To the extent possible, AEO2012 incorporates the impacts of State laws requiring the addition of renewable generation or capacity by utilities doing business in the States. Currently, 30 States and the District of Columbia have an enforceable renewable portfolio standard (RPS) or similar laws (Table 4). Under such standards, each State determines its own levels of renewable generation, eligible technologies [26], and noncompliance penalties. AEO2012 includes the impacts of all laws in effect at the end of 2011 (with the exception of Alaska and Hawaii, because NEMS provides electricity market projections for the contiguous lower 48 States only). However, the projections do not include policies with either voluntary goals or targets that can be substantially satisfied with nonrenewable resources. In addition, the model is not able to treat fuel-specific provisions—such as those for solar and offshore wind energy—as distinct targets. Where applicable, these distinct targets (sometimes referred to as “tiers,” “set-asides,”
or “carve-outs”) may be subsumed into the broader targets, or are not modeled because they may be met with existing capacity and/or projected growth based on modeled economic and policy factors.
In the AEO2012 Reference case, States generally are assumed to meet their ultimate RPS targets. The RPS compliance constraint in most regions is approximated, because NEMS is not a State-level model, and each State generally represents only a portion of one of the NEMS electricity regions. Compliance costs in each region are tracked, and the projection for total renewable generation is checked for consistency with any State-level cost-control provisions, such as caps on renewable credit prices, limits on State compliance funding, or impacts on consumer electricity prices. In general, EIA has confirmed the States’
requirements through original documentation, although the Database of State Incentives for Renewables & Efficiency was also used to support those efforts [27].
No new RPS programs were enacted over the past year;
however, some States with existing RPS programs made modifications in 2011. The aggregate RPS requirement for the various State programs, as modeled in AEO2012, is shown in Figure 10. By 2025, these targets account for about 10 percent of U.S. sales. The requirement is derived from the legal targets and projected sales, and does not account for any discretionary or nondiscretionary waivers or limits on compliance found in most State RPS programs. State RPS policies are not the only driver of growth in renewable generation, and a more complete discussion of those factors can be found in “Market trends.” The following sections detail the significant changes made by the States. In addition, Table 4 provides a summary of all State RPS laws.
0 1,000 2,000 3,000 4,000 5,000
2015 2020 2025 2030 2035
Combined requirement under current State-level RPS Total projected U.S. electricity sales
Figure 10. Total combined requirement for State renewable portfolio standards, 2015-2035 (billion kilowatthours)
Table 4. Renewable portfolio standards in the 30 States with current mandates
State Program mandate
AZ Arizona Corporate Commission Decision No. 69127 requires 15 percent of electricity sales to be renewable by 2025, with interim goals increasing annually. A specific percentage of the target must be from distributed generation. Multiple credits may be provided to solar generation and systems manufactured in-State.
CA SBX1-2, enacted in 2011, requires that 33 percent of electricity sales be met by renewable sources by 2020. The legislation codifies the 33 percent requirement in Executive Order S-21-09, which served as a continuation of California’s first RPS, in which investor-owned utilities (IOUs) were required to deliver 20 percent of sales from renewable sources. Under SBX1-2, both IOUs and publicly owned municipal utilities are subject to the RPS.
CO Enacted in March of 2010, House Bill (HB) 1001 strengthens the State’s existing RPS program by requiring that 20 percent of electricity generated by IOUs in 2015 be renewable, increasing to 30 percent in 2020. There is also a distributed generation requirement. In-State generation receives a 25-percent credit premium.
CT Public Act 07-242 mandates a 27-percent renewable sales requirement by 2020, including a 4-percent mandate for higher efficiency or combined heat and power systems. Of the overall total, 3 percent may be met by waste-to-energy and conventional biomass facilities.
DE Senate Substitute 1 amended Senate Bill (SB) 119 to extend the increasing RPS targets to 2025; 25 percent of generation is now required to come from renewable sources in 2025. There is a separate requirement for solar generation (3.5 percent of the total in 2025), and there are penalty payments for compliance failure. Offshore wind generation receives 3.5 times the credit amount, and solar technologies receive 3 times the credit amount.
HI HB 1464 sets the renewable mandate at 40 percent by 2030. All existing renewable facilities are eligible to meet the target, which has two interim milestones. (Not included in NEMS.)
IL Public Act 095-0481 created an agency responsible for overseeing the mandate of 25-percent renewable sales by 2025, with escalating annual targets. In addition, 75 percent of the required sales must be generated from wind, 6 percent from solar, and 1 percent from distributed generation. The plan also includes a cap on the incremental costs resulting from the penetration of renewable generation. In 2009, the rule was modified to cover sales outside a utility’s home territory.
IA In 1983, a capacity mandate of 105 megawatts of renewable energy capacity was adopted. By the end of 2010, Iowa had well over 3,000 megawatts of wind-powered capacity alone.
KS In 2009, HB 2369 established a requirement that 20 percent of installed capacity must use renewable resources by 2020.
ME In 2007, Public Law 403 was added to the State’s RPS requirements. The law requires that 10 percent of sales come from new renewable capacity by 2017, and that level must be maintained in subsequent years. The years leading up to 2017 also have new generation milestones. Generation from eligible community-owned facilities receives a 10-percent credit premium.
MD In April 2008, HB 375 revised the preceding RPS to contain a 20-percent target by 2022, including a 2-percent solar target.
HB 375 also raised penalty payments for “Tier 1” compliance shortfalls to 4 cents per kilowatthour. SB 277, while preserving the 2-percent by 2022 solar target, made the interim solar requirements and penalty payments slightly less stringent. In 2011, SB 717 extended the eligibility of the solar target to include solar water heating systems.
MA The State RPS has a goal of a 15-percent renewable share of total sales by 2020 and includes necessary payments for compliance shortfalls. Eligible biomass is restricted to low-carbon life cycle emission sources. A Solar Carve-Out Program was also added, which seeks to establish 400 megawatts of solar generating capacity.
MI Public Act 295, enacted in 2008, established an RPS that will require 10 percent of all electricity sales to be generated from renewable sources by 2015. Double credits are given to solar energy. In addition, the State’s large utilities are required to procure an additional combined total of 1,100 megawatts of renewable capacity by 2015, although generation from those facilities may be counted toward the generation-based RPS.
MN SF 4 created a 30-percent renewable requirement by 2020 for Xcel, the State’s largest supplier, and a 25-percent requirement by 2025 for other suppliers. The 30-percent requirement for Xcel consists of 24 percent that must be from wind, 1 percent that can be from wind or solar, and 5 percent that can be from other resources.
MO In November 2008, Missouri voters approved Proposition C, which mandates a 2-percent renewable energy requirement in 2011, increasing incrementally to 15 percent of generation in 2021. Bonus credits are given to renewable generation within the State.
MT HB 681, approved in April 2007, expanded the State RPS provisions to all suppliers. Initially the law covered only regulated utilities. A 15-percent share of sales must be renewable by 2015. The State operates a renewable energy credit market.
NV The State has an escalating renewable target, established in 1997 and most recently revised in 2009 by SB 358, which mandates a 25-percent renewable generation share of sales by 2025. Up to one-quarter of the 25-percent share may be met through efficiency measures. There is also a minimum requirement for photovoltaic systems, which receive bonus credits.
(continued on next page)
California
The State codified its RPS of 33 percent by 2020 through the passage of SBX1-2, the California Renewable Energy Resources Act [28]. The California Public Utilities Commission and California Energy Commission are the primary implementing authorities for SBX1-2, which builds on California’s prior RPS mandate for 20 percent of electricity sales by 2010 [29]. SBX1-2 extends the application of the RPS to local publicly owned utilities, which had greater flexibility under the State’s previous RPS mandate. SBX1-2 supersedes the SBX1-2009 Executive Order that charged the CARB with implementing the 33-percent RPS; however, CARB does retain an enforcement role over publicly owned local utilities. Because implementing regulations were not available at the time the AEO2012 projections were being developed, the 2009 Executive Order was modeled. Although the targets specified in the two programs are similar, enforcement mechanisms may differ significantly.
Connecticut
Public Act 11-80 adds a solar-specific component to the existing RPS target, which requires that renewables should account for 27 percent of sales by 2020 [30]. The State’s Clean Energy Finance and Investment Authority is tasked with creating an investment program that will result in the procurement of 30 megawatts of residential solar installations that can be counted toward the general RPS requirement.
Table 4. Renewable portfolio standards in the 30 States with current mandates (continued)
State Program mandate
NH HB 873, passed in May 2007, legislated that 23.8 percent of electricity sales must be met by renewables in 2025.
Compliance penalties vary by generation type.
NJ In 2006, the New Jersey Board of Public Utilities revised the State RPS to increase the renewable generation target to 22.5 percent of sales by 2021, with interim targets. Assembly Bill (AB) 3520, enacted in 2010, further refines the mandate to include 5,300 gigawatthours of solar generation by 2026, with the percentage-based RPS component to reach 20.38 percent by 2021, not including the required solar generation. SB 2036 has a specific provision for offshore wind, with a goal to develop 1,100 megawatts of capacity.
NM SB 418, passed in March 2007, directs investor-owned utilities to derive 20 percent of their sales from renewable generation by 2020. The renewable portfolio must consist of diversified technologies, with wind and solar each accounting for 20 percent of the target. There is a separate standard of 10 percent by 2020 for cooperatives.
NY The Public Service Commission issued updated RPS rules in January 2010 that expand the program to a 30-percent requirement by 2015. There is also a separate end-use standard. The program is administered and funded by the State.
NC In 2007, SB 3 created an RPS of 12.5 percent by 2021 for investor-owned utilities. There is also a 10-percent requirement by 2018 for cooperatives and municipals. Through 2018, 25 percent of the target may be met through efficiency standards, increasing to 40 percent in later years. Verifiable electricity demand reduction can also satisfy the RPS, with no upper limit.
OH SB 221, passed in May 2008, requires 25 percent of electricity sales to be produced from alternative energy resources by 2025, including low-carbon and renewable technologies. One-half of the target must come from renewable sources.
Municipals and cooperatives are exempt.
OR SB 838, signed into law in June 2007, requires that renewable generation account for 25 percent of sales by 2025 for large utilities, and 5 to 10 percent of sales by 2025 for smaller utilities. Renewable electricity on line after 1995 is considered eligible.
PA The Alternative Energy Portfolio Standard, signed into law in November 2004, has an 18-percent requirement by 2020.
Most of the qualifying generation must be renewable, but there is also a provision that allows waste coal resources to receive credits.
RI The Renewable Energy Standard was signed into law in 2004. The program requires that 16 percent of total sales be renewable by 2019. The interim program targets escalate more rapidly in later years. If the target is not met, a generator must pay an alternative compliance penalty. State utilities also must procure 90 megawatts of new renewable capacity, including 3 megawatts of solar, by 2014.
TX SB 20, passed in August 2005, strengthened the State RPS by mandating 5,880 megawatts of renewable capacity by 2015.
There is also a target of 500 megawatts of renewable capacity other than wind.
WA In November 2006, Washington voters approved Initiative 937, which specifies that 15 percent of sales from the State’s largest generators must come from renewable sources by 2020. There is an administrative penalty of 5 cents per kilowatthour for noncompliance. Generation from any otherwise qualified facility that came on line after 1999 is eligible.
WV HB 103, passed in June 2009, established a requirement that 25 percent of electricity sales must come from alternative energy resources by 2025. Alternative energy was defined to include various renewables, along with several different fossil energy technologies.
WI SB 459, passed in March 2006, strengthened the State RPS with a requirement that, by 2015, 10 percent of electricity sales must be generated from renewable resources, and that the renewable share of total generation must be at least 6 percentage points above the average renewable share from 2001 to 2003.
Delaware
Delaware enacted SB 124, which extends the list of sources eligible to meet the State’s RPS to include fuel cells under certain conditions [31]. Fuel cell projects that can be fueled by renewable sources and that are owned or operated by qualified providers can apply to earn renewable energy credits and, on a limited basis, solar renewable energy credits.
Illinois
With the enactment of SB 1652, the State augmented its existing RPS to include a distributed generation requirement [32]. SB 1652 requires that 1 percent of the renewable target (25 percent of sales from renewable sources by 2025 for large utilities) be fulfilled by distributed generation by mid-2015, with incremental targets beginning to take effect in 2013.
Maryland
The State enacted two pieces of legislation that allow for additional flexibility in meeting the existing RPS target of 20 percent of sales from renewable generation by 2022. SB 690 extends the designation of waste-to-energy facilities as qualifying to meet the 20-percent target beyond 2022, rather than sunsetting [33]. In addition, SB 717 specifies that solar water heating systems may also fulfill the solar set-aside requirement, which requires that solar sources account for 2 percent of electricity sales by 2022 [34].
North Carolina
North Carolina enacted SB 75, which allows reductions in electricity demand to qualify toward meeting the State’s existing renewable energy and energy efficiency portfolio standard. The legislation defines electricity demand reduction as a “measureable reduction in the electricity demand of a retail electric customer that is voluntary, under the real-time control of both the electric power supplier and the retail electric customer, and measured in real time, using two-way communications devices that communicate on the basis of standards” [35]. There is no upper limit on the portion of the RPS requirement that can be met by electricity demand reduction.