RENEWABLE ENERGY STANDARDS AND LEGISLATIVE PATHS TO IMPLEMENTATION Robert S. Kenney, Commissioner Missouri Public Service Commission P.O. Box 360 Jefferson City, MO 65102 (573) 751-4132 robert.kenney@psc.mo.gov www.psc.mo.gov July 28 29, 2010
Overview Renewable Energy Standards/Renewable Portfolio Standards (Why and How) Legislation Rulemaking Public Policy Implications of various legislative and rulemaking efforts Energy Efficiency Investment Act Feed In Tariffs as a means of promoting renewable energy Q & A
Renewable Energy: Why Environmental Benefits Economic Development Benefits Reduce d Dependence on Foreign Sources of Fossil Fuels
Renewable Energy: How State-level Renewable Energy Standards/Renewable Portfolio Standards Federal Level Feed-in Tariffs Standard Offer Contracts Tax Incentives Rebates
Amount Spent on Coal in Missouri
2008 MISSOURI: PERCENTAGE OF FUEL TYPES GENERATION 90.00 80.0 70.0 60.00 50.0 40.0 30.00 20.0 Coal Petroleum Natural Gas Nuclear Hydroelectric Other Renewables Pumped Storage 10.0 00 0.0 Fuel Type Wind, Solar and Geothermal comprise.2% of the total energy consumed in Missouri in 2008. Source: United States Department of Energy, Energy Information Administration, State Energy Data 2008: Generation
Missouri Electricity Consumption Continues in Increase
Growth in electricity demand continues to slow 3-year rolling average percent growth Period Annual Growth 14 History 1950s 9.8 1960s 7.3 12 1970s 4.7 1980s 2.9 10 1990s 2.4 2000-20082008 0.9 2008-2035 1.0 8 6 4 2 0 Projections -2 1950 1960 1970 1980 1990 2000 2010 2020 2030 Richard Newell, SAIS, December 14, 2009 Source: Annual Energy Outlook 2010 8
Demand Projections Demand will continue to increase 26% by 2030 The rate of demand growth will continue to decrease Cost of Fuel Energy Efficiency Measures
Renewable Portfolio Standards www.dsireusa.org / July 2010 VT: (1) RE meets any increase WA: 15% x 2020* MN: 25% x 2025 in retail sales x 2012; MT: 15% x 2015 (Xcel: 30% x 2020) (2) 20% RE & CHP x 2017 OR: 25% x 2025 (large utilities)* ND: 10% x 2015 MI: 10% + 1,100 MW 5% - 10% x 2025 (smaller utilities) x 2015* SD: 10% x 2015 WI: Varies by utility; NY: 29% x 2015 10% x 2015 statewide NV: 25% x 2025* IA: 105 MW OH: 25% x 2025 CO: 30% by 2020 (IOUs) 10% by 2020 (co-ops & large munis)* IL: 25% x 2025 WV: 25% x 2025* CA: 33% x 2020 UT: 20% by 2025* KS: 20% x 2020 VA: 15% x 2025* MO: 15% x 2021 AZ: 15% x 2025 NM: 20% x 2020 (IOUs) 10% x 2020 (co-ops) OK: 15% x 2015 NC: 12.5% x 2021 (IOUs) 10% x 2018 (co-ops & munis) DC ME: 30% x 2000 New RE: 10% x 2017 NH: 23.8% x 2025 MA: 22.1% x 2020 New RE: 15% x 2020 (+1% annually thereafter) RI: 16% x 2020 CT: 23% x 2020 PA: ~18% x 2021 NJ: 22.5% x 2021 MD: 20% x 2022 DE: 20% x 2020* DC: 20% x 2020 HI: 40% x 2030 TX: 5,880 MW x 2015 State renewable portfolio standard State renewable portfolio goal Solar water heating eligible Minimum solar or customer-sited sited requirement 29 states + * Extra credit for solar or customer-sited renewables Includes non-renewable alternative resources DC have an RPS (7 states have goals)
Legislative Paths to Renewable Energy In 2007, the Missouri General Assembly passed and the Governor signed into law, Missouri s Green Power Initiative. The Green Power Initiative provided d that t every electric corporation shall make a good faith effort to generate or procure electricity generated from renewable energy resources to meet the following: 2012 = 4% 2015 = 8% 2020 = 11%
Legislative Paths to Renewable Energy In 2008, the citizens of the State of Missouri adopted by initiative petition, commonly referred to as Proposition C, an amendment that established Missouri s s Renewable Energy Standard. Renewable Energy requirements to be generated or purchased: 2011 to 2013 = No less than 2% 2014 to 2017 = No less than 5% 2018 to 2020 = No less than 10% 2021 and beyond = No less than 15%
Missouri s Renewable Energy Standard What is a renewable energy source? Wind Solar thermal Photovoltaic cells/panels Dedicated Crops Cellulosic agricultural residues Plant residues Methane from landfills or from wastewater treatment Clean and untreated wood Hydropower y p (not including pumped p storage) less than 10 MW Hydrogen fuel cells Other resources not including nuclear that become available at a later date and that are approved by the Department of Natural Resources
Missouri s Renewable Energy Standard Two percent of the RES requirements must come from solar energy. Each electric utility (with, maybe, one exception) must make available to its customers a rebate of at least two dollars for each installed watt for solar electric systems sited on the customer s premises. Compliance with RES requirements can be accomplished through the purchasing of Renewable Energy Credits (RECs). A REC is a tradeable certificate of proof that one MWh of electricity has been generated from renewable energy sources. The use of RECs gives rise to other complicated issues: Where is the renewable energy generated? Does the energy have to be sold to Missouri consumers? Is the REC divisible from the energy associated with it?
Missouri s Renewable Energy Standard The Commission is required to promulgate rules setting forth the various requirements for all electric utilities to generate or purchase electricity generated from renewable resources. The rulemaking process raises legal and public policy considerations.
Missouri s Renewable Energy Standard Standard Offer Contract Geographic Sourcing Retail Rate Impact
Legislation Missouri s Renewable Energy Standard Senate Bill 848 requires the Commission and the Department to include methane generated from farm animal waste as a renewable energy source for purposes of meeting the portfolio requirement. This bill was signed by the Governor. House Bill 18511 would have added d nuclear generated power to the list of renewable energy sources. This bill failed
Missouri s Energy Efficiency Investment Act In addition to the renewable energy objectives it is also the policy of this state to encourage electrical corporations to develop and administer energy efficiency initiatives that reduce the annual growth in energy consumption and the need to build additional electric generation capacity. Mo. Rev. Stat. 393.1040 It shall be the policy of the state to value demandside investments equal to traditional investments in supply and delivery infrastructure and allow recovery of all reasonable and prudent costs of delivering costeffective demand-side programs. Mo. Rev. Stat. 393.1075.3 3
Missouri s Energy Efficiency Investment Act In supporting and encouraging energy efficiency, the Commission is required to: Provide timely cost recovery for utilities. Ensure that utilities financial incentives are aligned with helping customers use energy more efficiently and in a manner that sustains or enhances utility customers incentives to use energy more efficiently. Provide timely earnings opportunities associated with cost-effective, measureable and verifiable efficiency savings.
Questions? Robert S. Kenney, Commissioner Missouri Public Service Commission P.O. Box 360 Jefferson City, MO 65102 (573) 751-4132 robert.kenney@psc.mo.gov www.psc.mo.gov July 28 29, 2010