# Renewables Portfolio Standards in the 

# United States : A Status Update

Galen Barbose Lawrence Berkeley National Laboratory 

## Renewable Energy Markets 2014

December 4, 2014 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.

# RPS Policies Exist in 29 States and DC Apply to 56% of Total U.S. Retail Electricity Sales

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# A Substantial Portion of RE Capacity Additions Have (At Least Partially) Been Driven by RPS

3 Of the 75 GW of non - hydro renewable capacity additions from 1998 - 2013,

61% ( 46 GW ) serve entities with RPS obligations 

### U.S. Non - Hydro Renewable Energy Capacity

# State RPS’ Have Largely Supported Wind, Though Solar Has Become More Prominent

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### RPS - Related* Renewable Energy Capacity Additions from 1998 - 2013, by Technology Type

* Renewable additions are counted as “RPS -related” if and only if the entity receiving RECs from the project is subject to RPS obligations, and the project commenced operation after enactment of the RPS. On an energy (as opposed to capacity) basis, wind energy represents approximately 76%, biomass 12%, solar 8%, and geothermal 4% of cumulative RPS -related renewable energy additions, if estimated based on assumed capacity factors.

# More than Half of All RPS Programs Have a Solar or DG Set-Aside

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### 17 states + D.C. have solar or DG set - asides, sometimes combined with credit multipliers; 3 other states only have credit multipliers

11 states created solar/ DG set asides since 2007: DE, IL, MA, MD, MO , MN, NC, NH, NM, OH, OR Differential support for solar/DG also provided via long - term contracting programs (CT, DE, NJ, RI) and via up - front incentives/SREC payments

# Impact of Solar/DG Set-Asides is Substantial: 60 - 80% of Non - CA PV Additions Since 2005

6 *PV capacity additions are attributed to the solar/DG set-aside only if installation occurred no more than one year before comme ncement of set-aside compliance obligations in the host state and if eligible for the set-aside and not applied towards general RPS obli gations. Dip in set - aside capacity additions in 2013 reflects depressed SREC pricing and reduced or eliminated incentives in a number of states

# General RPS Obligations Also Driving Significant Solar Additions in California and E lsewhere

7 Sizable number of large solar projects (9 PV + 2 CSP, 100- 300 MW each) added to meet general RPS obligations in CA & AZ in 2013

Substantial solar capacity in excess of set- aside requirements also built

and applied towards general obligations in NC and NV

# Future RPS Requirements are Sizable, But Within Recent RE Growth Rates

8 • 98 GW of RE capacity required by 2020 (123 GW by 2035) to meet RPS requirements
• Depending on availability of existing RE capacity, will require incremental build of 3 - 7 GW/yr. through 2020 and 1 - 2 GW/yr. thereafter
• By comparison, RPS driven additions averaged 6 GW/yr. since 2008 ( 10 GW/yr. for all RE) Note: Values shown in figures represent required renewable capacity beyond what was supplied to each state at the time its R PS was enacted. The values do not represent incremental renewables required relative to current supply.

## RE Currently Under Development May Be Enough to Meet Future RPS Demand in Some Regions

9 Notes: RE under development and under construction refer only to RPS states within each region and therefore do not include add itional new RE from other states in the region or from outside the region. RPS requirements in MW terms reflect regionally specific ass umptions about RPS resource mix and capacity factors. Data source for RE Under Construction and Under Development: SNL Energy. Future RPS Requirements Compared to Current RPS Supply plus New RE Capacity

Under Construction and Under Development

# Compliance with RPS Targets Has Generally Been Strong

10 Percent of Main Tier RPS Target Met with Renewable Electricity or RECs (including available credit multipliers and banking, but excluding ACPs)

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.

# REC Prices in Compliance Markets Vary with Supply- Demand Balance

• Rising Class I REC prices in Northeastern states reflect tightening supply, while pricing in Mid - Atlantic states and TX remain low
• Depressed SREC prices in most states show enduring over - supply of solar, muting the cost impacts of rising set - aside targets

11 Main Tier/Class I RECs SRECs

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 month ly 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 REC pri ces for the current or nearest future compliance year traded in each month.

# RPS Compliance Costs Thus Far Low, But Face Upward Pressure from Rising Targets

12 • Final - year RPS targets (closed circles) constitute, on average, roughly a three - fold increase in RPS obligations compared to most - recent year targets (open circles)
• Future RPS costs will depends on many factors: RE technology costs, natural gas prices, federal tax incentives, environmental regulations, and RPS cost caps • RPS compliance costs have been equal to less than 3% of average retail rates in most states
• Costs have risen as targets ramp up

# Most States Have Capped Rate Impacts Below 10% and Many Below 5%

13 • Where ACPs used, they generally cap costs at 6 - 9% of average retail rates
• Among states with some other form of cost containment, effective cost caps are more restrictive (1 - 4%) and have already become binding in several states The figure compares each state’s “effective” cost cap with actual costs for the most - recent year

# The Future Role and Impact of State RPS Programs Will Depend On...  The outcome of ongoing and future legislative and legal challenges  Outcome of EPA carbon emissions regulations  Whether cost caps become binding (which in turn depends on RE 

### costs, gas prices, PTC/ITC, etc.)  How other related issues and barriers affecting RE deployment are addressed (transmission, integration, siting, net metering, etc .)  How policymakers re - tune RPS’ in response to all of the above and to changing market conditions more generally

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# Thank You! 

# For further information: LBNL RPS publications and resources: rps.lbl.gov LBNL renewable energy publications: emp.lbl.gov/reports/re Contact information: Galen Barbose, glbarbose@lbl.gov , 510 - 495 - 2593

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