Renewable Electricity Standards
Trailblazing the renewable energy frontier, in 1983 Iowa became the first state to implement a renewable electricity standard. Though modest – the RES only required the state’s two biggest utilities to procure 105 megawatts of renewable generation capacity – the policy positioned Iowa to become a renewable energy leader. Fast forward to today and you will find that 29 states and the District of Columbia have RES policies in place.
A renewable electricity standard (RES), also known as a renewable portfolio standard (RPS), is a policy that sets hard targets for renewable energy in the near- and long-term to diversify our electricity supply, spur local economic development, reduce pollution, cut water consumption and save consumers money. Basically, an RPS requires electric utilities to gradually increase the amount of renewable energy that they deliver to customers. By design, an RPS does not hand-pick a technology; rather all renewables are forced to compete, incentivizing cost reductions and efficiency gains. As a result, RPS policies encourage the growth of additional homegrown sources that diversify our energy portfoliostate and help hold down electric rates and save ratepayers money, all while boosting private investments for state economies.
Today, 29 states have renewable electricity standard mandates, while a further seven states have non-binding renewable energy goals. States with mandatory RES policies contain approximately 50% for the total U.S. electricity supply and will drive the development of more than 87,000 MW of new renewable generating capacity through 2025 - enough electricity to meet the annual electricity needs of more than 24 million American homes. Historically, compliance with RES requirements has been good. According to the Lawrence Berkerly National Laboratory (LBNL) over 96% of RES requirementswere met through 2010, with many states, including Colorado, Kansas, Minnesota, Oregon, and Washington, well ahead of schedule.
Most importantly, consumers are not experiencing substantially higher electric bills as the result of the RES policies. In fact, a 2010 LBNL study, examining 14 states with RES policies in place, found that consumers in only one state experiences electricity rate increases above 1.6%. In many areas, adding renewable electricity is saving ratepayers money:
- Xcel, Colorado’s largest utility, says that the state’s RPS will ultimately save consumers as much as $100 million over 25 years.
- A Michigan Public Service Commission (MPSC) report found that Michigan’s RPS resulted in $100 million in investment in the state.
- A 2010 New England Wind Integration Study found that wholesale electricity prices would decline anywhere from $5 per MWh to $11 per MWh if the region generated 20% of its power from wind, depending on which sites were used for wind production.
Finally, RES policies are positively impacting the American economy. A recent report from the Union of Concerned Scientists identified the following economic benefits provided by RES:
- The renewable energy industry supports American jobs. More than 119,000 people worked in solar-related industries in 2012, while wind energy development employed 75,000 full-time workers across the U.S., including 30,000 jobs at manufacturing facilities throughout the country.
- Renewable energy development promotes investments in the U.S. economy. In 2012, wind power made up 42 percent of all new U.S. electric capacity additions, representing a $25 billion investment in the U.S. economy.
- Renewable energy development outperforms fossil fuels in two important ways when it comes to driving job growth: 1) Renewable energy development is relatively labor intensive, so it creates more jobs per dollar invested than fossil fuel resources and 2) Installing renewable energy facilities uses primarily local workers, so investment dollars are kept in local communities.
- Local landowners benefit from renewable energy development. When wind turbines are installed on privately owned land, the land owners typically receive payments in the form of lease, royalty, or right-of-way payments. These payments can be an important source of income for rural families.
- Renewable energy projects pay property and income taxes that help support states and local communities. For example, wind projects in Iowa, which now generates more than 20 percent of its electricity with wind, provided more than $19.5 million in annual property tax payments to state and local governments in 2011.
The AWEA State RPS Market Assessment 2013 quantifies RPS compliance to-date and measure remaining RPS demand moving forward provides wind industry participants with a better understanding of the magnitude of market opportunity.
This map from the Database of State Incentives for Renewables and Efficiency breaksdown RES policies by state
This report from the Union of Concerned Scientists examines the economic impact of RES policies, concluding RES provide economic benefit at 'little or no' cost
This presentation delivered at the 2012 National Summit on RPS summarizes RES policy experience to date