State Targets Still Drive U.S. Renewable Energy Growth
State-mandated minimums for renewable energy deployment (Renewable Portfolio Standards, or RPSs) remain a potent force behind corporate uptake of non-fossils, nearly a year into a sustained attack from a new White House administration.
As renewables grow rapidly and steadily cheaper, more companies are choosing to keep the lights on with wind and solar: 2017 saw more voluntary purchases than ever before. But “it’s a state-by-state story,” said Malcolm Woolf, Vice President of Policy and Government Affairs for Advance Energy Economy (AEE). In wind-blown states like Kansas that are rich in renewable energy resources and have open energy markets, the need for RPSs is in decline, as market forces are increasingly sufficient to prompt investment in renewables. But in states with more limited access to renewables, especially where utilities function as monopolies (as is the case in Nevada), RPSs remain critical tools in changing the landscape of energy use in America.
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First introduced in Iowa in 1983, RPSs require utilities to supply a specific percentage of renewable energy generation within a given time period. Now on the books in 29 states and Washington, DC, RPS laws have delivered a significant boost to the uptake of renewables.
“Of the 120 GW of renewables capacity built since 2000, 56% was at least partially driven by RPS policies,” Utility Dive notes. While early RPS laws set a low bar of 10% renewables or lower, many states now require double that commitment. Leaders in the field, like California, are adopting 50% standards. Last year, Massachusetts signed into law the first U.S. offshore wind mandate, and New York and New Jersey are hard on their heels.
That RPS laws have been so well-received—at least in some states—isn’t surprising: a recent cost-benefit analysis by Lawrence Berkeley National Laboratory (LBNL) found that the RPSs cost the power system no more than US$0.01 per kilowatt-hour through 2050, while delivering benefits worth $0.024/kWh.
With environmental gains factored in, “the average estimated benefits to the system in reduced SO2, NOx, particulate matter, greenhouse gas emissions (GHGs), and water use were $258 billion. LBNL also found an estimated $78 billion saved through reduced natural gas use.”
Moreover, “LBNL expects the 235 terawatt-hours of renewables generation needed to meet 2016 mandates to increase to 450 TWh to meet 2030 mandates. That means RPSs will drive an annual average 4-GW increase of installed renewables capacity, with 18 GW of new installed renewables capacity added by 2020 and 55 GW added by 2030.”
As a “state-by-state story,” the tale of RPS laws has leaders and laggards (and few villains). Most states that have adopted RPS mandates are either accelerating them or maintaining the status quo, depending on the extent to which their grids are directed by market forces. In some states (like Nevada), “it is irrelevant that wind and solar produce power cheaper than the regulated utility is producing it,” Woolf notes. “The utility can simply continue to rely on existing, if more expensive, resources.” Such is the case in Florida, where in the absence of a RPS, “some of the nation’s best solar potential goes underdeveloped.”
One study also tracked Ohio’s recent experience with briefly losing its RPS. “Since 2008, when its Alternative Energy Portfolio Standard was put in place, Ohio ha[d] attracted more than $1.3 billion in asset finance, private equity, and venture capital for renewables,” Utility Dive reports, citing the American Council On Renewable Energy (ACORE). “The result was more than 504 MW of installed wind capacity and 125 MW of installed solar capacity.”
However, following a two-year, State Senate-mandated RPS freeze in 2014, there was little development, a situation that would have continued had Republican Governor John Kasich not vetoed a move to extend the freeze. With the RPS restored to 12.5% by 2026, Ohio is on track to “support more than $15.5 billion in projected investment and economic activity in [new] wind (3,000+ MW) and solar (nearly 500 MW).”
Other policies, like Dominion Virginia’s green tariff for large corporate buyers and Georgia’s support for third-party ownership and other forms of distributed generation, also enable the penetration of renewables, Utility Dive notes. But such efforts will, for the foreseeable future, be no replacement for the power of RPS laws in driving sustainable energy choices.