Renewable portfolio standard

Subscribe to Renewable portfolio standard via RSS

Clean energy projects have tremendous potential to create jobs and grow the economy and help the nation meet its energy needs in a more sustainable way, but regulatory and legal barriers to energy projects have substantially reduced job creation and economic growth while impeding efforts to bring new energy generation facilities on line, according to a recent economic study commissioned by the US Chamber of Commerce as part of its Project No Project.  The report, entitled, “Progress Denied: A Study on the Potential Economic Impact of Permitting Challenges Facing Proposed Energy Projects,” (PDF) found that legal challenges, threats of legal challenge, and regulatory hurdles caused the delay or cancellation of 333 energy projects which, if constructed and operated for twenty years, would have potential economic and employment benefits of  a projected $3.4 trillion.  These estimated benefits would include $1.4 trillion in employment earnings and one million or more jobs per year.

By Michael J. Gergen, Jared W. Johnson, and Shannon D. Torgerson

In an order issued December 16, 2010, the Federal Energy Regulatory Commission (FERC) conditionally accepted the California Independent System Operator Corporation’s (CAISO) proposed revisions to its Tariff (Docket No. ER10-1401) to implement a revised transmission planning process (RTPP) for the CAISO-controlled grid.  The CAISO had sought FERC approval of the RTPP proposal to facilitate the development of the electric transmission infrastructure necessary for California utilities to obtain 33% of their total energy supplies from renewable resources by December 31, 2020, as mandated under the California Air Resources Board (CARB) Renewable Electricity Standard and as proposed in legislation to modify the state’s Renewables Portfolio Standard (RPS).   

The RTPP introduces a three-phase approach to try to streamline identification of needed electric transmission projects for the CAISO-controlled grid, and clarifies the limited categories of transmission facilities in California that may be built and owned by non-incumbent transmission developers.

By David B. Amerikaner, Marc T. Campopiano, and David A. Goldberg 

In a legislative effort that could impose a significant new requirement on electric utilities that sell in California and have important ramifications on power producers, electrical infrastructure, and energy markets throughout western states, the California Senate voted on February 24, 2011 to approve Senate Bill SBX1 2 to increase California’s existing Renewables Portfolio Standard (RPS).  Authored by Sen. Joe Simitian of Palo Alto, the bill would  require utilities to obtain 33% of their total energy supplies from renewable sources by December 31, 2020.  The current RPS sets a 20% renewable energy mandate by 2010.  Statewide compliance (PDF) with the RPS reached 18% by the end of 2010 and is expected to surpass 20% by 2012.  Senate Bill SBX1 2 still needs to pass the state Assembly.  Governor Jerry Brown has previously expressed his support for raising the RPS.

The California Public Utilities Commission has estimated (PDF) that a 33% by 2020 RPS will require almost a tripling of available renewable electricity supplies, potentially requiring $115 billion in new infrastructure investment and at least seven major new transmission lines.  

On January 14, 2011, the California Public Utilities Commission (CPUC) issued Decision 11-01-025 lifting the stay on its earlier Decision 10-03-021 from March 2010 authorizing the use of unbundled renewable energy credits (RECs), known as Tradable Renewable Energy Credits (TRECs), as an additional compliance tool for the California Renewables Portfolio Standard Program (RPS program).

TRECs are RECs that can be traded separately from the generated energy underlying them, and do not have to be bundled in the same transaction with their underlying renewable energy.  As determined by the CPUC, procurement by California utilities of renewable resources that do not have their first point of interconnection with a California balancing authority will generally be deemed TRECs (not a bundled transaction of RECs and their underlying renewable energy).

On September 23, 2010, the California Air Resources Board (CARB) unanimously adopted the “Renewable Electricity Standard” (RES) to require most retail sellers of electricity to procure 33 percent of their electricity from eligible renewable resources by 2020. Established in Executive Order S-21-09, the RES is an independent requirement from California’s existing Renewables Portfolio Standard (RPS), which imposes a 20 percent renewable energy procurement requirement by 2010.

Both the RPS and RES apply to large and small investor-owned utilities (PG&E, SCE and SDG&E), electric service providers and community choice aggregators. However, the RES applies to a broader range of regulated entities than the RPS, most notably, publicly-owned utilities, such as LADWP and SMUD.  

According to the California Public Utilities Commission (CPUC), the “magnitude of the infrastructure that California will have to plan, permit, procure, develop and integrate in the next ten years is immense and unprecedented,” potentially requiring $115 billion in new infrastructure investment and at least seven major new transmission lines. However, a CARB Staff Report explained that the RES’s enhanced flexibility compared to the RPS — including eliminating delivery requirements for out-of-state renewable resources and allowing an unlimited use of “unbundled” or “tradable” renewable energy credits (TRECs) — is expected to reduce costs and facilitate compliance.