5 GW of solar-thermal electric capacity Higher estimates of distributed PV than Coleman because of triple credit provided for end-use PV

100 200 300 400 500 600 700 2 6 2 8 2 1 2 1 2 2 1 4 2 1 6 2 1 8 2 2 2 2 2 2 2 4 Total Non-Hydro, Non-MSW Renewable Energy (GWh)

PV - End Use PV - Electric Pow er Sector Solar Therm al Electric Geotherm al Biom ass W ind

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Environmental Energy Technologies Division • Energy Analysis Department

Conclusions from Federal RPS Analysis

  • Federal RPS could substantially increase

renewable energy supply, but...

  • Traditionally designed RPS unlikely to yield

substantial increases in solar electric generation

  • Credit multipliers, such as Bingaman’s 3x credit

for distributed solar, can increase the chances that solar will benefit from an RPS, but even this proposal yields relatively little incremental solar because the credit multiplier is not high enough to spur large increase in sales

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Environmental Energy Technologies Division • Energy Analysis Department

Presentation Overview

  • 1. Overview of RPS Policies and Proposals
  • 2. The “Problem” for Solar Electricity
  • 3. EIA Analysis of Federal RPS Proposals
  • 4. State RPS Experience with Solar
  • 5. Conclusions
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Environmental Energy Technologies Division • Energy Analysis Department

Standard State RPS Designs Provide Little Support for Solar Energy

  • 10 of the 22 state RPS policies in place today provide

no differential support for solar/distributed energy

  • Operational experience with these state policies largely

confirms the EIA findings for Federal RPS proposals

RPS policies with no differential support for solar are unlikely to provide meaningful support to customer-sited or utility scale photovoltaics With the exception of the desert Southwest, RPS policies with no differential support for solar are also unlikely to greatly benefit solar thermal electric generation

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Environmental Energy Technologies Division • Energy Analysis Department

California: An Exception to the Rule?

New, Repowered, or Re-Started Capacity, by Technology (minimum MW)

solar thermal 899 MW solar photovoltaic 0 MW wind 782 MW geothermal 266 MW small hydro 6 MW biogas 35 MW biomass 134 MW

The only state where meaningful solar activity is

  • ccurring within an RPS that

does not differentially support solar is California, where the state’s utilities have signed contracts with 899 MW + of solar thermal electric capacity [none yet built] Separate from the RPS, the state is also aggressively supporting solar PV; this support, however, is not driven by the RPS

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Environmental Energy Technologies Division • Energy Analysis Department

States that Support Solar within an RPS Do So in Two Ways

  • Solar Share/Set-Aside

– A requirement that some portion of the RPS come from solar specifically, or distributed generation more broadly – Can be designed in multiple ways, as state experience shows

  • Solar Multiplier

– Provides solar electricity more credit towards an RPS than other forms of generation – For example, a MWh of solar generation might count as 3 MWh towards the RPS States may also use direct financial incentives to encourage solar power either separate from an RPS (CA) or under an RPS (NJ, NY)

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Environmental Energy Technologies Division • Energy Analysis Department

Solar Incentives: Set Asides in 8 States, Credit Multipliers in 4 Additional States

NV: 1% solar by 2015 2.4x multiplier for central PV 2.45x multiplier for distributed PV PA: 0.5% solar PV by 2021 NJ: 2.12% solar by 2021 AZ: 4.5% customer-sited DG by 2025 (half from residential) NY: 0.1542% customer-sited PV, fuel cells, wind by 2013 CO: 0.8% solar by 2020 (half from customer-sited projects) [for POUs, 3x multiplier] DC: 0.386% solar by 2021 WA: 2x multiplier for DG NM: 3x multiplier for solar TX: 500 MW target for non-wind DE: 3x multiplier for solar MD: 2x multiplier for solar

Set-aside Multiplier

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Environmental Energy Technologies Division • Energy Analysis Department

Early Results of Solar Incentives in State RPS Policies

  • Credit Multipliers

– WA: no real impact on solar to date, or expected – DE: no real impact on solar to date, or expected – MD: no real impact on solar to date, or expected – NM: some activity to support solar, but few results to show as of yet

  • Solar Set Asides

– NJ: 18 MW PV in 2006 (27 MW cumulative) – NY: 2.7 MW PV in 2006 (9 MW cumulative)

  • not significantly impacted by RPS set-aside, yet

– AZ: 1.8 MW PV in 2006 (16 MW cumulative); 1 MW solar thermal plant – CO: 0.9 MW in 2006 (1.8 MW cumulative) – TX: 0.7 MW in 2006 (2.2 MW cumulative)

  • not significantly impacted by RPS set-aside, yet

– NV: 2.6 MW in 2006 (3.5 MW cumulative); 64 MW solar thermal plant – DC: no real impact, yet – PA: no real impact, yet

  • Note that many of the above states also offer direct financial support for

solar, including (prominently) NJ and NY

Source: IREC, DRAFT

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Environmental Energy Technologies Division • Energy Analysis Department

Projecting the Future Market Impacts of Existing State Solar Set Asides

(Assuming Full Compliance with Existing RPS Standards)

200 400 600 800 1,000 1,200 1,400 1,600 1,800 2010 2015 2020 2025 2010 2015 2020 2025 2010 2015 2020 2025 2010 2015 2020 2025 2010 2015 2020 2030 2010 2015 2020 2025 2010 2015 2020 2025 New Jersey Arizona Pennsylvania Colorado Nevada Wash., DC New York

Solar Capacity (MW)

low high

Total Estimated Solar Capacity Driven by State RPS Set-Asides (assuming full compliance with mandates)

  • 2010: 400 MW to 500 MW
  • 2015: 1,200 MW to 1,400 MW
  • 2020: 2,800 MW to 3,200 MW
  • 2030: 3,700 MW to 4,300 MW
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Environmental Energy Technologies Division • Energy Analysis Department

Lessons Learned

  • Sizable solar markets typically exist in states that have:

– Solar set-asides within their RPS policies – Solar incentive programs outside of RPS

  • States that only have credit multipliers for solar, but no solar

share requirement, have not yet seen significant solar additions, especially customer-sited solar

– Partly reflects fact that credit multipliers have not been large enough to spur heightened interest – Also reflects fact that customer-sited solar projects face solicitation barriers due to their small individual size

  • Bottom line: for an RPS to significantly benefit solar,

especially PV, a solar share requirement appears necessary; or else multipliers must be set at higher levels, with overt action to remove contracting barriers for small, customer-sited projects

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Environmental Energy Technologies Division • Energy Analysis Department

Presentation Overview

  • 1. Overview of RPS Policies and Proposals
  • 2. The “Problem” for Solar Electricity
  • 3. EIA Analysis of Federal RPS Proposals
  • 4. State RPS Experience with Solar
  • 5. Conclusions
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Environmental Energy Technologies Division • Energy Analysis Department

Conclusions

  • RPS policies are a major driver for renewable energy

additions in the United States

  • A Federal RPS may, if enacted, substantially increase this

growth

  • Standard RPS designs do little to support solar energy,

especially customer-sited photovoltaics

  • To encourage solar within an RPS, either solar share

requirements or multipliers may be used; alternatively, direct financial incentives might be used

  • Evidence suggests that solar share requirements (or direct

financial incentives) are likely to be more effective than multipliers in growing the solar market within an RPS