SR/OIAF/2009-04

Impacts of a 25-Percent Renewable Electricity 

Standard as Proposed in the American Clean Energy 

and Security Act Discussion Draft 

April 2009

Energy Information Administration 

Office of Integrated Analysis and Forecasting 

U.S. Department of Energy 

Washington, DC 20585

This report was prepared by the Energy Information Administration, the independent statistical and 

analytical agency within the Department of Energy. The information contained herein should be attributed 

to the Energy Information Administration and should not be construed as advocating or reflecting any 

policy position of the Department of Energy or any other organization. Service Reports are prepared by 

the Energy Information Administration upon special request and are based on assumptions specified by 

the requester. 
Preface and Contacts 

The Energy Information Administration (EIA) is the independent statistical and analytical 

agency within the Department of Energy. EIA provides timely, high-quality energy information 

and prepares objective, transparent analyses for the use of Congress, the Administration, and the 

public. EIA does not, however, take positions on policy issues. Because of EIA’s statutory 

independence with respect to the content of its energy information program, the analysis 

presented herein is strictly its own and should not be construed as representing the views of the 

U.S. Department of Energy or the Administration. 

The model projections in this report are not statements of what will happen but of what might

happen, given the assumptions and methodologies used. The reference case projections are 

business-as-usual trend forecasts, given known technology, technological and demographic 

trends, and current laws and regulations. Thus, they provide a policy-neutral starting point that 

can be used to analyze policy initiatives. EIA does not propose, advocate, or speculate on future 

legislative and regulatory changes. All laws are assumed to remain as currently enacted; 

however, the impacts of scheduled regulatory changes, when defined, are reflected. 

The Office of Integrated Analysis and Forecasting prepared this report. General questions 

concerning the report can be directed to John J. Conti (john.conti@eia.doe.gov, 202/586-2222), 

Director of the Office of Integrated Analysis and Forecasting, and J. Alan Beamon 

(joseph.beamon@eia.doe.gov, 202/586-2025), Director of its Coal and Electric Power Division. 

Specific questions about the report can be directed to the following analysts: 

Renewables ..............................Chris Namovicz (cnamovicz@eia.doe.gov, 202/586-7120) 

 Marie LaRiviere (marie.lariviere@eia.doe.gov, 202/586-1475) 

Electricity.................................Jeffrey Jones (jeffrey.jones@eia.doe.gov, 202/586-2038) 

For ordering information and questions on other energy statistics available from EIA, please 

contact EIA’s National Energy Information Center at: 

National Energy Information Center, EI 30 

 Energy Information Administration 

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 Washington, DC 20585 

 

 Telephone: 202/586-8800 

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Energy Information Administration / Impacts of the 25-Percent RES in the ACESA Discussion Draft 

 

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Contents 

Preface and Contacts........................................................................................................... ii 

Contents .............................................................................................................................iii 

Executive Summary........................................................................................................... iv 

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

Background................................................................................................................. 1 

Analysis Cases ............................................................................................................ 3 

Results......................................................................................................................... 4 

Uncertainties ............................................................................................................. 12 

Appendix A: Follow-Up Analysis Request Letter........................................................... 15 

Appendix B: Analysis Request Letter.............................................................................. 18 

Appendix C: Discussion Draft......................................................................................... 22 

Tables

Table ES-1. Summary Results........................................................................................viii 

Table 1. Summary Results............................................................................................... 10 

Figures 

Figure 1: Share of Renewables Required........................................................................... 5 

Figure 2: Generation by Fuel ............................................................................................. 5 

Figure 3. National Energy Modeling System Electricity Regions..................................... 8 

Figure 4: Regional Price Impacts in the RESNEC Case.................................................... 8 

Figure 5: Regional Price Impacts in the RESFEC Case .................................................... 9 

Figure 6: Electricity Sector Carbon Dioxide Emissions.................................................. 11 

Energy Information Administration / Impacts of the 25-Percent RES in the ACESA Discussion Draft

 

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Impacts of a 25-Percent Renewable Electricity 

Standard as Proposed in the American Clean Energy and Security Act 

Discussion Draft 

Executive Summary 

This report responds to requests from Chairman Edward Markey, for an analysis of a 25-

percent Federal renewable electricity standard (RES). The RES proposal analyzed in this 

report is included in the discussion draft of broader legislation, the American Clean 

Energy and Security Act (ACESA) of 2009, issued on the Energy and Commerce 

Committee website at the end of March 2009.1 The two request letters and the relevant 

section of the ACESA discussion draft are provided as Appendices A, B, and C of this 

report. 

While Chairman Markey’s original letter asked that sensitivities with alternative 

greenhouse gas policies be prepared, his subsequent letter released the Energy 

Information Administration (EIA) from that requirement. Consequently, the analysis 

presented here does not consider the interactions of the RES provisions contained in 

ACESA with other key provisions of that legislation, although the report does include 

some qualitative discussion of how the RES might interact with other key provisions in 

ACESA. 

The analysis presented in this report starts from an updated version of the Annual Energy 

Outlook 2009 reference case that reflects the projected impacts of the American Recovery 

and Reinvestment Act (ARRA), enacted in February 2009, and revised economic 

assumptions. ARRA has a significant impact on the projected growth of renewable 

energy over the next 5 years, so it is important to account for its enactment in considering 

the projected impacts of an RES requirement. The development of the updated reference 

case is described in a recent EIA report An Updated Annual Energy Outlook 2009 

Reference Case Reflecting Provisions of the American Recovery and Reinvestment Act 

and Recent Changes in the Economic Outlook.2

 As noted in that report, EIA intends to 

use this updated baseline in its analyses of proposed changes in laws and regulations, 

including the RES analysis presented in this report. Therefore, the term “reference case” 

in this report means the updated reference case presented in the aforementioned report. 

The RES program in the ACESA discussion draft includes provisions that may allow 

credits for qualified State energy efficiency programs to satisfy up to 20 percent of the 

RES requirement, but the availability of these credits is tied to implementation of the 

energy efficiency resource standard (EERS) program that is also included in ACESA. As 

 

1

 An earlier version of the RES proposal was introduced as H.R. 890, the American Renewable Energy Act 

(AREA) of 2009. 

2 Energy Information Administration, An Updated Annual Energy Outlook 2009 Reference Case 

Reflecting Provisions of the American Recovery and Reinvestment Act and Recent Changes in the 

Economic Outlook, SR/OIAF/2009-03 (Washington, DC, April 2009), 

http://www.eia.doe.gov/oiaf/servicerpt/stimulus/index.html.

Energy Information Administration / Impacts of the 25-Percent RES in the ACESA Discussion Draft

 

iv
the baselines for and details of the yet-to-be-established EERS program are unknown, the 

extent to which States would have access to efficiency credits for purposes of the RES is 

not clear. In order to assess how different outcomes might affect the projected impacts of 

the RES, EIA analyzed two RES policy cases. The RES with Full Efficiency Credits 

(RESFEC) case assumes that the maximum level of efficiency credits, up to one-fifth of 

the credits in the target in any given year, are claimed. This is reflected as a 20-percent 

reduction in the effective target for eligible renewable generation. The RES with No 

Efficiency Credits (RESNEC) case assumes that States cannot qualify for, or elect not to 

use, efficiency credits. 

Key findings include: 

 While the nominal target sales share for renewables eligible for the RES is 25 percent 

in 2025, exempting the small retailers lowers the effective target to 22 percent of total 

electricity sales. The effective target is lowered further to 21 percent when the 

generation from hydroelectric power and municipal solid waste is removed from the 

sales baseline. If States are able to, and elect to, take full advantage of the energy 

efficiency credits for compliance, the effective share of renewables required could 

drop to approximately 17 percent of total electricity sales. 

 Power sellers will turn to a mix of renewable fuels to comply with the RES. In 

absolute terms, the key fuels are projected to be biomass and wind, but other 

renewable fuels including solar and geothermal are also projected to grow 

significantly in percentage terms. 

 Most of the projected increase in wind generation is due to existing State renewable 

portfolio standard programs and the passage of ARRA. This occurs in both the 

reference case and the RES cases. Total wind generation in the two RES cases is 

projected to increase from 32 billion kilowatthours in 2007 to between 208 billion 

kilowatthours and 249 billion kilowatthours in 2030. Total biomass generation 

increases from 39 billion kilowatthours in 2007 to between 438 billion kilowatthours 

and 577 billion kilowatthours in 2030 in the two RES cases. The renewable 

provisions of ARRA do not have as large an impact on biomass as on wind, because 

the production subsidies provided for the co-firing of biomass are smaller and 

because new dedicated biomass plants generally take longer to develop than would be 

required to meet the deadline to qualify for production subsidies under ARRA. 

 The higher renewable generation stimulated by the Federal RES leads to lower coal 

and natural gas generation. In the two RES cases, coal generation ranges between 

182 billion kilowatthours (8 percent) and 257 billion kilowatthours (11 percent) 

below the reference case level. Similarly, natural gas generation in the two RES 

cases in 2030 is between 55 billion kilowatthours (6 percent) and 150 billion 

kilowatthours (15 percent) below the level projected in the reference case. 

 Given the amount of eligible renewable generation projected in the reference case, the 

RES is not expected to affect national average electricity prices until after 2020. As 

Energy Information Administration / Impacts of the 25-Percent RES in the ACESA Discussion Draft

 

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the required RES share increases to its maximum value in 2025, the value of RES 

credits increases, and impacts on national average electricity prices become evident. 

The peak effect on national average electricity prices, 2.7 percent in the RESFEC 

case and 2.9 percent in the RESNEC case, occurs as the required renewable share 

ramps up more rapidly than the demand for electricity is growing. In the later years 

of the projections, the impact on national average electricity prices is smaller, as the 

impact of the RES requirement on the cost of coal and natural gas, fuels whose use is 

reduced by added renewables, is increasingly reflected in electricity prices. By 2030, 

electricity prices are projected to be little changed from the reference case in both 

RES cases, with 2030 prices less than 1 percent higher than in the reference case. 

.

 Electricity price impacts vary from region to region, with renewable–resource-rich 

regions like the northern Great Plains States and the northwest States potentially 

seeing prices decline from reference case levels, while other regions see price 

increases ranging from 1 percent to 6 percent above reference case levels between 

2025 and 2030. 

 Because of the level of renewables projected in the reference case, renewable credits 

have no value before 2020. After 2020, they rise to the 5-cent-per-kilowatthour cap 

in 2024 as the renewable requirement grows more rapidly than electricity sales. In 

the last few years of the projections, they begin to fall as electricity demand and fossil 

fuel prices continue to grow. 

 The increased use of renewables stimulated by the RES leads to lower electricity 

sector carbon dioxide emissions. Electricity sector carbon dioxide emissions in 2030 

are between 196 million metric tons (7 percent) and 307 million metric tons (12 

percent) below the reference case level in the two RES cases. 

 EIA’s modeling of the RES in the ACESA discussion draft was a standalone analysis 

that did not consider interactions with other key programs in the ACESA discussion 

draft. While EIA cannot develop an integrated analysis until there are clearer insights 

into how some of the other ACESA programs would actually be implemented, 

interactions among the elements of ACESA could be significant. 

o In previous analyses of economy-wide policies to limit or reduce 

emissions of greenhouse gases, EIA has generally found that a cap-andtrade program for greenhouse gases leads to significant growth in the use 

of renewable energy for electricity generation, which becomes more 

attractive when the cost of using fossil fuels goes up. Where there are 

multiple targets that can be satisfied with the same energy resources and 

projects, the target that sets the upper limit on the use of the resource will 

generally absorb all of the incremental costs from that resource, making 

compliance with the non-binding goal appear to be costless. To the extent 

that the proposed cap and trade program induces more renewable 

resources than required by the concurrent RES proposal, one might expect 

Energy Information Administration / Impacts of the 25-Percent RES in the ACESA Discussion Draft

 

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Energy Information Administration / Impacts of the 25-Percent RES in the ACESA Discussion Draft

 

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a reduction in apparent RES compliance costs, since those costs would 

already be reflected in the value of carbon dioxide allowances. 

o The potential interactions of an RES policy with other policy instruments 

such as an EERS or a cap–and-trade program for limiting or reducing 

greenhouse gas emissions could also impact the findings. If the EERS and 

other energy efficiency policies are successful in leading to falling demand 

for electricity, reducing the need for capacity additions of any kind, it 

could be very difficult to stimulate utilities to invest in new renewable 

capacity. While previous EIA analyses have found that increased 

investment in renewables would be attractive under a greenhouse gas 

emission reduction policy, successful development of competing “clean” 

technologies such as nuclear and fossil plants with carbon capture and 

storage equipment could hamper renewable development. 

 Numerous uncertainties exist in this analysis. Key unknowns include: 

o Future fuel and technology costs are highly uncertain. Lower-than-expected 

fossil fuel prices would make it more difficult to stimulate investments in 

renewables, while higher fossil fuel prices would have the opposite impact. 

With regard to technology costs, this analysis generally assumes that 

technology costs and performance will improve as technologies penetrate the 

market, but insurmountable hurdles could arise. 

o With respect to biomass co-firing at existing coal plants, powerplant operators 

may be reluctant to make the necessary investments if they believe they may 

have to retire or reduce the utilization of their plants under a greenhouse gas 

emission reduction policy. 

o For wind, solar, and biomass technologies, the level of development called for 

with the proposed RES may require developers or grid operators to pay to 

build or upgrade long transmission lines from the remote areas with ample 

wind resources to the areas with significant electricity demand. 
Table ES-1. Summary Results 

2007 2020 2025 

Generation (billion kilowatthours) Reference Reference RESFEC RESNEC Reference RESFEC RESNEC RCoal 2021 2198 2160 2090 2202 2076 2005 Petroleum 66 49 49 49 49 50 49 Natural Gas 892 714 709 672 908 839 774 Nuclear 806 876 876 869 882 881 872 Conventional Hydropower 248 299 298 297 299 298 297 Geothermal 15 22 23 26 22 25 28 Municpal Waste 16 24 26 28 24 27 28 Wood and Other Biomass 39 139 178 263 197 359 460 Solar 1 20 20 20 21 22 23 Wind 32 203 204 227 207 207 248 Other 22 28 28 28 29 29 28 Total Generation 4159 4573 4571 4571 4840 4813 4813 Prices (cents per kilowatthour) Credit Price 0.0 0.0 0.6 1.7 0.0 5.0 5.0 Electricity Price 9.1 9.3 9.3 9.3 9.5 9.7 9.8 RPS Compliance Total Electricity Sales (billion kilowatthours) 3747 4127 4124 4125 4348 4327 4320 Covered Baseline1 NA NA 3355 3357 NA 3358 3352 Credits Required (percent of total sales) 0.0 0.0 11.4 14.2 0.0 16.5 20.6 Credits Achieved (percent of total sales) 0.0 0.0 11.2 14.0 0.0 14.9 18.3 Eligible Generation Achieved (percent of total electricity sales) 0.0 0.0 10.9 13.7 0.0 14.8 18.2 Electricity Sector Carbon Dioxide (million metric tons) 2,433 2,466 2,426 2,341 2,533 2,382 2,287 1Defined as total electricity sales minus sales from exempt small retailers, minus hydroelectric generation and minus non-landfill gas municipal solid waste generation. 

Source: Energy Information Administration, National Energy Modeling System runs, STIMULUS.D041409A, WAXRPS.D041609A, AND WAXRPSNE.D041609C.

Energy Information Administration / Impacts of the 25-Percent RES in the ACESA Discussion Draft 
Impacts of a 25-Percent Renewable Electricity 

Standard as Proposed in the American Clean Energy and Security Act 

Discussion Draft 

Introduction 

This report responds to requests from Chairman Edward Markey, for an analysis of a 25-

percent Federal renewable electricity standard (RES). The RES proposal analyzed in this 

report is included in the discussion draft of broader legislation, the American Clean 

Energy and Security Act (ACESA) of 2009, issued on the Energy and Commerce 

Committee website at the end of March 2009.3 The two request letters and the relevant 

section of the ACESA discussion draft are provided as Appendices A, B, and C of this 

report. 

While Chairman Markey’s original letter asked that sensitivities with alternative 

greenhouse gas policies be prepared, his subsequent letter released the Energy 

Information Administration (EIA) from that requirement. Consequently, the analysis 

presented here does not consider the interactions of the RES provisions contained in 

ACESA with other key provisions of that legislation. An analysis of these interactions 

will not be possible until some open issues in the ACESA discussion draft are resolved. 

However, this report does provide a qualitative discussion of potential interactions with 

an energy efficiency resource standard (EERS) and a cap-and-trade program for 

greenhouse gases, two other programs that are also included in the ACESA discussion 

draft. 

Background 

An RES, also known as a renewable portfolio standard (RPS), is a policy that requires 

covered electricity retailers to supply a specified share of their electricity sales from

qualifying renewable energy resources. As of the end of 2008, 28 States and the District 

of Columbia had enacted an RPS or similar renewable energy requirement. The Federal 

RES analyzed here would apply to electricity retailers on a nationwide basis, establishing 

a target level for the market share of qualifying renewable resources that grows from 6 

percent in 2012 to 25 percent in 2025 and beyond. 

To stimulate an increase in the use of renewable resources to generate electricity, an RES 

requires that a specified share of the power sold must be produced from qualifying 

renewable facilities. Companies that generate power from qualifying renewable facilities 

are issued credits that they can hold for their own use or sell to others. To meet the RES 

requirement, each covered electricity seller must generate their own qualifying renewable 

power or purchase renewable energy credits from others. For example, a covered 

electricity retailer with 100 billion kilowatthours of retail electricity sales in a year with a 

 

3

 An earlier version of the RES proposal was introduced as H.R. 890, the American Renewable Energy Act 

(AREA) of 2009. 

Energy Information Administration / Impacts of the 25-Percent RES in the ACESA Discussion Draft

 

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25-percent RES requirement would have to generate or purchase credits representing a 

combined total of 25 billion kilowatthours of qualifying renewable power for that year. In 

a competitive market, the price of renewable energy credits should rise to the level 

needed to stimulate powerplant developers to construct the amount of qualifying 

renewable capacity needed to meet the RES requirement while allowing the market to 

determine the most economical renewable compliance options to develop. 

The RES program analyzed in this report has the following characteristics: 

 The program begins in 2012 with the required renewable share starting at 6 

percent and growing in scheduled increments to 25 percent in 2025. The program 

sunsets in 2040. 

 Power sellers with retail sales of at least 1 billion kilowatthours (1,000,000 

megawatthours) are covered. Entities with retail sales below this level are exempt. 

 Generation from existing hydroelectric and municipal solid waste (MSW) 

facilities are not included in the base electricity sales but also do not earn 

compliance credits. 

 The total amount of qualifying renewable generation required each year is 

calculated by multiplying the base (total electricity retail sales minus existing 

hydroelectric and MSW generation and sales by exempt small retailers) by the 

required share. 

 Qualifying renewable facilities include all new and existing nonhydroelectric 

renewable generation facilities, including co-firing modifications to existing coal 

plants4 that are placed in service on or after the enactment date of the legislation. 

Qualifying fuels include incremental hydropower5

, geothermal, solar, wind, 

ocean, landfill gas, and certain biomass feedstocks. 

 Generation from distributed renewable generation resources, i.e., customer-sited 

facilities such as roof-top photovoltaics and small wind turbines, earns three 

credits for every kilowatthour of generation through 2014, with a discretionary 

adjustment possible after 2014.6 For purposes of this analysis, it is assumed that 

the credit will be reduced to one credit per kilowatthour after 2014, because the 

affected distributed generation resources show significant growth prior to 2014 

when they receive triple credits and continue to grow slowly after 2014, 

indicating that have approached competitiveness in some markets. 

 

4

 Generation from a co-firing facility is counted in proportion to the renewable fuel used in the facility. 5

 Hydroelectric dams entering starting in 2001 are eligible. This includes new generation capacity at 

existing non-electric dams and certain improvements to existing hydroelectric dams. 6

 The Secretary of Energy is required to review the credit multiplier in 4-year increments and adjust it to 

ensure that distributed energy resources only get enough of a credit to ensure competitiveness with other 

renewable resources. The credit multiplier cannot exceed three, nor fall below one. 

Energy Information Administration / Impacts of the 25-Percent RES in the ACESA Discussion Draft

 

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 Credits are granted for qualified State energy efficiency programs to satisfy up to 

20 percent of the RES requirement upon petition of the governor of any State 

provided that the State is in compliance with the EERS provisions of the bill. 

 The market value of credits used for compliance is capped at 5 cents per 

kilowatthour, adjusted annually for inflation. Power sellers may purchase an 

unlimited number of alternative compliance credits from the Federal government 

at this “safety-valve” credit value, allowing them to meet their program 

obligations without providing additional renewable generation. Revenue from the 

sale of government-issued credits will be returned to retail suppliers in proportion 

to the credits they submit. 

 The program does not affect any State-level RES requirements or similar 

obligations. 

Analysis Cases 

The analysis presented in this report starts from an updated version of the Annual Energy 

Outlook 2009 (AEO2009) reference case that reflects the projected impacts of the 

American Recovery and Reinvestment Act (ARRA), enacted in February 2009, and 

revised economic assumptions. ARRA has a significant impact on the projected growth 

of renewable energy over the next 5 years, so it is important to take account of its 

enactment in considering the projected impacts of an RES requirement. For example, 

overall targets for renewable generation in this RES proposal, on a credits-earned basis, 

are below projected renewable generation in the updated reference case through 2015. 

The development of the updated reference case is described in a recent EIA report An 

Updated Annual Energy Outlook 2009 Reference Case Reflecting Provisions of the 

American Recovery and Reinvestment Act and Recent Changes in the Economic 

Outlook.7

 As noted in that report, EIA plans to use this updated baseline in its analyses 

of proposed changes in laws and regulations, including the RES analysis presented in this 

report. Therefore, the term “reference case” in this report means this updated reference 

case unless otherwise stated. 

The RES proposal that is the subject of this report contains a provision requiring the 

Secretary of Energy to adjust the credit multiplier for distributed renewable generation to 

maintain it at a level “no higher than the Secretary determines is necessary to make 

distributed generation facilities cost competitive with other sources of renewable 

electricity generation.” Enforcement of this provision will require significant discretion 

 

7 Energy Information Administration, An Updated Annual Energy Outlook 2009 Reference Case 

Reflecting Provisions of the American Recovery and Reinvestment Act and Recent Changes in the 

Economic Outlook, SR/OIAF/2009-03 (Washington, DC, April 2009), 

http://www.eia.doe.gov/oiaf/servicerpt/stimulus/index.html. 

Energy Information Administration / Impacts of the 25-Percent RES in the ACESA Discussion Draft

 

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from the Secretary, which EIA is unable to analyze. Based on the market response of 

distributed renewable resources in the reference case, EIA has assumed that distributed 

renewable resources will be assigned a multiplier of one beyond 2014, the earliest date 

for adjustment of the initial multiplier of three in the two RES policy cases analyzed in 

this report. 

One key difference between the RES proposal contained in H.R. 890 and the RES in the 

ACESA discussion draft that is the focus of this report is that the latter provides for the 

inclusion of credits for qualified State energy efficiency programs to satisfy up to 20 

percent of the RES requirement upon petition of the governor of any State provided that 

the State is in compliance with the EERS provisions of the bill. As the baselines for and 

details of the yet-to-be-established EERS program are unknown, the extent to which 

States would have access to efficiency credits for purposes of the RES is not clear. In 

order to assess how different outcomes regarding the application of efficiency credits 

might affect the projected impacts of the RES, EIA analyzed two RES policy cases. The 

RES with Full Efficiency Credits (RESFEC) case assumes that the maximum level of 

efficiency credits, up to one-fifth of the credits in the target in any given year, are 

claimed. This is reflected as a 20-percent reduction in the applicable target for eligible 

renewable generation. The RES with No Efficiency Credits (RESNEC) case assumes 

that States cannot qualify for, or elect not to use, efficiency credits, so that the RES 

targets stated in the proposal are used as the actual targets for eligible renewable 

generation. 

This report provides an analysis of the RES provisions in the ACESA discussion draft on 

a standalone basis. The impact of the EERS on the overall growth in electricity load, 

which could also affect the projected effects of an RES, is also not clear. A cap-and trade 

program for greenhouse gas emissions could also affect RES impacts. These interactions 

are beyond the scope of the analysis in this report, but they are addressed qualitatively. 

Results 

Required Level of Renewables 

The level of renewables required to comply with the RES will be lower than the nominal 

target because of the exemptions and baseline adjustments. Figure 1 illustrates the 

derivation of the overall share of renewables required when these factors are taken into 

account. While the nominal share in 2025 is 25 percent, exempting the small retailers 

lowers the effective target to 22 percent of total electricity sales. The effective target is 

lowered further to 21 percent when the generation from hydroelectric power and 

municipal solid waste is removed from the sales baseline. The effective target will be 

lowered still further by the degree to which qualifying energy efficiency credits are used. 

If States are able to take full advantage of the energy efficiency credits, using them to 

meet up to 20 percent of the RES requirement, the effective share of renewables required 

could drop to approximately 17 percent of total electricity sales. These values are both 

greater than the 11-percent share of total electricity sales achieved by eligible renewables 

in 2025 in the reference case in this report. 

Energy Information Administration / Impacts of the 25-Percent RES in the ACESA Discussion Draft

 

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Electricity Sector Results 

Under both the RES simulations prepared, generation from renewable resources increases 

relative to the reference case (Figure 2). However, the growth in renewable generation, 

particularly for wind, stimulated by State RES programs and ARRA in the 

Figure 1: Share of Renewables Required 

 (share of total electricity sales) 

0%

5%

10%

15%

20%

25%

30%

2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Nominal Target Exempt Sales by Small Utilities

Exempt Hydro and MSW Generation Maximum Use of Efficiency Credits

Reference Case

Source: Energy Information Administration, Office of Integrated Analysis and Forecasting.

Figure 2: Generation by Fuel 

 (billion kilowatthours) 

0

200

400

600

800

1000

Reference

RESNEC

RESFEC

Reference

RESNEC

RESFEC

Reference

RESNEC

RESFEC

Geothermal Landfill Gas Biomass Solar Wind

2020 2025 2030

Source: Energy Information Administration, National Energy Modeling System runs, STIMULUS.D041409A, WAXRPS.D041609A, 

and WAXRPSNE.D041609C.

Energy Information Administration / Impacts of the 25-Percent RES in the ACESA Discussion Draft

 

5
reference case plays a major role in compliance with the Federal RES. For example, in 

the reference case, wind generation increases from 32 billion kilowatthours in 2007 to 

208 billion kilowatthours in 2030. This increase in wind generation accounts for a 

significant share of the increase in renewable generation require with the Federal RES. 

In the cases analyzed in this report, biomass generation, both from dedicated biomass 

plants and existing coal plants co-firing with biomass fuel, also plays a major role in 

compliance with the Federal RES, with biomass generation more than doubling from 218 

billion kilowatthours in the reference case to 438 billion kilowatthours in the RESFEC 

case and 577 billion kilowatthours in the RESNEC case (Table 1). Unlike for wind, the 

renewable provisions of ARRA did not have as large an impact on biomass because the 

co-firing of biomass only receives half the credit available to new wind plants and new 

dedicated biomass plants generally take longer to develop than the period of the credit 

extension in ARRA. 

Wind generation in the RESFEC case reaches the same level (208 billion kilowatthours) 

as in the reference case by 2030, but in the RESNEC case wind generation increases to 

249 billion kilowatthours. Although total solar generation does not reach the level of 

wind, it has a higher percentage increase than wind by 2030, when compared to the 

reference case. Solar generation, including utility-owned solar thermal and photovoltaics 

and customer-sited distributed generation, increases from 23 billion kilowatthours in 

2030 in the reference case to 30 billion kilowatthours in the RESFEC and 31 billion 

kilowatthours in the RESNEC case, an increase of 30 percent and 35 percent, 

respectively. 

The increase in renewable generation stimulated by the Federal RES leads to lower 

projected coal and natural gas generation. In the two RES cases, coal generation ranges 

between 182 billion kilowatthours (8 percent) and 257 billion kilowatthours (11 percent) 

below the reference case level. Similarly, natural gas generation in the two RES cases in 

2030 is between 55 billion kilowatthours (6 percent) and 150 billion kilowatthours (15 

percent) below the level projected in the reference case. 

Given the amount of eligible renewable generation projected in the reference case, the 

RES is not expected to affect national average electricity prices until after 2020. As the 

required RES share increases to its maximum value in 2025, the value of RES credits 

increases and impacts on national average electricity prices become evident. The peak 

effect on national average electricity prices, 2.7 percent in the RESFEC case and 2.9 

percent in the RESNEC case, occurs as the required renewable share ramps up more 

rapidly than the demand for electricity is growing. In the later years of the projections, 

the impact on national average electricity prices is smaller, as the impact of the RES 

requirement on the cost of coal and natural gas, fuels whose use is reduced by added 

renewables, is increasingly reflected in electricity prices. By 2030, electricity prices are 

projected to be little changed from the reference case in both RES cases, with 2030 prices 

less than 1 percent higher than in the reference case. 

By 2030, natural gas prices, measured as the average wellhead price, have decreased 1 

percent in the RESFEC case and 4 percent in the RESNEC case, relative to the reference 

Energy Information Administration / Impacts of the 25-Percent RES in the ACESA Discussion Draft

 

6
case. Also by 2030, average minemouth coal prices relative to the reference case have 

decreased 2 percent in the RESFEC case and 4 percent in the RESNEC case. 

Renewable credit prices do not rise above zero in either RES proposal until 2020. The 

RESNEC case generally results in a higher credit price than the RESFEC case. In both 

cases, credit prices reach a maximum of 5 cents per kilowatthour in 2024 and maintain 

this price through 2028, after which time the price begins to drop as electricity demand 

grows enough to absorb the required growth in renewables. In 2030, the RESFEC case 

results in a credit price of 2.5 cents per kilowatthour and the RESNEC case results in a 

credit price of 3.5 cents per kilowatthour. 

Regional Results 

Compliance with RES targets can vary significantly by region. Although all regions do 

provide some significant fraction of their required renewable generation from in-region 

sales, some tend to over-comply and thus are able to sell credits to other regions, and 

other regions tend to under-comply and need to purchase credits to achieve compliance. 

Several factors contribute to a region’s overall tendency to be a net credit importer or 

exporter, including: 

 Cost and availability of renewable resources. Regions with low-cost and/or 

abundant resources may be able to comply more economically or to a greater 

extent than other regions. Some regions may also be able to access lower cost 

resources in an adjacent region, with additional investment in transmission 

improvements. 

 Cost of alternative generation options. Regions that rely on more expensive 

conventional generation options, such as natural gas, will see reduced compliance 

costs, even with relatively expensive or limited renewable resources, as credit 

prices are a function of the spread between the cost of the renewable and the cost 

of the displaced generation. 

 State incentives for renewable generation. Some regions may have State RES 

requirements in excess of the net Federal requirement for that region and, as a 

result, will necessarily over-comply with the Federal RES. 

Because of regional differences in electricity market structure, State RES requirements, 

and ability to utilize resources, regional compliance surpluses or deficits may have 

differing price impacts, as shown in Figures 3 through 5. In regions dominated by 

traditional cost-of-service regulation, the net cost increases or decreases from RES 

compliance are generally passed through to consumers; in regions with more open 

electricity market structures, these changes in costs will only be passed through to 

consumers to the extent that market forces allow and will otherwise by absorbed by the 

industry. In cases where one region may be building dedicated renewable energy 

resources in an adjacent region, costs and benefits may be shared between the two 

regions, as the host region will realize the local economic benefits such as employment 

and land-owner payments, but also local costs such as any undesirable land uses, and the 

Energy Information Administration / Impacts of the 25-Percent RES in the ACESA Discussion Draft

 

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Figure 3. National Energy Modeling System Electricity Regions 

1

2

3

4

5

6

8

9

10

11

12

13

1

2

3

4

5

6

8

9

10

11

12

13

7

1 East Central Area Reliability Coordination Agreement (ECAR)

2 Electric Reliability Council of Texas (ERCOT)

3 Mid-Atlantic Area Council (MAAC)

4 Mid-America Interconnected Network (MAIN)

5 Mid-Continent Area Power Pool (MAPP)

6 New York (NY)

7 New England (NE)

8 Florida Reliability Coordinating Council (FL)

9 Southeastern Electric Reliability Council (SERC)

10 Southwest Power Pool (SPP)

11 Northwest Power Pool (NWP)

12 Rocky Mountain Power Area, Arizona, New Mexico, and Southern Nevada (RA)

13 California (CA)

Source: Energy Information Administration 

Figure 4: Regional Price Impacts in the RESNEC Case 

 (percent change from reference case) 

-15

-10

-5

0

5

10

15

2020 2025 2030

National ECAR ERCOT MAAC MAIN

MAPP NY NE FL SERC

SPP NWP RA CA

Source: Energy Information Administration, National Energy Modeling System runs, STIMULUS.D041409A AND 

WAXRPSNE.D041609C.

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Figure 5: Regional Price Impacts in the RESFEC Case 

 (percent change from reference case) 

-15

-10

-5

0

5

10

15

2020 2025 2030

National ECAR ERCOT MAAC MAIN

MAPP NY NE FL SERC

SPP NWP RA CA

Source: Energy Information Administration, National Energy Modeling System runs, STIMULUS.D041409A AND 

WAXRPS.D041609A.

By 2020, when the RES targets first start to result in significant new capacity builds 

above reference case levels, most regions start to see an increase in electricity prices, with 

most regions seeing an increase of 2 to 5 percent above reference case levels through 

2025. After 2025, prices begin to return to reference case levels, and by 2030 they are 

generally 1 percent to 3 percent higher than projected in the reference case. In a few 

regions, especially the MAPP region (covering the northern Great Plains States), with 

abundant and low-cost renewable resources, prices fall below the reference case level. In 

the RESNEC case, ERCOT (covering most of Texas) also sees a significant decrease in 

electricity prices compared to the reference case, as a result of the significant wind 

resources of Texas and also because of the significant reliance of that region on natural 

gas as a generation fuel. The RES leads to lower natural gas use and prices, which 

benefits regions that rely heavily on natural gas. 

Carbon Dioxide Emissions 

This analysis is of the RES portion of the ACESA discussion draft and does not account 

for the various carbon-reduction policies that affect other markets outside of the electric 

power sector. Within the electric power sector, the RES is projected to result in 

reductions in carbon dioxide emissions relative to the reference case (Figure 6). In the 

RESFEC and RESNEC case, electricity sector carbon dioxide emissions in 2030 are 

projected to be 2,444 million metric tons and 2,333 million metric tons respectively, 

compared to 2,639 million tons in the reference case and 2,433 million tons estimated in 

2007. 

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Table 1. Summary Results 

2007 2020 2025 

Generation (billion kilowatthours) Reference Reference RESFEC RESNEC Reference RESFEC RESNEC RCoal 2021 2198 2160 2090 2202 2076 2005 Petroleum 66 49 49 49 49 50 49 Natural Gas 892 714 709 672 908 839 774 Nuclear 806 876 876 869 882 881 872 Conventional Hydropower 248 299 298 297 299 298 297 Geothermal 15 22 23 26 22 25 28 Municpal Waste 16 24 26 28 24 27 28 Wood and Other Biomass 39 139 178 263 197 359 460 Solar 1 20 20 20 21 22 23 Wind 32 203 204 227 207 207 248 Other 22 28 28 28 29 29 28 Total Generation 4159 4573 4571 4571 4840 4813 4813 Prices (cents per kilowatthour) Credit Price 0.0 0.0 0.6 1.7 0.0 5.0 5.0 Electricity Price 9.1 9.3 9.3 9.3 9.5 9.7 9.8 RPS Compliance Total Electricity Sales (billion kilowatthours) 3747 4127 4124 4125 4348 4327 4320 Covered Baseline1 NA NA 3355 3357 NA 3358 3352 Credits Required (percent of total sales) 0.0 0.0 11.4 14.2 0.0 16.5 20.6 Credits Achieved (percent of total sales) 0.0 0.0 11.2 14.0 0.0 14.9 18.3 Eligible Generation Achieved (percent of total electricity sales) 0.0 0.0 10.9 13.7 0.0 14.8 18.2 Electricity Sector Carbon Dioxide (million metric tons) 2,433 2,466 2,426 2,341 2,533 2,382 2,287 1Defined as total electricity sales minus sales from exempt small retailers, minus hydroelectric generation and minus non-landfill gas municipal solid waste generation.Source: Energy Information Administration, National Energy Modeling System runs, STIMULUS.D041409A, WAXRPS.D041609A, AND WAXRPSNE.D041609C.

Energy Information Administration / Impacts of the 25-Percent RES in the ACESA Discussion Draft 
Figure 6: Electricity Sector Carbon Dioxide Emissions 

 (million metric tons) 

0

500

1000

1500

2000

2500

3000

2007 2015 2020 2025 2030

Reference RESFEC RESNEC

Source: Energy Information Administration, National Energy Modeling System Runs, STIMULUS.D041409A, 

WAXRPS.D041609A, AND WAXRPSNE.D041609C.

Interactions Between the RES, the EERS, and the Cap-and-Trade Program for 

Greenhouse Gas Emissions in the ACESA Discussion Draft 

EIA’s modeling of the RES in the ACESA discussion draft was a standalone analysis that 

did not consider interactions with other key programs in the ACESA discussion draft. 

While EIA cannot develop an integrated analysis until there are clearer insights into how 

some of the other ACESA programs would actually be implemented, interactions among 

the elements of ACESA could be significant. 

In previous analyses of economy-wide policies to limit or reduce emissions of 

greenhouse gases, EIA has generally found that a cap-and-trade program for greenhouse 

gases leads to significant growth in the use of renewable energy for electricity generation, 

which becomes more attractive when the cost of using fossil fuels goes up. Where 

there are multiple targets that can be satisfied with the same energy resources and 

projects, the target that sets the upper limit on the use of the resource will generally 

absorb all of the incremental costs from that resource, making compliance with the nonbinding goal appear to be costless. To the extent that the proposed cap and trade program 

induces more renewable resources than required by the concurrent RES proposal, one 

might expect a reduction in apparent RES compliance costs, since those costs would 

already be reflected in the value of carbon dioxide allowances. 

In contrast, an EERS, which reduces or eliminates projected growth in electricity load, 

and therefore the need for additional generation capacity, makes it more likely that a 

given RES target will require that generation from new eligible renewable capacity 

replace generation from existing capacity rather than from other types of new capacity. 

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The cost penalty associated with backing out existing capacity, whose capital cost is 

already sunk, is typically much larger than the cost penalty associated with backing out 

alternative types of new capacity. The EERS in the ACESA discussion draft calls for a 

15-percent reduction in load relative to the EERS baseline between 2012 and 2020, with 

further reductions beyond 2020 to be established through a rulemaking process. 

Although the relationship between the EERS baseline and the updated AEO2009

reference case is far from clear, projected electricity demand growth in the updated 

AEO2009 reference case, before application of an EERS, is only about 1.0 percent per 

year from 2008 through 2030. If the EERS program in fact leads to a significant 

reduction in projected demand growth relative to the updated AEO2009 baseline, many 

regions would likely have little if any need for new capacity, so new generation from 

eligible renewables required to meet the RES target would be backing out generation 

from existing capacity. 

Uncertainties 

As with any long-term projections, there are considerable uncertainties in these results. 

Among the key uncertainties are projections of the growth in the demand for electricity, 

future fuel prices, and the cost and performance of new generating equipment, both 

renewable and nonrenewable technologies. Future energy and environmental policy is 

also a key uncertainty. 

Future coal and natural gas prices are important in determining the credit price needed to 

make new renewable electricity competitive with other generation options. If coal and 

natural gas prices turn out to be lower than are projected in this report, the renewable 

energy credit price needed to make renewables competitive would be larger. Conversely, 

it would be lower if coal and natural gas prices turn out to be higher than expected. 

Projections of the future cost and performance of new generating equipment are always 

difficult, particularly for technologies that currently have little or no market experience. 

Nonhydroelectric renewable technologies currently produce about 3 percent of the power 

generated in the United States. Spurring the market penetration of these technologies 

with an RPS might allow developers to make reductions in their costs and improve their 

performance through mass production techniques and learning by doing. These types of 

improvements are assumed to occur and are incorporated in the National Energy 

Modeling System (NEMS), EIA’s long-term domestic energy model. 

However, it could turn out that the current relatively low market shares for these 

technologies result from high costs that cannot be easily reduced. In addition, even if 

renewable technology developers are successful in improving the cost and performance 

of their technologies, their ability to penetrate the market will depend on the relative costs 

and performance of nonrenewable technologies. If renewable and nonrenewable 

technologies improve by similar amounts, the relative advantage that nonrenewable 

technologies have today would likely remain. If renewable technology improves at a 

faster rate than assumed, compliance costs could be less than projected. 

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For wind, solar, and biomass technologies, the level of development called for with the 

proposed RPS comes with some uncertainty. For example, developers or grid operators 

may have to pay to build or upgrade long transmission lines from the remote areas with 

ample wind resources to the cities with significant demand. In this analysis, costs are 

assumed to increase as developers turn to more costly sites such as those with higher 

interconnection costs, higher land costs, or more difficult terrain. However, there is 

significant uncertainty about the actual cost increases that might occur, and the actual 

costs may be more or less than projected. 

Wind and solar power development may also be constrained by the intermittent nature of 

the resource which may lead to the need for additional capacity to ensure that consumers’ 

need for electricity can be met at all times. At regional penetration levels seen for wind in 

this analysis, NEMS represents many of the most significant costs of accommodating 

wind intermittency, including costs for additional firm system capacity when needed, 

potential mismatch between load and wind-production peaks, and lost revenue during 

periods of excess wind production. 

The solar resource development seen in this report would largely occur at the customer 

site, on the distribution rather than on the transmission system. Such a level of 

penetration may have minor or significant effects on system cost and reliability, largely 

depending on localized concentration of installations and the pre-existing condition of 

local distribution systems. 

As with wind, data suggest that there are sufficient biomass resources to fuel the 

increased biomass generation projected in the RPS case. However, currently there are 

relatively few coal plants that co-fire with biomass. To achieve the level of biomass cofiring called for in the RPS case, the infrastructure to reliably gather, process, and deliver 

the available biomass to coal plants would have to be developed. Utilities with coal 

plants may also be resistant to investing in them to allow them to use biomass, if they 

believe that future climate policy may lead them to shut the plant down or reduce its 

utilization. 

Finally, EIA assumes the use of biomass gasification technology for dedicated biomass 

generation plants. Based on current estimates, these plants trade off somewhat higher 

capital costs for significantly improved efficiency compared to direct-combustion 

technology, thus reducing operating costs. However, few commercial biomass 

gasification operations currently exist, and capital costs for this technology are highly 

uncertain. 

Biomass generation, both in dedicated plants and in co-firing operations, is a significant 

compliance option in this report. A low carbon fuels standard may cause increased 

competition for the same biomass feedstocks on land that is projected to be used to meet 

this renewable electricity sector. Such competition for feedstocks/fuels could result in a 

shift in compliance strategy for the RES and/or an increase in renewable electricity credit 

prices and compliance costs. However, increased production of liquid fuels from 

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biomass may also result in increased electricity generation from biofuel production 

facilities, which may be able to burn biomass wastes from their production processes to 

produce electricity. 

 

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Appendix A 

Follow-Up Analysis Request Letter 

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Energy Information Administration / Impacts of the 25-Percent RES in the ACESA Discussion Draft

 

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Appendix B 

Analysis Request Letter 

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Energy Information Administration / Impacts of the 25-Percent RES in the ACESA Discussion Draft

 

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Energy Information Administration / Impacts of the 25-Percent RES in the ACESA Discussion Draft

 

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Appendix C 

Discussion Draft 

American Clean Energy and Security Act of 2009 

Title I, Subtitle A 

Renewable Electricity Standard 

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March 30, 2009 (11:13 p.m.) 

F:\TB\EC\CLICH09_001.XML 

f:\VHLC\033009\033009.302.xml (428961|20) 

1 TITLE I—CLEAN ENERGY 

2 Subtitle A—Renewable Electricity 

3 Standard 

4 SEC. 101. FEDERAL RENEWABLE ELECTRICITY STANDARD. 

5 (a) IN GENERAL.—Title VI of the Public Utility Reg 

6 ulatory Policies Act of 1978 (16 U.S.C. 2601 and fol 

7 lowing) is amended by adding at the end the following: 

8 ‘‘SEC. 610. FEDERAL RENEWABLE ELECTRICITY STANDARD. 

9 ‘‘(a) DEFINITIONS.—For purposes of this section: 

10 ‘‘(1) AFFILIATE.—The term ‘affiliate’ when 

11 used in relation to a person, means another person 

12 that directly or indirectly owns or controls, is owned 

13 or controlled by, or is under common ownership or 

14 control with, such person, as determined under regu 

15 lations promulgated by the Secretary. 

16 ‘‘(2) BIOMASS.—The term ‘biomass’ means 

17 each of the following: 

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1 ‘‘(A) Crops, crop byproducts, or crop resi 

2 dues harvested from actively managed or fallow 

3 agricultural land that was cleared prior to the 

4 date of enactment of this section and is nonfor 

5 ested. 

6 ‘‘(B) Planted trees, brush, slash, and all 

7 residues from an actively managed tree planta 

8 tion located on land that was cleared prior to 

9 the date of enactment of this section and is not 

10 Federal land. 

11 ‘‘(C) Pre-commercial-sized thinnings, slash, 

12 brush, and residue from milled trees, from for 

13 ested land that is not— 

14 ‘‘(i) old-growth or mature forest; 

15 ‘‘(ii) identified under a State Natural 

16 Heritage Program as rare, imperiled, or 

17 critically imperiled; or 

18 ‘‘(iii) Federal land. 

19 ‘‘(D) Algae. 

20 ‘‘(E) Nonhazardous plant matter derived 

21 from waste such as separated yard waste, land 

22 scape right-of-way trimmings, or food waste 

23 (but not municipal solid waste, recyclable waste 

24 paper, painted, treated or pressurized wood, or 

25 wood contaminated with plastic or metals). 

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1 ‘‘(F) Animal waste or animal byproducts, 

2 including products of animal waste digesters. 

3 ‘‘(G) Vegetative matter removed from 

4 within 200 yards of any manmade structure or 

5 campground. 

6 ‘‘(3) DISTRIBUTED GENERATION FACILITY.— 

7 The term ‘distributed generation facility’ means a 

8 facility that— 

9 ‘‘(A) generates renewable electricity other 

10 than by means of combustion; 

11 ‘‘(B) primarily serves 1 or more electricity 

12 consumers at or near the facility site; and 

13 ‘‘(C) is no larger than 2 megawatts in ca 

14 pacity. 

15 ‘‘(4) FEDERAL ALTERNATIVE COMPLIANCE PAY 

16 MENT.—The term ‘Federal alternative compliance 

17 payment’ means a payment, to be submitted in lieu 

18 of 1 Federal renewable electricity credit, pursuant to 

19 subsection (c)(3). 

20 ‘‘(5) FEDERAL LAND.—The term ‘Federal land’ 

21 means land owned by the United States, other than 

22 land held in trust for an Indian or Indian tribe. 

23 ‘‘(6) FEDERAL RENEWABLE ELECTRICITY 

24 CREDIT.—The term ‘Federal renewable electricity 

25 credit’ means a credit, representing one megawatt 

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1 hour of renewable electricity, issued pursuant to sub 

2 section (d). 

3 ‘‘(7) FUEL CELL.—The term ‘fuel cell’ means a 

4 device that directly converts the chemical energy of 

5 a fuel and an oxidant into electricity by electro 

6 chemical processes occurring at separate electrodes 

7 in the device. 

8 ‘‘(8) FUND.—The term ‘Fund’ means the Re 

9 newable Electricity Deployment Fund established 

10 under subsection (f). 

11 ‘‘(9) QUALIFIED HYDROPOWER.—The term 

12 ‘qualified hydropower’ means— 

13 ‘‘(A) electricity generated solely from in 

14 creased efficiency achieved, or additions of ca 

15 pacity made, on or after January 1, 2001 at a 

16 hydroelectric facility that was placed in service 

17 before that date; or 

18 ‘‘(B) electricity generated from generating 

19 capacity added on or after January 1, 2001 to 

20 a dam that did not previously have the capacity 

21 to generate electricity, provided that the Com 

22 mission certifies that— 

23 ‘‘(i) the dam was placed in service be 

24 fore the date of the enactment of this sec 

25 tion and was operated for flood control, 

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1 navigation, or water supply purposes and 

2 did not produce hydroelectric power before 

3 January 1, 2001; 

4 ‘‘(ii) the hydroelectric project installed 

5 on the dam is licensed by the Commission 

6 and meets all other applicable environ 

7 mental, licensing, and regulatory require 

8 ments, including applicable fish passage re 

9 quirements; and 

10 ‘‘(iii) the hydroelectric project in 

11 stalled on the dam is operated so that the 

12 water surface elevation at any given loca 

13 tion and time that would have occurred in 

14 the absence of the hydroelectric project is 

15 maintained, subject to any license require 

16 ments that require changes in water sur 

17 face elevation for the purpose of improving 

18 the environmental quality of the affected 

19 waterway. 

20 ‘‘(10) RENEWABLE ELECTRICITY.—The term 

21 ‘renewable electricity’ means electricity generated 

22 (including by means of a fuel cell) from a renewable 

23 energy resource. 

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1 ‘‘(11) RENEWABLE ENERGY RESOURCE.—The 

2 term ‘renewable energy resource’ means each of the 

3 following: 

4 ‘‘(A) Wind energy. 

5 ‘‘(B) Solar energy. 

6 ‘‘(C) Geothermal energy. 

7 ‘‘(D) Biomass or landfill gas. 

8 ‘‘(E) Qualified hydropower. 

9 ‘‘(F) Marine and hydrokinetic renewable 

10 energy, as that term is defined in section 632 

11 of the Energy Independence and Security Act 

12 of 2007 (42 U.S.C. 17211). 

13 ‘‘(12) RETAIL ELECTRIC SUPPLIER.— 

14 ‘‘(A) IN GENERAL.—The term ‘retail elec 

15 tric supplier’ means, for any given year, an 

16 electric utility that sold not less than 1,000,000 

17 megawatt hours of electric energy to electric 

18 consumers for purposes other than resale dur 

19 ing the preceding calendar year. 

20 ‘‘(B) INCLUSIONS AND LIMITATIONS.—For 

21 purposes of determining whether an electric 

22 utility qualifies as a retail electric supplier 

23 under subparagraph (A)— 

24 ‘‘(i) the sales of any affiliate of an 

25 electric utility to electric consumers for 

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1 purposes other than resale shall be consid 

2 ered to be sales of such electric utility; and 

3 ‘‘(ii) sales by any electric utility to an 

4 affiliate, lessee, or tenant of such electric 

5 utility shall not be treated as sales to elec 

6 tric consumers. 

7 ‘‘(13) RETAIL ELECTRIC SUPPLIER’S BASE 

8 AMOUNT.—The term ‘retail electric supplier’s base 

9 amount’ means the total amount of electric energy 

10 sold by the retail electric supplier, expressed in 

11 terms of megawatt hours, to electric customers for 

12 purposes other than resale during the relevant cal 

13 endar year, excluding electricity generated by— 

14 ‘‘(A) a hydroelectric facility that is not 

15 qualified hydropower; or 

16 ‘‘(B) combustion of municipal solid waste. 

17 ‘‘(14) RETIRE AND RETIREMENT.—The terms 

18 ‘retire’ and ‘retirement’ with respect to a Federal re 

19 newable electricity credit, means to disqualify such 

20 credit for any subsequent use under this section, re 

21 gardless of whether the use is a sale, transfer, ex 

22 change, or submission in satisfaction of a compliance 

23 obligation. 

24 ‘‘(b) ESTABLISHMENT OF PROGRAM.—Not later than 

25 1 year after the date of enactment of this section, the SecEnergy Information Administration / Impacts of the 25-Percent RES in the ACESA Discussion Draft

 

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1 retary shall, by regulation, establish a program to imple 

2 ment and enforce the requirements of this section. In es 

3 tablishing such program, the Secretary shall, to the extent 

4 practicable— 

5 ‘‘(1) preserve the integrity, and incorporate best 

6 practices, of existing State renewable electricity pro 

7 grams; 

8 ‘‘(2) rely upon existing and emerging State or 

9 regional tracking systems that issue and track non10 Federal renewable electricity credits; and 

11 ‘‘(3) cooperate with the States to facilitate co 

12 ordination between State and Federal renewable 

13 electricity programs and to minimize administrative 

14 burdens and costs to retail electric suppliers. 

15 ‘‘(c) ANNUAL COMPLIANCE REQUIREMENT.— 

16 ‘‘(1) IN GENERAL.—Except as provided in para 

17 graph (3), for each of calendar years 2012 through 

18 2039, each retail electric supplier shall, not later 

19 than April 1 of the following calendar year, submit 

20 to the Secretary a quantity of Federal renewable 

21 electricity credits equal to the retail electric sup 

22 plier’s base amount for the calendar year multiplied 

23 by the required annual percentage set forth in para 

24 graph (2). The Secretary shall retire each Federal 

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1 renewable energy credit immediately upon submis 

2 sion under this section. 

3 ‘‘(2) REQUIRED ANNUAL PERCENTAGE.—For 

4 each of calendar years 2012 through 2039, the re 

5 quired annual percentage shall be as follows: 

‘‘Calendar year Required annual percentage 

2012 ............................................................................... 6.0 

2013 ............................................................................... 6.0 

2014 ............................................................................... 8.5 

2015 ............................................................................... 8.5 

2016 ............................................................................... 11.0 

2017 ............................................................................... 11.0 

2018 ............................................................................... 14.0 

2019 ............................................................................... 14.0 

2020 ............................................................................... 17.5 

2021 ............................................................................... 17.5 

2022 ............................................................................... 21.0 

2023 ............................................................................... 21.0 

2024 ............................................................................... 23.0 

2025 through 2039 ........................................................ 25.0 

6 ‘‘(3) EFFICIENCY COMPLIANCE OPTION.—The 

7 Governor of a State (including, for purposes of this 

8 section, the Mayor of the District of Columbia), may 

9 petition the Secretary to reduce, by up to one fifth, 

10 the required annual percentage under paragraph (2) 

11 in any given year that shall be applied to the portion 

12 of any retail electric supplier’s base amount that is 

13 sold to electric customers located within such State 

14 for purposes other than resale. The Secretary shall 

15 grant such petition if the Secretary determines that 

16 the entities within the State that are subject to the 

17 Federal Energy Efficiency Resource Standard estabEnergy Information Administration / Impacts of the 25-Percent RES in the ACESA Discussion Draft

 

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1 lished under section 611 of this Act are in compli 

2 ance with such standard for such year. 

3 ‘‘(4) ALTERNATIVE COMPLIANCE PAYMENTS.— 

4 A retail electric supplier may satisfy the require 

5 ments of paragraph (1) (as modified, where applica 

6 ble, under paragraph (3)) in whole or in part by 

7 submitting in lieu of each Federal renewable elec 

8 tricity credit that would otherwise be due, a payment 

9 equal to the lesser of— 

10 ‘‘(A) 200 percent of the average market 

11 value of a Federal renewable electricity credit 

12 for the previous compliance year, as determined 

13 by the Secretary; or 

14 ‘‘(B) $50, adjusted on January 1 of each 

15 year following calendar year 2009 based on the 

16 Gross Domestic Product Implicit Price 

17 Deflator. 

18 ‘‘(5) USE OF PAYMENTS.—Alternative compli 

19 ance payments submitted pursuant to paragraph (4) 

20 shall be deposited in the Fund established under 

21 subsection (f). 

22 ‘‘(d) FEDERAL RENEWABLE ELECTRICITY CRED 

23 ITS.— 

24 ‘‘(1) IN GENERAL.—The regulations promul 

25 gated under subsection (b) shall include provisions 

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1 governing the issuance, tracking, and verification of 

2 Federal renewable electricity credits. Except as pro 

3 vided in paragraphs (2), (3), and (4) of this sub 

4 section, the Secretary shall issue to each generator 

5 of renewable electricity, 1 Federal renewable elec 

6 tricity credit for each megawatt hour of renewable 

7 electricity generated by such generator. The Sec 

8 retary shall assign a unique serial number to each 

9 Federal renewable electricity credit. 

10 ‘‘(2) GENERATION FROM STATE RENEWABLE 

11 ELECTRICITY PROGRAMS USING CENTRAL PROCURE 

12 MENT AND FROM STATE ALTERNATIVE COMPLIANCE 

13 PAYMENTS.—Where renewable electricity is gen 

14 erated with the support of payments from a retail 

15 electric supplier pursuant to a State renewable elec 

16 tricity program (whether through State alternative 

17 compliance payments or through payments to a 

18 State renewable electricity procurement fund or enti 

19 ty), the Secretary shall issue Federal renewable elec 

20 tricity credits to such retail electric supplier for the 

21 proportion of the relevant renewable electricity gen 

22 eration that is attributable to the retail electric sup 

23 plier’s payments, as determined pursuant to regula 

24 tions issued by the Secretary. For any remaining 

25 portion of the relevant renewable electricity generaEnergy Information Administration / Impacts of the 25-Percent RES in the ACESA Discussion Draft

 

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1 tion, the Secretary shall issue Federal renewable 

2 electricity credits to the generator, as provided in 

3 paragraph (1), provided that in no event shall more 

4 than 1 Federal renewable electricity credit be issued 

5 for the same megawatt hour of electricity. In deter 

6 mining how Federal renewable electricity credits will 

7 be apportioned among retail electric suppliers and 

8 generators in such circumstances, the Secretary 

9 shall consider information and guidance furnished by 

10 the relevant State or States. 

11 ‘‘(3) CERTAIN POWER SALES CONTRACTS.— 

12 When a generator has sold renewable electricity to 

13 a retail electric supplier under a contract for power 

14 from a facility placed in service before the date of 

15 enactment of this section, and the contract does not 

16 provide for the determination of ownership of the 

17 Federal renewable electricity credits associated with 

18 such generation, the Secretary shall issue such Fed 

19 eral renewable electricity credits to the retail electric 

20 supplier for the duration of the contract. 

21 ‘‘(4) CREDIT MULTIPLIER FOR DISTRIBUTED 

22 GENERATION.— 

23 ‘‘(A) IN GENERAL.—Except as provided in 

24 subparagraph (B), the Secretary shall issue 3 

25 Federal renewable electricity credits for each 

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1 megawatt hour of renewable electricity gen 

2 erated by a distributed generation facility. 

3 ‘‘(B) ADJUSTMENT.—Except as provided 

4 in subparagraph (C), not later than January 1, 

5 2014, and not less frequently than every 4 

6 years thereafter, the Secretary shall review the 

7 effect of this paragraph and shall, as necessary, 

8 reduce the number of Federal renewable elec 

9 tricity credits per megawatt hour issued under 

10 this paragraph, but not below 1, to ensure that 

11 such number is no higher than the Secretary 

12 determines is necessary to make distributed 

13 generation facilities cost competitive with other 

14 sources of renewable electricity generation. 

15 ‘‘(C) FACILITIES PLACED IN SERVICE 

16 AFTER ENACTMENT.—For any distributed gen 

17 eration facility placed in service after the date 

18 of enactment of this section, subparagraph (B) 

19 shall not apply for the first 10 years after date 

20 of enactment. For each year during such 10- 

21 year period, the Secretary shall issue the facil 

22 ity the same number of Federal renewable elec 

23 tricity credits per megawatt hour as are issued 

24 to that facility in the year in which such facility 

25 is placed in service. After such 10-year period, 

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1 the Secretary shall issue Federal renewable en 

2 ergy credits to the facility in accordance with 

3 the current multiplier as determined pursuant 

4 to subparagraph (B). 

5 ‘‘(5) CREDITS BASED ON INCREMENTAL HY 

6 DROPOWER.—For purposes of this subsection, the 

7 number of Federal renewable electricity credits 

8 issued for qualifying hydropower described in sub 

9 section (a)(9)(A) shall be calculated— 

10 ‘‘(A) based solely on the increase in aver 

11 age annual generation directly resulting from 

12 the efficiency improvements or capacity addi 

13 tions described in subsection (a)(9)(A); and 

14 ‘‘(B) using the same water flow informa 

15 tion used to determine a historic average an 

16 nual generation baseline for the hydroelectric 

17 facility, as certified by the Secretary or by the 

18 Commission. 

19 ‘‘(6) GENERATION FROM MIXED RENEWABLE 

20 AND NON-RENEWABLE RESOURCES.—If electricity is 

21 generated using both a renewable energy resource 

22 and an energy source that is not a renewable energy 

23 resource (as, for example, in the case of co-firing of 

24 biomass and fossil fuel), the Secretary shall issue 

25 Federal renewable electricity credits based on the 

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1 proportion of the electricity that is attributable to 

2 the renewable energy resource. 

3 ‘‘(7) PROHIBITION AGAINST DOUBLE-COUNT 

4 ING.—Except as provided in paragraph (4) of this 

5 subsection, the Secretary shall ensure that no more 

6 than 1 Federal renewable electricity credit will be 

7 issued for any megawatt hour of renewable elec 

8 tricity and that no Federal renewable electricity 

9 credit will be used more than once for compliance 

10 with this section. 

11 ‘‘(e) TRADING, BANKING, AND MARKET OVER 

12 SIGHT.— 

13 ‘‘(1) TRADING.—The lawful holder of a Federal 

14 renewable electricity credit may sell, exchange, 

15 transfer, submit for compliance in accordance with 

16 subsection (c), or submit such credit for retirement 

17 by the Secretary. 

18 ‘‘(2) BANKING.—A Federal renewable elec 

19 tricity credit may be submitted in satisfaction of the 

20 compliance obligation set forth in subsection (c) for 

21 the compliance year in which the credit was issued 

22 or for any of the 3 immediately subsequent compli 

23 ance years. The Secretary shall retire any Federal 

24 renewable electricity credit that has not been sub 

25 mitted under subsection (c) by the deadline for the 

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1 compliance year that is 3 years after the compliance 

2 year in which the credit was issued. 

3 ‘‘(3) OVERSIGHT.—The Commission, in con 

4 sultation with the Secretary and relevant Federal 

5 agencies, may prescribe such rules as the Commis 

6 sioner determines necessary to ensure the trans 

7 parency, fairness, and stability of the market in 

8 Federal renewable electricity credits and any deriva 

9 tive instruments based on such credits. 

10 ‘‘(f) RENEWABLE ELECTRICITY DEPLOYMENT 

11 FUND.— 

12 ‘‘(1) IN GENERAL.—There is established in the 

13 Treasury of the United States a Renewable Elec 

14 tricity Deployment Fund. 

15 ‘‘(2) DEPOSITS.—All Federal alternative com 

16 pliance payments submitted to the Secretary pursu 

17 ant to subsection (c)(3) and civil penalties assessed 

18 under this section shall be deposited into the Fund. 

19 ‘‘(3) USE.— 

20 ‘‘(A) IN GENERAL.—Amounts deposited in 

21 the Fund shall be available exclusively for use 

22 by the Secretary, subject to appropriations, to 

23 make payments to retail electric suppliers in ac 

24 cordance with subparagraph (B). 

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1 ‘‘(B) ALLOCATION.—Not later than May 1 

2 of each year from 2013 through 2040, the Sec 

3 retary shall distribute amounts deposited in the 

4 Fund during the preceding 12-month period 

5 among the retail electric suppliers which have 

6 submitted Federal renewable electricity credits 

7 to the Secretary in total or partial compliance 

8 with their obligations under subsection (c) for 

9 the preceding calendar year. Each retail electric 

10 supplier shall receive a payment equal to the 

11 product of— 

12 ‘‘(i) the total payments made to all re 

13 tail electric suppliers under this subsection; 

14 and 

15 ‘‘(ii) the quotient obtained by dividing 

16 the quantity specified in subclause (I) by 

17 the quantity specified in subclause (II): 

18 ‘‘(I) The quantity of Federal re 

19 newable electricity credits submitted 

20 by the retail electric supplier for the 

21 preceding calendar year pursuant to 

22 subsection (c). 

23 ‘‘(II) The total quantity of Fed 

24 eral renewable electricity credits sub 

25 mitted by all retail electric suppliers 

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1 for the preceding calendar year pursu 

2 ant to subsection (c). 

3 ‘‘(g) INFORMATION COLLECTION.—In accordance 

4 with section 13 of the Federal Energy Administration Act 

5 of 1974 (15 U.S.C. 772), the Secretary may require any 

6 retail electric supplier, renewable electricity generator, or 

7 such other entities as the Secretary deems appropriate, to 

8 provide any information the Secretary determines appro 

9 priate to carry out this section. 

10 ‘‘(h) ENFORCEMENT AND JUDICIAL REVIEW.— 

11 ‘‘(1) CIVIL PENALTY.—If any person fails to 

12 comply with the requirements of subsection (c), such 

13 person shall be liable to pay to the Secretary a civil 

14 penalty equal to the product of— 

15 ‘‘(A) double the Federal alternative compli 

16 ance payment calculated under subsection 

17 (c)(3), and 

18 ‘‘(B) the aggregate quantity of Federal re 

19 newable electricity credits (or equivalent Fed 

20 eral alternative compliance payments) that the 

21 person failed to submit to the Secretary in vio 

22 lation of the requirements of subsection (c). 

23 ‘‘(2) ENFORCEMENT.—The Secretary shall as 

24 sess a civil penalty under paragraph (1) in accord 

25 ance with the procedures described in section 333(d) 

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1 of the Energy Policy and Conservation Act of 1954 

2 (42 U.S.C. 6303). 

3 ‘‘(3) JUDICIAL REVIEW.—Any person who will 

4 be adversely affected by a final action taken by the 

5 Secretary under this section, other than the assess 

6 ment of a civil penalty under this subsection, may 

7 use the procedures for review described in section 

8 336(b) of the Energy Policy and Conservation Act 

9 (42 U.S.C. 6306). For purposes of this paragraph, 

10 references to a rule in section 336(b) of the Energy 

11 Policy and Conservation Act shall be deemed to refer 

12 also to all other final actions of the Secretary under 

13 this section other than the assessment of a civil pen 

14 alty under this subsection. 

15 ‘‘(i) SAVINGS PROVISIONS.—Nothing in this section 

16 shall— 

17 ‘‘(1) diminish or qualify any authority of a 

18 State or political subdivision of a State to— 

19 ‘‘(A) adopt or enforce any law or regula 

20 tion respecting renewable electricity, including 

21 programs that exceed the required amount of 

22 renewable electricity under this section, pro 

23 vided that no such law or regulation may relieve 

24 any person of any requirement otherwise appli 

25 cable under this section; or 

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1 ‘‘(B) regulate the acquisition and dispose 

2 tion of Federal renewable electricity credits by 

3 retail electric suppliers located within the terri 

4 tory of such State or political subdivision, in 

5 cluding the authority to require such retail elec 

6 tric supplier to acquire and retire Federal re 

7 newable electricity credits associated with elec 

8 tric energy it sells to end-use customers; or 

9 ‘‘(2) affect the application of, or the response 

10 bility for compliance with, any other provision of law 

11 or regulation, including environmental and licensing 

12 requirements. 

13 ‘‘(j) SUNSET.—This section expires on December 31, 

14 2040.’’. 

15 (b) TABLE OF CONTENTS AMENDMENT.—The table 

16 of contents of the Public Utility Regulatory Policies Act 

17 of 1978 (16 U.S.C. 2601 and following) is amended by 

18 adding at the end of the items relating to title VI the fol 

19 lowing: 

‘‘Sec. 610. Federal renewable electricity standard’’.