Renewable Energy Standards
Renewable energy standards are requirements imposed on electric utilities by the state legislature or utility regulatory commission in which a specified fraction of electricity sold at retail must come from renewable energy technologies. Five of the seven states in which WRA works now have renewable energy standards as summarized in the table below, WRA has been active in developing and implementing these standards in Arizona, New Mexico, Colorado, and Nevada.
WRA, Renewable Energy on the Web
WRA Energy Program Director John Nielsen discusses renewable energy standards in this YouTube video.
Eligible resources are usually required to be new (i.e., built after a specified date) and typically include:
- wind energy
- geothermal energy
- various technologies for using solar energy such as photovoltaics or solar thermal power plants
- biomass projects such as those using landfill gas, agricultural waste, or wood product manufacturing waste, and
- small hydropower projects.
Renewable energy standards achieve multiple objectives:
- They foster utilities’ understanding of how renewable energy can fit into their generation and transmission systems and have led to improved processes for acquiring renewable resources and improved understanding of the costs of renewable energy.
- They create a hedge against high fossil fuel prices. Renewable energy generally displaces the most expensive fossil fuel generation that would otherwise be running, often natural gas-fired power plants. Typically, renewable energy is priced at a fixed or stable rate in contrast to natural gas whose price has been very volatile and has exhibited a general upward trend in recent years.
- They reduce air emissions from power generation. Renewable resources generally have little or no air emissions in contrast to using coal or natural gas. Of particular importance is the emission of carbon dioxide which contributes to global climate change. Fossil fuel plants emit large quantities of carbon dioxide while renewable energy emits almost none. Consequently, the costs of complying with future carbon dioxide regulations will fall on conventional resources but not on renewable resources.
- They encourage technological improvements. For example, utilities are working with developers to design and install concentrating solar power projects with thermal storage. These projects can have several hundred MW of generation capacity each and can produce electricity during hours when the sun is not shining.
- They may encourage distributed generation (projects located at consumer premises) which reduces the reliance on long distance transmission of electricity from the generator to the users and may reduce the need for additional distribution system capacity in some locations.
- They accelerate the development of mature markets in renewable energy. Problems in resource acquisition, such as delays or cancellations of proposed projects or financial difficulties of suppliers, must be reduced in order for renewable energy to better compete against conventional resources. As buyers and sellers gain more experience, these types of problems may diminish.
Some states have singled out specific objectives for the development of renewable energy. For example, Arizona has set aside a large chunk of the standard for distributed resources. Montana and Colorado encourage community renewable energy projects (small, locally owned projects) by requiring a specified amount of generation capacity from such projects (Montana) or by counting each kilowatt-hour (kWh) from community based projects as 1.5 kWh toward meeting the standard (Colorado). Nevada’s standard allows some of the requirements to be met with energy efficiency.
Renewable energy standards can be dynamic. In 2007, both New Mexico and Colorado increased their standards to the levels shown in the table from smaller standards. Standards applied to rural electric cooperatives tend to be smaller than those applied to investor-owned utilities.
Some states have applied cost caps on the effect of their standards on utility rates. However, as the renewable energy market develops, WRA is finding that many renewable resources are cost competitive with conventional generation.
WRA will remain active in the Interior West to ensure that renewable energy standards are reasonably implemented and that significant amounts of renewable energy are substituted for fossil-fueled power generation.
Summary of Renewable Energy Standards in the Interior West
State |
Target* |
Remarks |
AZ |
15% by 2025 |
|
CO |
20% by 2020 |
|
MT |
15% by 2015 |
|
NV |
20% by 2015 |
|
NM |
20% by 2020 |
|
UT |
No RES |
|
WY |
No RES |
|
* generally target applies to investor-owned utilities.