Renewables Portfolio Standards in the United States: A Status Update

Transcription

1 Renewables Portfolio Standards in the United States: A Status Update Galen Barbose Lawrence Berkeley National Laboratory State-Federal RPS Collaborative National Summit on RPS Washington, D.C. November 6, 2013 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- AC02-05CH11231.

2 Summary of State RPS Experience-to-Date State RPS policies have been a significant driver for renewable energy growth in the United States and have largely held up against recent political challenges Generally high levels of compliance achieved thus far Compliance costs have thus far remained relatively modest, though questions exist about future costs Significant solar and other RE capacity is required to meet future RPS targets, but is well in-line with pace of additions in recent years Significant challenges nevertheless exist to meeting future RPS obligations (e.g., managing REC price volatility, transmission, integration, siting) 2

3 RPS Policies Exist in 29 States and DC 7 More States Have Non-Binding Goals Existing State RPS Policies Apply to 55% of Total U.S. Retail Electricity Sales in 2012 WA: 15% by 2020 OR: 25% by 2025 (large utilities) 5-10% by 2025 (smaller utilities) CA: 33% by 2020 AK: 50% by 2025 NV: 25% by 2025 AZ: 15% by 2025 MT: 15% by 2015 UT: 20% by 2025 CO: 30% by 2020 (IOUs) 20% by 2020 (co-ops) 10% by 2020 (munis) ND: 10% by 2015 SD: 10% by 2015 KS: 20% of peak demand by 2020 NM: 20% by 2020 (IOUs) 10% by 2020 (co-ops) MN: 25% by 2025 Xcel: 30% by 2020 WI: 10% by 2015 IA: 105 MW by 1999 IL: 25% by 2025 MO: 15% by 2021 OK: 15% by 2015 MI: 10% by 2015 VT: 20% by 2017 NY: 30% by 2015 PA: 8.5% by 2020 NJ: 22.5% by 2020 OH: 12.5% by 2024 MD: 20% by 2022 DE: 25% by 2025 ME: 40% by 2017 MA: 11.1% by %/yr RI: 16% by 2019 DC: 20% by 2020 VA: 15% by 2025 NH: 24.8% by 2025 CT: 23% by 2020 NC: 12.5% by 2021 (IOUs) 10% by 2018 (co-ops and munis) HI: 40% by 2030 TX: 5,880 MW by 2015 Mandatory RPS Non-Binding Goal 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) 3

4 Enactment of New RPS Policies has Waned, but States Continue to Hone Existing Policies CO (2007) HI (2005) IL (2008) MA (2003) CT (2000) MD (2006) DC (2007) NH (2008) MI (2012) ME (2000) PA (2001) NJ (2001) NY (2006) DE (2007) NC (2010) MO (2011) IA MN (2002) AZ (1999) NV (2001) WI (2000) TX (2002) NM (2002) CA (2003) RI (2007) MT (2008) WA (2012) OR (2011) OH (2009) KS (2011) IA MN AZ MN NM CT NJ CT AZ CA DC HI CO CA MA CO WI NV MN NM CO CA CO DE IL DE CT MD CT NV PA NV CT CT HI ME IL DC NJ MD TX HI DE MA MN MA DE NH MN Enactment (above timeline) Enactment (above timeline) Major Revisions (below timeline) ( ) Year of First Requirement NJ MD MD NV MD IL NM MT WI ME NJ OR NJ MA NY NV MN RI NY MD OH NJ NC NM WI PA TX 4

5 Major RPS Revisions in 2013 CO: Raised overall RPS target for rural electric cooperatives from 10% to 20% and created DG set-aside; extended eligibility to GHGneutral coal mine methane and pyrolysis of MSW CT: Increased maximum size threshold for hydroelectric facilities to qualify for Class I resources, from 5 MW to 30 MW, subject to various limitations MD: Created off-shore wind set-aside (2.5% by 2017) MN: Created a solar set-aside aside (1.5% by 2020) for IOUs MT: Created exemption for utilities serving fewer than 50 customers NV: Phases out energy efficiency allowance and multiplier for PV and places limits on banking of excess RECs 5

6 General Trends in Recent RPS Revisions Expanding and revising resource eligibility (waste-toenergy, hydropower, biomass co-firing, solar thermal) Increased stringency of RPS purchase targets Adoption of resource-specific set-asides and acceleration or increase in targets Honing solar set-aside provisions Eligibility rules (size, location, etc.) Solar ACP schedules Procurement mechanisms (contracting, auctions) Efforts to address REC oversupply/volatility and lack of long-term contracting opportunities in restructured markets 6

7 Experience with State RPS Compliance Obligations Varies Widely and is Growing Operational Experience with State RPS Policies (number of major compliance years completed-to-date) Colorado Delaware Illinois Kansas Montana California Arizona Michigan New Hampshire Maryland Connecticut Iowa Missouri Hawaii Pennsylvania New Mexico Massachusetts Maine Oregon North Carolina Rhode Island New York Minnesota New Jersey Washington Ohio Washington D.C. Wisconsin Nevada Texas 1-2 years 3 4 years 5 6 years 7 8 years 9 10 years > 10 years 7

8 State RPS Policies Appear to Have Motivated Substantial Renewable Capacity Development Cumulative and Annual Non-Hydro Renewable Energy Capacity in RPS and Non-RPS States, Nationally Cumulative Capacity Annual Capacity Additions Nameplate Capacity (MW) 80,000 70,000 60,000 50,000 40,000 30,000 20,000 RPS Non-RPS Nameplate Capacity (MW) 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 10, RPS Non-RPS Though not an ideal metric for RPS-impact, 67% (46 GW) of all non-hydro renewable capacity additions from occurred in states with active/impending RPS compliance obligations 8

9 State RPS Have Largely Supported Wind, Though Solar Has Become More Prominent RPS-Motivated* Renewable Energy Capacity Additions from , by Technology Type 14,000 12,000 10,000 8,000 6,000 4,000 2,000 Cumulative RPS Capacity Additions ( ) 88% 8% 1% 3% Nameplate Capacity (MW) Annual RPS Capacity Additions Geothermal Biomass Solar Wind * 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 year of RPS compliance obligations in that state. On an energy (as opposed to capacity) basis, wind energy represents approximately 85%, biomass 8%, solar 4%, and geothermal 3% of cumulative RPS-motivated renewable energy additions from , if estimated based on assumed capacity factors. 9

10 Solar and DG Set-Asides Have Become Widespread 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: 20 MW solar PV by x multiplier for PV installed before 2016 NV: 1.5% solar by x multiplier for PV until 2015 MN: 1.5% solar by 2020 for IOUs CO: 3% DG by 2020 for IOUs (half from retail DG) 1% DG by 2020 for coops 3x multiplier for munis/coops for solar installed before July 2015 AZ: 4.5% customer-sited DG by 2025 (half from residential) NM: 4% solar electric by 2020, 0.6% customer-sited DG by 2020 MI: 3x multiplier for solar NY: 878 GWh retail DG by 2015 NJ: 4.1% solar electric by 2027 PA: 0.5% solar PV by 2020 OH: 0.5% solar electric by 2024 IL: 1.5% solar PV by 2025, 1% DG by 2015 (50% <25 kw) MO: 0.3% solar electric by 2021 NH: 0.3% solar electric by 2014 MA: 456 GWh customer-sited solar PV (no specified target year) DE: 3.5% solar by x multiplier for solar installed before Jan (applies only to solar used for general RPS target) MD: 2% solar by 2020 DC: 2.5% solar by 2023 NC: 0.2% solar by 2018 Set-aside Set-aside with multiplier Multiplier 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 provided via long-term contracting programs (CT, DE, NJ, and RI) and via up-front incentives/srec payments 11 states created solar/ DG setasides since 2007: DE, IL, MA, MD, MO, MN, NC, NH, NM, OH, OR 10

11 Solar Share is Notably Greater in Regions with Set-Asides or Strong Solar Resource Potential RPS-Motivated* Renewable Energy Capacity Additions from , by Region and Technology Type 100% 20,000 % of Capacity Additions (Nameplate MW) 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% New England, New York Mid-Atlantic California Non-CA West Texas Midwest 16,000 12,000 *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. 8,000 4,000 0 Capacity Additions (Nameplate MW) Solar Geothermal Biomass Wind Total MW (right axis) 11

12 Impact of Solar/DG Set-Asides is Growing: Drove ~50% of U.S. PV Additions in Annual Grid-Connected PV Installations for Solar/DG Set-Asides (MWac) 1,200 1, Percent of U.S. annual grid-connected PV capacity additions, excluding California, driven by solar/dg set-asides [right axis] Percent of U.S. annual grid-connected PV capacity additions, driven by solar/dg setasides [right axis] % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Percent of U.S. Annual Grid-Connected PV Installations (%) NH MO DC IL DE OH MD NY PA NM NV MA NC CO AZ NJ General RPS obligations also driving significant solar additions in California and Southwest 12

13 Main Tier RPS Targets Largely Achieved; Isolated Struggles Apparent 100% 90% 80% 70% 60% 50% Percent of Main Tier RPS Target Met with Renewable Electricity or RECs (including available credit multipliers and banking, but excluding ACPs and borrowing) 40% 30% 20% 10% % 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 Note: Percentages less than 100% do not necessarily indicate that full compliance was not technically achieved, because of ACP compliance options, funding limits, or force majeure events. 13

14 Achievement of Solar/DG Set-Aside Targets Has Steadily Increased in Most States Percent of Solar/DG Set-Aside Target Met with Solar/DG Electricity or SRECs (including available credit multipliers and banking, but excluding ACPs and borrowing) Percent of Solar/DG Target Met with Solar/DG Electricity or RECs 100% 80% 60% 40% 20% 0% AZ DC IL MD MO NH NM NY OR CO DE MA MN NC NJ NV OH PA Note: "Percent of Solar/DG Target Met with Solar/DG Electricity or RECs" excludes ACPs but includes applicable credit multipliers. In cases where this figure is below 100%, suppliers may not have been technically out of compliance due to solar ACP compliance options, funding limits, and force majeure provisions. 14

15 REC Pricing Reflects Current Supply-Demand Balance; Exhibits Continued Volatility Rising Class I REC prices in Northeastern states reflect tightening supply, while pricing in Mid-Atlantic states remain low Sinking SREC prices in recent years (across most markets) show enduring over-supply Avg Monthly REC Price (2012$/MWh) $80 $70 $60 $50 $40 $30 $20 $10 $0 Jan-05 Jul-05 Jan-06 Main Tier/Class I RECs 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 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Trading Month Sources: Evolution Markets (through 2007) and Spectron (2008 onward). Plotted values are the last trade (if available) or the mid-point of Bid and Offer prices, for the current or nearest future compliance year traded in each month. Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Avg. Monthly SREC Price ($2012/MWh) $800 $700 $600 $500 $400 $300 $200 $100 $0 Jan-05 Jul-05 Jan-06 DC MA NC NJ PA Jul-06 Jan-07 Jul-07 DE MD NH OH Jan-08 SRECs Jul-08 Jan-09 Jul-09 Jan-10 Trading Month 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 SREC prices for the current or nearest future compliance year traded in each month. Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 15

16 Rate Impacts of State RPS Policies Have Thus Far Been Generally Modest (<2%) Translating REC prices or other available data on net incremental costs into retail rate impacts yields the results shown below 5% 4% 3% 2% 1% 0% -1% CT DC DE Estimated Rate Impact of State RPS Policies* (% of average retail electricity rate) IL MA MD ME NH NJ OH Future compliance costs will be impacted by increasing RPS targets, changes to fed. tax incentives, and trajectories of RE costs and natural gas prices (among other factors) PA RI TX AZ CO MI NC NY REC Purchases and ACPs Other Methods* * Other Methods for estimating rate impacts include utility-reported incremental costs (OR), RPS tariff rider collections (AZ, CO, MI, NC), approved budget (NY), and PUC analysis (WI). States omitted if data on incremental RPS compliance costs are unavailable (CA, IA, HI, KS, MN, MO, MT, NM, NV, TX, WA). OR WI Simplified approach ignores some ratepayer costs (e.g., integration) and benefits (e.g., wholesale electricity price suppression) Limited/mixed data for states dominated by bundled contracts Rate impacts vary with target levels, REC prices, presence of setasides 16

17 Rate Impacts of Solar/DG Set-Asides Vary and Were Tempered by SREC Price Declines in 2012 The rate impacts of solar/dg set-asides can be estimated using SREC prices or data on incentive program expenditures Rate impacts vary with target levels and SREC prices Incentive programs tend to front-load set-aside costs Rate impacts in 2012 fell in many states due to decline in SREC prices, in spite of increasing targets 4% 3% 2% 1% 0% DC DE Estimated Rate Impact of Solar/DG Set-Asides* (% of average retail electricity rate) MA MD NH NJ SREC Purchases and SACPs OH PA AZ NY MO Solar/DG Incentive Program *States omitted from the figure if data on incremental costs of solar/dg set-aside are unavailable (CO, IL, MN, NC, NM, NV, OR). Set-Aside targets are still in the early phases of ramping up; will increase by a factor of 5 by

18 Solar/DG Set-Asides Represent a Large Share of Total RPS Rate Impacts in Some States Average RPS rate impacts over can be segmented into Solar/DG Set-Aside and Non-Solar/DG Set-Aside impacts 5% 4% 3% Estimated Rate Impact of State RPS Policies* (% of average retail electricity rate, ) Solar/DG Set-Aside Non-Solar/DG Set-Aside 2% 1% 0% DC DE MA MD NH NJ OH PA AZ NY SREC Purchases and SACPs Solar/DG Incentive Program * Results are based on average rate impacts over the period, using however many years of compliance data are available. States omitted from the figure if data on incremental costs are unavailable (CO, IL, MN, MO, NC, NM, NV, OR). Overall RPS rate impacts may increasingly be driven by solar/dg set-aside costs as targets rise 18

19 Most States Have Capped Rate Impacts Well Below 10% (13 States Below 5%) Many states cost containment mechanisms can be translated into an estimated maximum increase in retail rates Estimated Retail Rate Increase 15% 10% 5% 0% Maximum Incremental RPS Compliance Costs (Percentage Increase in Average Retail Rates) Effective Cost Cap (Max Retail Rate Increase) Historical Compliance Costs (Most-Recent Year) NJ RI MA DC NH CT MD ME OR WA NM MI TX DE OH NY CO NC IL MO MT No explicit cap on incremental compliance costs in 9 states (AZ, CA, IA, KS, HI, MN, NV, PA, WI), though KS caps gross revenue requirements and CA is currently developing its cost containment mechanism 19

20 Future RPS Requirements are Sizable, But Well Within Recent RE Growth Rates 94 GW of New RE required by 2035, if full compliance is achieved Equates to roughly 3-5 GW/yr through 2020 and 2-3 GW through 2035 By comparison, RPSdriven RE additions have ranged from 6-13 GW/yr in all but one year since 2008 CA IL NJ TX MN OH MA CO WA PA MD AZ NY OR MO NC KS MI NM CT WI NV HI DE MT DC NH ME RI IA New Renewable Capacity by 2035 (Nameplate GW) HI MA MN CA IL NJ DE OR CT NM NH CO RI NV MD KS WA OH MT DC ME AZ MO NY WI PA MI TX NC IA New Renewable Generation by 2035 (Percent of Statewide Retail Sales) 0% 5% 10% 15% 20% 25% 30% 35% * New RE is defined based on state-specific distinctions between new vs. existing, or based on the year in which the RPS was enacted; it does not represent new renewables relative to current supply 20

21 Solar Market Growth is on Pace to Meet Future Solar/DG Set-Aside Requirements Cumulative capacity requirement grows to 9,300 MW by 2035 Required average annual solar capacity additions of 700 MW/yr through 2020, tapering off thereafter By comparison, set-aside PV additions reached 1,200 MW in 2012 Annual Solar Capacity Additions (MW ac ) 1,200 1, Required Annual Capacity Additions (left axis) Cumulative Capacity Required (right axis) ,000 8,000 6,000 4,000 2,000 0 Cumulative Solar Capacity (MW ac ) NJ IL AZ MD PA OH CO NM MA DE DC NC NY NV MO NH OR 21

22 The Future Role and Impact of State RPS Programs Will Depend On The outcome of ongoing and future legislative and legal challenges Whether cost caps become binding The ever-present possibility of federal energy legislation How policymakers re-tune RPS in response to changing market conditions Continued efforts to address challenges associated with volatile REC prices and limited availability of long-term contracts in restructured retail electricity markets How other related policy issues and barriers affecting RE deployment are addressed (transmission, integration, siting, EPA/environmental regs, net metering, etc.) 22

23 Thank You! For further information: LBNL RPS publications and resources: rps.lbl.gov LBNL renewable energy publications: Contact information: Galen Barbose, Ryan Wiser,

24 Political and Legal Challenges to RPS Policies Have Been Mounting Legislation to repeal, reduce, delay, or freeze RPS targets introduced in many states over the past several years American Legislative Exchange Council (ALEC) developed model legislation to repeal state RPS laws None of those bills have thus far passed Other legislation has sought revisions that would weaken RPS policies (e.g., by expanding eligibility for large/existing hydro) Legal issues also raised in court cases & regulatory proceedings Commerce Clause issues, often tied to geographic eligibility rules (MA, MI, CO, CA, MO, MN) Challenges to the jurisdictional authority of the PUC to enact an RPS (AZ) 24

25 Given Uncertainly in Future Costs, Cost Caps of Various Designs are Common 1) ACP with automatic cost recovery: MA, ME, NH, NJ, RI 2) ACP with possible cost recovery: DC, DE, MD, OR 3) Retail rate / revenue requirement cap: CO, KS, IL, MD, MO, NM, OH, OR, WA 4) Renewable energy contract price cap: MT, NM 5) Per-customer cost cap: MI, NC, NM 6) Renewable energy fund cap: NY 7) Financial penalty may serve as cost cap: CT, HI, OH, PA, TX 25

26 Emerging cost-containment issues Standardizing definitions and methodologies How to define net costs (Costs/benefits to whom? What benefits to net out? What costs to count?) Data availability and transparency Calculating incremental costs with bundled RE contracts Drivers for RPS costs going forward Growth in RPS targets (set-aside targets especially) RE technology costs Gas prices 26