Technical Report

NREL/TP-6A2-46264

January 2010

A Framework for State-Level 

Renewable Energy Market 

Potential Studies

Claire Kreycik, Laura Vimmerstedt, and 

Elizabeth Doris
National Renewable Energy Laboratory

1617 Cole Boulevard, Golden, Colorado 80401-3393

303-275-3000 • www.nrel.gov

NREL is a national laboratory of the U.S. Department of Energy

Office of Energy Efficiency and Renewable Energy

Operated by the Alliance for Sustainable Energy, LLC

Contract No. DE-AC36-08-GO28308

Technical Report

NREL/TP-6A2-46264

January 2010

A Framework for State-Level 

Renewable Energy Market 

Potential Studies

Claire Kreycik, Laura Vimmerstedt, and 

Elizabeth Doris 

Prepared under Task No. WF6N.1013
NOTICE

This report was prepared as an account of work sponsored by an agency of the United States government. 

Neither the United States government nor any agency thereof, nor any of their employees, makes any 

warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or 

usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not 

infringe privately owned rights. Reference herein to any specific commercial product, process, or service by 

trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, 

recommendation, or favoring by the United States government or any agency thereof. The views and 

opinions of authors expressed herein do not necessarily state or reflect those of the United States 

government or any agency thereof.

Available electronically at http://www.osti.gov/bridge

Available for a processing fee to U.S. Department of Energy

and its contractors, in paper, from:

U.S. Department of Energy

Office of Scientific and Technical Information

P.O. Box 62

Oak Ridge, TN 37831-0062

phone: 865.576.8401

fax: 865.576.5728

email: mailto:reports@adonis.osti.gov

Available for sale to the public, in paper, from:

U.S. Department of Commerce

National Technical Information Service

5285 Port Royal Road

Springfield, VA 22161

phone: 800.553.6847

fax: 703.605.6900

email: orders@ntis.fedworld.gov

online ordering: http://www.ntis.gov/ordering.htm

Printed on paper containing at least 50% wastepaper, including 20% postconsumer waste
iii

Table of Contents

Acknowledgments ..................................................................................................................................... iv

Executive Summary.................................................................................................................................... v

1 Introduction........................................................................................................................................... 1

2 Methodology ......................................................................................................................................... 4

3 Framework for Conducting a Market Potential Study....................................................................... 4

Process .......................................................................................................................................4

Framing a Study .........................................................................................................................4

Scenario Development ...............................................................................................................5

4 Goal-Oriented Studies.......................................................................................................................... 7

Case Study: Western Governors' Association's Clean and Diversified Energy Initiative Task 

Force Reports .......................................................................................................................7

Case Study: New Jersey Renewable Energy Market Assessment .............................................9

5 Conclusions ........................................................................................................................................ 11

Appendix A: Studies Analyzed ................................................................................................................ 12

Appendix B: List of Data Resources....................................................................................................... 13

List of Figures

Figure 1. Types of potential studies ...........................................................................................3

List of Tables

Table 1. Applications for State-Level Renewable Energy Potential Studies .............................2

Table 2. Massachusetts Supported Development Case..............................................................6

Table 3. Massachusetts Accelerated Development Case ...........................................................6

Table 4. Massachusetts Market-based Development Case ........................................................6

Table 5. Summary of WGA Renewable Goal-Specific Analysis ..............................................8

Table 6. New Jersey Market Potential Scenarios .....................................................................10
iv

Acknowledgments

This work is funded by the U.S. Environmental Protection Agency (EPA). The authors 

appreciate the thoughtful reviews of Niko Dietsch and Julie Rosenberg of the EPA, and Doug 

Arent, David Hurlbut, and Jim Newcomb of the National Renewable Energy Laboratory 

(NREL). The authors also thank Karen Atkison for providing editorial support—including a 

careful technical edit— and Jim Leyshon for designing the graphics.
v

Executive Summary

State-level policymakers are relying on estimates of the market potential for renewable energy 

resources as they set goals and develop policies to accelerate the development of these resources. 

Therefore, accuracy of such estimates should be understood and possibly improved to 

appropriately support these decisions.

This document provides a framework and next steps for state officials who require estimates of 

renewable energy market potential. The report gives insight into how to conduct a market 

potential study, including what supporting data are needed and what types of assumptions need 

to be made. The report distinguishes between goal-oriented studies and other types of studies, 

and explains the benefits of each.

Renewable energy market potential is defined as the quantity of renewable energy development 

that could be supported in a particular jurisdiction given the available resource, and given the 

technical, economic, and market constraints.

Market potential studies are useful to state decision makers because they can help shape 

renewable energy targets, can identify the lowest-cost options for reaching specific goals, or can 

serve as the basis for evaluating costs and benefits of renewable energy development. Based on a 

synthesis of the methodologies and approaches of various studies and an analysis of the 

evolution of the market potential study over the last decade, the following general conclusions 

were reached: 

• Market potential studies must be grounded in comprehensive analysis of resource, 

technical, and economic potential.

• Recent market potential studies incorporate detailed scenario analysis with 

comprehensive projections of electricity, renewable energy credit (REC), and carbon 

market conditions, and future incentive levels. This level of detail provides perspective 

on different possible future investment environments, which in turn provides more 

realistic bounds for market potential.

• Uncertainty in the analysis can be minimized by focusing on a goal for renewable 

penetration, shortening the timeline for the analysis, or both.

• A final caveat: market potential estimates are hypothetical because of the large number of 

assumptions that go into them. Results should not be taken as projections for future 

renewable energy supply.
1

1 Introduction

Energy powers the United States; therefore, it is critical that policymakers know how much 

energy is available and at what cost. In a fossil-fuel-dominated energy system, this knowledge 

comes in terms of reserves (barrels of petroleum, tons of coal, or cubic feet of natural gas). These 

reserves are further defined by their market competitiveness–the quality of the resource, the cost 

of extraction, and the cost of competing energy resources. Similarly, a renewable energy 

potential study can be used to quantify reserve quantity, costs, and competitiveness for 

renewable resources.

State-specific renewable energy market potential studies can help identify opportunities for 

policy enhancement and future investments to advance economic development. Relevant to this 

application of the studies, the American Recovery and Reinvestment Act has provided funding 

for state energy initiatives and programs that will help states achieve energy goals, including 

renewable energy goals. Funds from the Recovery Act may be used to conduct market potential 

studies, which can provide key insight to decision makers and help shape their strategies and 

activities.

There are four basic types of renewable energy potential study, defined below:

• Resource—an estimate of the theoretical potential for renewable resources in a region.

Resource potential studies address the quantity, timing of availability, geographic 

location, and trends in supply of renewable resources such as biomass, geothermal, 

hydro, ocean, solar, and wind.

• Technical—an estimate that limits potential by incorporating technical and land use 

limitations. Technical potential studies examine opportunities for conversion of these 

energy resources into useful forms using proven or assumed-to-be-developed 

technologies. A technical potential study provides an estimate of the maximum amount of 

feasible renewable energy development, not considering economic or market barriers.

• Economic—an estimate that limits potential by incorporating technology cost 

information and other economic indicators (including ancillary impacts). Economic 

potential studies also account for costs and cost-competitiveness of those technologies.

• Market—an estimate that limits potential by incorporating market acceptance 

considerations including demand, supply, commodity prices, regulations, incentives, 

barriers, investments, consumer response, and others. A common subtype is the goaloriented market potential study that will be described in more detail below. Goal oriented 

potential studies identify the potential of renewable energy resources to meet a selected 

policy-driven goal.

The desired applications of renewable energy potential studies shape their design. These 

applications range from education and awareness of the public to developing policies and 

programs to promote renewable energy use in the jurisdiction. Table 1 summarizes the primary 

applications for potential studies. Actual studies can address one or, more frequently, a 

combination of applications.
2

Table 1. Applications for State-Level Renewable Energy Potential Studies

Outcome Description Applicable Type

of Study

Baseline 

Availability 

Understanding

Develops and consolidates possible uses 

of, and resources for, renewable energy 

within the geographic area 

Resource

Public Education 

and Awareness

• Consolidates information 

available within a geographic area 

for the general public 

• Raises awareness among the 

general public through accessible 

information tailored specifically to 

constituent needs 

All

Scenario 

Development

Provides information based on variable 

assumptions regarding market 

development, technology pricing changes, 

and/or policy choices

Economic, Market

Target Setting Assists in setting renewable energy 

targets for single resources or resource 

mixes

Economic, Market, 

Goal-Oriented

Economic 

Competitiveness of 

Renewable 

Technologies 

Competes opportunities for renewable 

resources against each other or against 

fossil-based fuels

Economic

Business 

Development

Illustrates the value of renewable energy 

in a geographic location for potential 

investors

Market

Policy 

Opportunities

Identifies market development and 

incentive opportunities for public sector 

support 

Market

Each type of study has appropriate applications. Detailed resource studies can encourage 

business interest in developing those resources and provide opportunities for the public and 

policymakers to better understand available resource opportunities. Market potential studies can 

estimate likely usage of renewable resources and technologies under selected scenarios, and the 

difference between economic and market potential can highlight possible opportunities for 

effective policy intervention. Comparison of economic and technical potential can identify 

opportunities for technical improvements that increase economic competitiveness of the 

technologies. Goal-oriented potential studies can assist policymakers in understanding the 

implications of targets and evaluating possible incentives to achieve those targets.

Among different types of potential studies, market potential studies provide the most practical 

and usable information for decision makers because they encompass market factors that may 

influence outcomes. Market potential estimates build upon inputs from the other types of studies 

to determine a realistic potential for renewable energy under a particular set of assumptions. 

These results are often presented as scenarios of future market development. The purpose of 
3 

these studies is to offer policymakers and decision 

makers information about the likely development 

within a specified policy context.

Figure 1 shows how these types of studies relate to 

one another. Technical, economic, and market 

potential each depend on the limitations and 

constraints of the preceding type of potential in a 

sequential manner, as depicted in the figure. Each 

layered analysis adds additional assumptions about 

technologies, economics, and markets. In fact, 

economic and market potential studies can present 

the results as fractions of the total technical 

potential.

As the number of assumptions increases, 

variability in the range of possible outcomes 

increases. Whereas scenario analysis is valuable in 

the policy arena, holding underlying assumptions 

constant provides the most useable product for 

decision makers. By constraining resource and technical potential, decision makers can compare 

the impacts of different policy options on cost reduction and market penetration. Varying market 

assumptions, while holding all else constant, can also help bound market potential over a given 

timeframe.

Figure 1 also illustrates that market studies must build upon solid understanding of resource 

potential, because the resources vary by location and time, and their competitiveness varies by 

technology and market. Resource uncertainty, including climatic and weather system shifts and 

reallocation of land for alternative uses, can have a large impact on the economics and market 

situation for renewable energy. In the same vein, technology changes regarding performance 

(e.g., increased conversion efficiency) or cost (e.g., increased steel costs) can dramatically 

change the market impact that renewable energy can have. In short, renewable energy potential 

study types are interlinked and need to be used together to fully understand policy implications.

Figure 1. Types of potential studies 
4

2 Methodology

State policymakers have been conducting or commissioning renewable energy market potential 

studies for more than 10 years. The methodologies supporting potential studies have evolved. 

We analyzed nearly two dozen studies to identify the issues and assumptions that need to be 

addressed in conducting market potential studies, the data needed to support them, and the next 

steps for states to pursue the development of them. Our purpose is to increase the usefulness of 

these studies to policymakers.

Section 4 delves into how best to conduct a state-specific market potential study. Specific 

considerations include framing the purpose and scope, and developing scenarios. Section 5 

describes the goal-oriented study: its uses, benefits, and drawbacks.

3 Framework for Conducting a Market Potential Study

This section provides a framework for conducting market potential studies, with emphasis on 

maximizing usefulness and managing uncertainty. A step-by-step description of how to conduct 

a study is provided below and details are provided about how to frame a study and develop 

scenarios.

Process

1. Conduct background research, including a review of potential studies done in other states 

and regions. Background research can help in the development of assumptions and data 

sources for the area.

2. Frame the study; develop a clear research question to address a particular purpose.

3. Consider study scope and timeframe of the analysis.

4. Create an underlying estimate of technical potential by doing a full resource assessment 

and adding technical and geographical limitations.

5. Apply economic constraints, with consideration given to how state policy context 

influences technology costs.

6. Identify primary market drivers (e.g., fuel prices, future generation retirements, 

transmission requirements, and REC and carbon markets) and monetize them.

7. Evaluate policy or market scenarios to develop bounds for renewable energy market 

potential.

Framing a Study

Market potential studies are often developed in state energy offices for the purposes of planning 

and impact evaluation. By building upon resource assessment, and technological and economic 

potentials, market potential studies can identify costs, benefits, and economic impacts of 

particular policies, public sector investments, or investment environments. Market potential 

studies can assist in setting renewable energy targets for single resources or resource mixes, or 

conversely can evaluate the impact of a target on the market development. Furthermore, the 

studies also can help identify barriers to market penetration and opportunities for investments 

and incentives that could stimulate market development.
5

To maximize the impact of market potential studies, it is important to develop a clear and 

specific question. The box below describes common questions that market potential studies set 

out to answer:

Scenario Development

Scenarios portray possible market conditions for renewables in future years. Information on cost 

reductions, policies, and markets is uncertain at best. Therefore, market potential results should 

be presented as scenarios, or possible future outcomes. This is also the case for other potential 

types, but because market studies have very specific and tangible results, there may be greater 

opportunity for misconceptions about their level of certainty.

Studies often characterize scenarios in terms of investment environment, comparing a base case, 

representing business as usual, with a case of accelerated development, caused by incentives, 

market conditions, and cost reductions. Alternatively, scenarios could be defined by the presence 

or absence of a market for greenhouse gas emissions mitigation. Many factors contribute to the 

quality of the investment environment, including commodity prices, consumer demand, 

greenhouse gas policy, government incentives, load growth, non-incentive regulation, 

transmission, and the difference in cost between renewable electricity and conventional 

electricity.

In the 2008 “Massachusetts Renewable Energy Potential” study, three theoretical scenarios were 

defined: Supported Development, Accelerated Development, and Market-based Development. 

The study commissioners, the Massachusetts Department of Energy Resources and the 

Massachusetts Technology Collaborative, developed sets of assumptions about the prices of 

natural gas, carbon, electricity, and RECs in the study period 2009 through 2020. The three 

scenarios also captured differences in the cost-competitiveness of renewables and availability of 

government incentives.

The Supported Development case estimates an unfavorable investment environment, offset by 

supportive government incentives and policies. The Market-based Development case assumes 

high economic returns to renewable energy development, tempered by minimal government 

incentive. The Accelerated Development case estimates favorable economics and high 

government incentives for renewables. As an example of the assumptions that need to be made to 

develop scenarios, the market and policy variables for this study are shown in Tables 2, 3, and 4. 

These assumptions were made strictly for this analysis and should not be used outside of the 

scenario framework.

Questions Answered by Market Potential Analysis

• What impact is a policy likely to have on market penetration of renewables?

• What do supply chain changes mean for market penetration? 

• Where and in what technology should investment dollars be focused?

• What investments are likely to result in actual renewable energy projects?

• How aggressive should a renewable energy target be?

• Will the state reach its renewable energy target, and if so, with what mix of technologies?

• To what extent will renewable energy build-out require grid updates?
6

Table 2. Massachusetts Supported Development Case

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Natural gas price ($/MMBtu) 12.80 11.28 9.18 8.04 8.23 8.33 8.78 9.23 9.99 10.65 11.14 11.37

Carbon Price ($/ton) 1.86 1.86 1.86 1.86 1.86 3.35 4.01 4.82 5.79 6.94 8.33 10.00

Wholesale Electricity Price (¢/kWh) 10.02 9.28 8.86 7.16 7.56 7.67 7.73 8.18 8.85 9.51 10.13 10.17

Retail Electricity Price (¢/kWh) 19.5 18.4 17.8 15.2 15.9 16.0 16.1 16.8 17.9 18.9 19.8 19.9

REC Price ($/MWh) 51.68 51.68 51.68 51.68 51.68 51.68 51.68 51.68 51.68 51.68 51.68 51.68

PTC/REPIa On On On On On On On On On On On On

Table 3. Massachusetts Accelerated Development Case

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Natural gas price ($/MMBtu) 12.80 15.20 17.60 20.00 20.25 20.50 20.75 21.00 21.25 21.50 21.75 22.00

Carbon Price ($/ton) 1.86 6.24 10.61 14.39 19.37 23.74 28.12 32.49 36.87 41.25 45.62 50.00

Wholesale Electricity Price (¢/kWh) 10.60 12.81 15.02 17.22 17.67 18.12 18.56 19.01 19.45 19.90 20.34 20.79

Retail Electricity Price (¢/kWh) 20.4 23.6 26.7 29.5 30.1 30.7 31.2 31.8 32.4 32.9 33.5 34.0

REC Price ($/MWh) 51.68 51.68 51.68 51.68 51.68 51.68 51.68 51.68 51.68 51.68 51.68 51.68

PTC/REPI On On On On On On On On On On On On

Table 4. Massachusetts Market-Based Development Case

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Natural gas price ($/MMBtu) 12.80 15.20 17.60 20.00 20.25 20.50 20.75 21.00 21.25 21.50 21.75 22.00

Carbon Price ($/ton) 1.86 6.24 10.61 14.39 19.37 23.74 28.12 32.49 36.87 41.25 45.62 50.00

Wholesale Electricity Price (¢/kWh) 10.60 12.81 15.02 17.22 17.67 18.12 18.56 19.01 19.45 19.90 20.34 20.79

Retail Electricity Price (¢/kWh) 20.4 23.6 26.7 29.5 30.1 30.7 31.2 31.8 32.4 32.9 33.5 34.0

REC Price ($/MWh) 51.68 49.96 48.23 46.51 44.79 43.07 41.34 39.62 37.9 36.18 32.73 31.01

PTC/REPI Off Off Off Off Off Off Off Off Off Off Off Off

a Indicates the presence or absence of two federal incentives: the Production Tax Credit and the Renewable Energy Production Incentive program.
7

4 Goal-Oriented Studies

Of the market potential studies considered, many are focused on addressing the ability of a state 

to reach renewable energy goals. Specifically, these types of studies apply to renewable portfolio 

standard (RPS) policy development and planning. Because of its direct applicability to policy 

making, the goal-oriented study is considered in more depth and two case studies of goaloriented studies are provided: the Western Governors' Association (WGA) 2005 market potential 

study1

A possible benefit of this kind of analysis is that goal-oriented studies limit the number of 

assumptions needed. Goal setting reduces the uncertainty related to identifying market potential 

by imposing a target amount of market penetration, a time limitation, or both. Some goaloriented studies set maximum limits for renewable penetration in the market. The associated 

analysis determines the least-cost resources and technologies for meeting that goal. Because the 

goal is for both an energy amount and a time, assumptions regarding technology development 

can be more targeted. For example, the WGA 2005 market potential study identifies least-cost 

solutions to reach a set capacity target.

and the New Jersey Renewable Energy Market Assessment.

Often, the feasibility of a goal or target is analyzed by setting a timeframe over which renewable 

development is analyzed. This type of study assesses different market and policy scenarios with 

respect to achieving a goal within a state context. Economic viability of various technologies is 

determined under these different scenarios, and supply curves are generated for each technology 

for the set time period. A limit for renewable penetration is not set, but rather the goal and its 

timeframe are used as benchmarks for evaluating different policy and market contexts. An 

example is the “New Jersey Renewable Energy Market Assessment” study, described in detail in 

below.

While these are significant benefits, there are two primary drawbacks to goal-oriented studies. 

First, goals, historically, have been set arbitrarily, and at best are educated policy “guesses” 

regarding economic and market actors. This can create an analytic environment in which goals 

that may not be realistic or economically feasible (even with market intervention) are analyzed 

and met. To minimize this effect, the results of initial analysis would inform the goal-setting 

policy process. Second, analyzing specifically toward goals with only cost as a decision factor 

for investors might not account for the all the benefits of renewable technologies. Incorporating 

monetary estimates of the benefits of renewable energy (e.g., impacts on carbon emissions, air 

quality, water, national security, price volatility for producers and consumers and/or economic 

growth) can minimize this problem, but is analytically challenging and may require deeper and 

more costly studies.

Case Study: Western Governors' Association’s Clean and Diversified Energy 

Initiative Task Force Reports

In 2005, the WGA conducted a major goal-oriented study to assess the least-cost means for 

meeting a “clean energy” goal for the region. The study, which considered energy efficiency as 

well as a wide range of renewable energy resources, illustrates the power of goal-oriented studies 

to create an implementation plan for a larger market vision determined in a policy setting. It also 

 1

Available at: http://www.westgov.org/
8

illustrates the importance of regional considerations and the possible importance of coordination 

between states. Conducting a wider regional analysis, may give a more accurate picture of how 

renewable energy market development might occur. Finally, regional studies may provide useful 

context and a coherent set of technical assumptions for state studies within the region.

The WGA brings together the governors of 19 states and the leadership of three U.S. Pacific 

islands to address policy issues specific to the West as well as promote the role of the West in the 

federal system. For 2005-2006, one focus of the association was to, “strengthen state and federal 

energy policy and systems.” As a part of that focus, the WGA set a goal of increasing clean 

energy (renewable energy as well as advanced coal technologies) to a total of 30,000 megawatts 

(MW) in the region by 2015. A series of reports were developed by resource experts to 

determine if the goal could be met. In this set of studies, each resource type was given a portion 

of the goal and analysts studied the resource availability, the current economics for technologies 

to convert the resource to electricity, and the current market, to determine if the goal was 

attainable.

Table 5 summarizes the details of the individual resource studies, especially their base 

assumptions and general conclusions regarding the further potential for that resource. Both the 

figure and the table are high-level summaries of the detailed work of the WGA. For full details 

please refer to the reports.

Table 5. Summary of WGA Renewable Goal-Specific Analysis

Resource Available Potential in 2015 (Report URL)

Biomass 10,000 MW at 8 ¢/kwh, (out of 15,000 MW of technical potential)

Geothermal

(http://www.westgov.org/wga/initiatives/cdeac/Biomass-full.pdf)

5,600 MW (out of 13,000 MW of technical potential)

(http://www.westgov.org/wga/initiatives/cdeac/Geothermal-full.pdf)

Solar 8,000 MW CSP and distributed PV, 2,000 MW solar hot water

(http://www.westgov.org/wga/initiatives/cdeac/Solar-full.pdf)

Wind 5,000-9,125 MW without transmission additions

25,000 MW+ with transmission adjustments 

(http://www.westgov.org/wga/initiatives/cdeac/Wind-full.pdf)

Notes: 

1. This is an overview table. Please refer to cited reports for detail.

2. Advanced coal technologies did not provide an estimate for their role in the WGA summary 

report. 

3. Biomass for biofuels is not included in the WGA reports. 

4. White Papers submitted to the Clean and Diversified Energy Committee indicate the potential for 

43,000 MW of Combined Heat and Power based capacity as well as 20,000 MW of additional 

hydropower at existing sites.

Although not directly applicable to states, this regional study is useful to states both within and 

beyond the geographic study borders. The WGA study was compiled using the expertise of more 

than 250 analysts from a variety of different institutions. For states within the regional 

boundaries, this study provides a framework for individual states, including listings of data 

availability and general information regarding market barriers and technology economics in the 

region. The assumptions and methodologies, especially related to the technologies available for 
9

conversion of the resources to usable forms of electricity, may further apply to a broader state 

audience.

Another consideration for state policymakers when looking to the WGA reports is that the 

analysis is goal-based. The WGA asked the question, “Can the western states develop 30,000 

MW of clean electricity by 2015?” The goal was broken down by resource and each analysis 

found that the resource could meet the goal. Almost all analytic outcomes found that additional 

capacity could be economically installed if advancing technology or additional technologies 

(e.g., hydroelectric, ocean power, and combined heat and power) were considered. States, 

especially those within the WGA study region, considering a renewable energy potential study 

should review the assumptions and methodologies used to develop those estimates, as well as the 

policy recommendations for meeting the goals as they develop state specific methodologies and 

assumptions for estimating renewable energy potential within their states.

Case Study: New Jersey Renewable Energy Market Assessment 

In 2004, the New Jersey Board of Public Utilities commissioned Navigant Consulting to do a 

market potential study evaluating the state’s ability to reach its RPS goals. Three targets are 

evaluated in the study: 300 MW of new Class I Renewables2

To develop their market potential estimates, Navigant screened technologies according to their 

economic potential. Only those demonstrating substantial near-term market potential underwent 

a rigorous review by the project team. Those technologies were photovoltaics (PV), onshore 

wind, offshore wind, solid biomass combustion and gasification, landfill gas, and biogas from 

wastewater treatment.

by 2008, solar energy production of 

at least 120,000 megawatt-hours (MWh) per year in 2008 (equivalent to roughly 90 MW, the 

solar set aside in that year), and 20% of demand sourced from Class I Renewables in 2020.

Three market scenarios were created to evaluate the state’s ability to reach the goals of 300 MW 

of Class I Renewables by 2008 and 20% demand reached through Class I Renewables by 2020. 

The scenarios embody a range of possible incentive levels: a Base Case, a Low Incentive and 

REC Price scenario, and a High Incentive and REC Price scenario. The scenarios are 

summarized in Table 6.

 2 Class I renewable energy is defined as electricity derived from solar energy, wind energy, wave or tidal action, 

geothermal energy, landfill gas, anaerobic digestion, fuel cells using renewable fuels, and—with written permission 

of the New Jersey Department of Environmental Protection—certain other forms of sustainable biomass (Database 

of State Incentives for Renewables & Efficiency 2009).
10

Table 6. New Jersey Market Potential Scenarios

Market assumptions have a huge impact on the ability of a state to reach its renewable energy 

targets and/or reach its technical potential. For example, by 2020, the Base Case only resulted in 

241 MW across all technologies and the Low Incentive and REC Price resulted in only 196 MW. 

However, the High Incentive and REC Price Case resulted in an estimated 2,660 MW of capacity 

by 2020. Another key uncertainty that makes the High Case significantly different from the other 

cases is the viability of offshore wind. In the High Case, offshore wind becomes economical 

earlier, and is a major contributor to total cumulative capacity installed.

Another key point is that scenarios can compare different incentive structures and their impact on 

market growth. The New Jersey study broke out the solar market, and evaluated how five solar 

incentive scenarios might help achieve a goal of 90 MW of customer-sited PV by 2008. The 

following five incentive scenarios were included: 

5. Reference case with no state incentives, (does not meet goal)

6. Case with the 2004 rebate levels and Solar RECs (SRECs) at $100/MWh (meets goal)

7. Case with 50% of the 2004 rebate levels and SRECs at $100/MWh, (nearly meets goal)

8. Case with no state rebate, but SRECs at $250/MWh (does not meet goal)

9. Case with rebates that provide a constant net system cost of $2,500/kW for residential 

buyers and $2,400/kW for commercial buyers and SRECs at $100/MWh (meets goal).

This type of comparative analysis might help policymakers choose incentive levels and 

structures. Combining rigorous analysis of market penetration under different incentives with a 

market potential framework may be useful for other states to consider.

Scenario Production Tax Credit Class I RPS Average 

market price for RECS

Class I RPS Average 

market price for solar 

RECS

Base Case Extended through end of 

2006 @ $18/MWh

$20/MWh $150/MWh

Low Incentive and 

REC Price

Not extended $6/MWh $100/MWh

High Incentive 

and REC Price

Extended through end of 

2006 @ $18/MWh

$45/MWh $250/MWh
11

5 Conclusions

This paper defines the renewable energy potential study and describes its applicability to 

decision makers. Market potential studies can help meet three major policy objectives:

• Increase public understanding of renewable energy potential

• Establish appropriate goals for renewable energy market development and identify 

resources and technologies that will meet policy goals

• Estimate the potential for investment in renewable energy and develop appropriate 

incentives to encourage investment in renewable energy.

This analysis identifies important steps in the development of a market potential study. 

Comprehensive analysis, informed by background research and data collection, must be 

conducted to come up with estimates for resource, technical, and economic potential in order to 

inform a market potential estimate. Uncertainty can be managed and usefulness can be increased 

by properly framing the study, setting goals, or shortening the timeline for the analysis. 

Furthermore, scenario analysis within a market potential study increases applicability to 

policymakers. Detailed projections of electricity rates, REC market prices, carbon prices, 

incentives, and other variables can enhance the financial precision of the analysis. Detailed 

scenario analysis gives a comprehensive picture of different future investment environments, 

providing a more informative range for the market potential estimate.
12

Appendix A: Studies Analyzed

“Arizona Solar Electric Roadmap Study.” January 2007. Prepared for the Arizona Department of 

Commerce, by Navigant Consulting, Inc. http://www.azcommerce.com/doclib/energy/az_solar

_electric_roadmap_study_full_report.pdf

“New Jersey Renewable Energy Market Assessment.” August 2004. Prepared for the New Jersey 

Board of Public Utilities (NJBPU) and Rutgers University Center for Energy, Economic and 

Environmental Policy (CEEEP), by Navigant Consulting, Inc., Sustainable Energy Advantage, 

and Boreal Renewable Energy Development. http://www.njcleanenergy.com/files/file/Final

_Report.pdf

“Process Evaluation of the Renewable Energy Programs Administered and Managed by the New 

Jersey Board of Public Utilities.” November 2004. Prepared for the NJBPU and CEEEP, By 

Aspen Systems Corporation. http://www.njcleanenergy.com/files/file/ExecutiveSummary.pdf

“Impacts of Environmental Externalities Upon Relative Costs of Renewable Technology & 

Impact of the Deployment of Renewable Generation on the Market Price of Electricity.” 

Prepared for the NJBPU, by CEEEP. http://www.njcleanenergy.com/files/file/CEEEP

_Impacts.pdf

“Analysis of a Renewable Portfolio Standard for the State of North Carolina” December 2006. 

Prepared for North Carolina Utilities Commission, by La Capra Associates, Inc.

Advance press release for the Florida market potential study. “Sun, wind energy potential high, 

but so is price.” By Asjylyn Loder. 28 Nov 2008. Prepared for the Florida Public Service 

Commission, by Navigant Consulting, Inc.

“Massachusetts Renewable Energy Potential.” August 2008. Prepared for Massachusetts 

Department of Energy Resources and Massachusetts Technology Collaborative, by Navigant 

Consulting.

“Massachusetts Renewable Portfolio Standard Cost Analysis Report.” December 2000. Prepared 

for Massachusetts Department of Energy Resources, by La Capra Associates, Bob Grace, and 

Ryan Wiser.

“Massachusetts RPS: 2002 Cost Analysis Update - Sensitivity Analysis.” December 2002. 

Prepared for Massachusetts Department of Energy Resources, by Bob Grace, La Capra 

Associates.

“A Study to Evaluate the Impacts of Increasing Wisconsin’s Renewable Portfolio Standard: 

Methodology, Assumptions, Scenarios, and Results.” October 2003. Prepared for the Wisconsin 

Division of Energy, by the Union of Concerned Scientists, Sustainable Energy Advantage, and 

La Capra Associates.

Western Governors' Association’s Clean and Diversified Energy Initiative Task Force Reports. 

2006. http://www.westgov.org/wga/initiatives/cdeac/cdeac-reports.htm#TaskForceReports
13 

Appendix B: List of Data Resources

Note: This is a representative listing, and state studies should include data reviews of available 

state specific data.

Renewable Resource Data

NREL's GIS Team develops technology-specific GIS data for a variety of areas, as well as 

targeted analysis tools that can help determine availability of renewable energy resources.

GIS Datasets

Some datasets— in either high resolution or low resolution — are available for download 

through the GIS Web site (http://www.nrel.gov/gis/data_analysis.html). High-resolution datasets 

are available for specific states and technologies. Low-resolution datasets are available for 

Alaska, Hawaii, and the lower 48 states. These datasets are designed to be used in GIS software 

applications. High resolution wind datasets (at resolutions between 200 m and 1000 m cell sizes) 

are available for Alaska, Arkansas, California, Hawaii, Illinois, Indiana, Kansas, Kentucky, 

Michigan, Mid-Atlantic, Missouri, Nebraska, New England, North and South Dakota, Ohio, 

Oklahoma, Pacific Northwest, Puerto Rico and the Virgin Islands, and Southwest. These maps 

were developed by NREL and AWS TrueWind. For additional information, including state wind 

resource maps developed by other organizations, please visit http://www.windpoweringamerica

.gov/

Dynamic Maps and Tools

United States Atlas of Renewable Resources: The Atlas is an interactive application of the 

renewable energy resources in the contiguous United States, Alaska and Hawaii. It illustrates the 

geographic distribution of wind, solar, geothermal, and biomass resources, as well as other 

pertinent information such as transportation network and administrative boundaries. Available at: 

http://www.nrel.gov/gis/maps.html

United States Solar Atlas: This map interface accesses monthly average PVWatts Version 2 -

Dynamic Maps solar resource information for any given location in the United States. It also 

provides access to spreadsheets giving average monthly radiation for 14 different types of solar 

collectors. Data for individual collectors are also available for fixed, flat-plate (photovoltaic) 

collectors on five different orientations. Added features include a zoom tool, which allows the 

user to zoom to zip codes and latitude/longitude locations. Available at: http://www.nrel.gov/gis/

solar.html 

Solar Power Prospector Tool: This interactive Solar Power Prospector mapping tool allows users 

to examine, distribute, and analyze solar resource data for the United States and northern 

Mexico. It assists in making decisions about optimal locations for CSP plants. Users can explore 

temporal and spatial aspects of NREL's solar resource data and can download the resource data 

for use outside of the tool—for example, in the Solar Advisor Model (https://www.nrel.gov/

analysis/sam/). Available at: http://mercator.nrel.gov/csp/ 

Bio-power Tool is an interactive geospatial application allowing users to view biomass resources, 

infrastructure, and other relevant information, as well as query the data and conduct initial 

screening analyses. Users can select a location on the map, quantify the biomass resources 
14

available within a user-defined radius, and then estimate the total thermal energy or power that 

could be generated by recovering a portion of that biomass. Available at: http://rpm.nrel.gov/

biopower/biopower/launch

Virtual Hydropower Prospector (VHP): Idaho National Laboratory developed this GIS tool to 

assist decision makers in their assessment of natural streamwater energy resources in the United 

States. The result of an extensive study of hydropower resources in the United States, the VHP 

can be used at the state level. Available at: http://hydropower.inel.gov/prospector

Technology Data

NREL’s Web site (http://www.nrel.gov/) provides up-to-date information on the most recent 

technologies for converting renewable energy to electricity and fuels.

Economic Information

State-level economic information is available through state economic offices, as well as the 

Federal Bureau of Economic Analysis (http://bea.gov/).

Market Information

The Department of Energy’s Energy Information Agency and state energy offices are good 

sources for renewable energy market information and electricity market data, but detailed 

additional research on the local market barriers and opportunities to determine potential is 

probable.

General Energy Information

The Department of Energy’s Energy Information Administration (http://eia.doe.gov) provides 

extensive historical energy information and projections for state-level energy use. The Web site 

also contains limited economic and population data.
F1147-E(10/2008) 

REPORT DOCUMENTATION PAGE Form Approved

OMB No. 0704-0188

The public reporting burden for this collection of information is estimated to average 1 hour per response, including the time for reviewing instructions, searching existing data sources, 

gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this 

collection of information, including suggestions for reducing the burden, to Department of Defense, Executive Services and Communications Directorate (0704-0188). Respondents 

should be aware that notwithstanding any other provision of law, no person shall be subject to any penalty for failing to comply with a collection of information if it does not display a 

currently valid OMB control number.

PLEASE DO NOT RETURN YOUR FORM TO THE ABOVE ORGANIZATION.

1. REPORT DATE (DD-MM-YYYY)

January 2010

2. REPORT TYPE

Technical Report 

3. DATES COVERED (From - To)

 

4. TITLE AND SUBTITLE

Framework for State-Level Renewable Energy Market Potential 

Studies

5a. CONTRACT NUMBER

DE-AC36-08-GO28308

5b. GRANT NUMBER

5c. PROGRAM ELEMENT NUMBER

6. AUTHOR(S)

Claire Kreycik, Laura Vimmerstedt, and Elizabeth Doris

5d. PROJECT NUMBER

NREL/TP-6A2-46264

5e. TASK NUMBER

WF6N.1013

5f. WORK UNIT NUMBER

7. PERFORMING ORGANIZATION NAME(S) AND ADDRESS(ES)

National Renewable Energy Laboratory

1617 Cole Blvd.

Golden, CO 80401-3393

8. PERFORMING ORGANIZATION

REPORT NUMBER

NREL/TP-6A2-46264

9. SPONSORING/MONITORING AGENCY NAME(S) AND ADDRESS(ES) 10. SPONSOR/MONITOR'S ACRONYM(S)

NREL

11. SPONSORING/MONITORING

AGENCY REPORT NUMBER

12. DISTRIBUTION AVAILABILITY STATEMENT

National Technical Information Service

U.S. Department of Commerce

5285 Port Royal Road

Springfield, VA 22161

13. SUPPLEMENTARY NOTES

14. ABSTRACT (Maximum 200 Words)

State-level policymakers are relying on estimates of the market potential for renewable energy resources as they set 

goals and develop policies to accelerate the development of these resources. Therefore, accuracy of such estimates 

should be understood and possibly improved to appropriately support these decisions. This document provides a 

framework and next steps for state officials who require estimates of renewable energy market potential. The report 

gives insight into how to conduct a market potential study, including what supporting data are needed and what types of 

assumptions need to be made. The report distinguishes between goal-oriented studies and other types of studies, and 

explains the benefits of each.

15. SUBJECT TERMS

renewable energy; RE; state policymakers; state policy; renewable energy market potential; energy markets; market 

potential study; energy analysis; NREL; Claire Kreycik; Elizabeth Doris; Laura Vimmerstedt

16. SECURITY CLASSIFICATION OF: 17. LIMITATION 

OF ABSTRACT

UL

18. NUMBER 

OF PAGES

19a. NAME OF RESPONSIBLE PERSON

a. REPORT

Unclassified

b. ABSTRACT

Unclassified

c. THIS PAGE

Unclassified 19b. TELEPHONE NUMBER (Include area code)

Standard Form 298 (Rev. 8/98)

Prescribed by ANSI Std. Z39.18