State Policies Provide Critical Support for Renewable Electricity

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Growth in renewable energy in the U.S. over the past decade has been propelled by a number of forces, including rising fossil fuel prices, environmental concerns, and policy support at the state and federal levels. In this article, we review and discuss what are arguably the two most important types of state policies for supporting electricity generation from geothermal and other forms of renewable energy: renewables portfolio standards and utility integrated resource planning requirements. Within the Western U.S., where the vast majority of the nation's readily-accessible geothermal resource potential resides, these two types of state policies have been critical to ... continued below

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Barbose, Galen; Wiser, Ryan & Bolinger, Mark July 15, 2008.

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Growth in renewable energy in the U.S. over the past decade has been propelled by a number of forces, including rising fossil fuel prices, environmental concerns, and policy support at the state and federal levels. In this article, we review and discuss what are arguably the two most important types of state policies for supporting electricity generation from geothermal and other forms of renewable energy: renewables portfolio standards and utility integrated resource planning requirements. Within the Western U.S., where the vast majority of the nation's readily-accessible geothermal resource potential resides, these two types of state policies have been critical to the growth of renewable energy, and both promise to continue to play a fundamental role for the foreseeable future. In its essence, a renewables portfolio standard (RPS) requires utilities and other retail electricity suppliers to produce or purchase a minimum quantity or percentage of their generation supply from renewable resources. RPS purchase obligations generally increase over time, and retail suppliers typically must demonstrate compliance on an annual basis. Mandatory RPS policies are backed by various types of compliance enforcement mechanisms, although most states have incorporated some type of cost-containment provision, such as a cost cap or a cap on retail rate impacts, which could conceivably allow utilities to avoid (full) compliance with their RPS target. Currently, 27 states and the District of Columbia have mandatory RPS requirements. Within the eleven states of the contiguous Western U.S., all but three (Idaho, Utah, and Wyoming) now have a mandatory RPS legislation (Utah has a more-voluntary renewable energy goal), covering almost 80% of retail electricity sales in the region. Although many of these state policies have only recently been established, their impact is already evident: almost 1800 MW of new renewable capacity has been installed in Western states following the implementation of RPS policies. To date, wind energy has been the primary beneficiary of state RPS policies, representing approximately 83% of RPS-driven renewable capacity growth in the West through 2007. Geothermal energy occupies a distant second place, providing 7% of RPS-driven new renewable capacity in the West since the late 1990s, though geothermal's contribution on an energy (MWh) basis is higher. Looking to the future, a sizable quantity of renewable capacity beyond pre-RPS levels will be needed to meet state RPS mandates: about 25,000 MW by 2025 within the Western U.S. Geothermal energy is beginning to provide an increasingly significant contribution, as evidenced by the spate of new projects recently announced to meet state RPS requirements. Most of this activity has been driven by the RPS policies in California and Nevada, where the Geothermal Energy Association has identified 47 new geothermal projects, totaling more than 2,100 MW, in various stages of development. Additional geothermal projects in Arizona, New Mexico, Oregon, and Washington are also under development to meet those states RPS requirements. The other major state policy driver for renewable electricity growth, particularly in the West, is integrated resource planning (IRP). IRP was first formalized as a practice in the 1980s, but the practice was suspended in some states as electricity restructuring efforts began. A renewed interest in IRP has emerged in the past several years, however, with several Western states (California, Montana, and New Mexico) reestablishing IRP and others developing new rules to strengthen their existing processes. In its barest form, IRP simply requires that utilities periodically submit long-term resource procurement plans in which they evaluate alternative strategies for meeting their resource needs over the following ten to twenty years. However, many states have developed specific requirements for the IRP process that directly or indirectly support renewable energy. The most general of these is an explicit requirement that utilities evaluate renewables, and that they do so on an 'equivalent' or 'comparable' basis to conventional supply-side generation options. Many states also require that utilities include various types of risk analyses within their IRP. For example, utilities are often required to evaluate fuel price risk within their resource plan, which can reveal the value of renewables as a hedge against rising and volatile fuel prices. Of particular importance for supporting renewable energy is the increasingly common requirement that utilities evaluate the potential costs and risks associated with future greenhouse gas regulations. Virtually all of the major Western utilities that prepare IRPs incorporated future carbon dioxide regulations in their analyses of alternative resource strategies in their most recent resource plans.

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  • Journal Name: Geothermal Tomorrow

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  • Report No.: LBNL-2072E
  • Grant Number: DE-AC02-05CH11231
  • Office of Scientific & Technical Information Report Number: 962956
  • Archival Resource Key: ark:/67531/metadc928478

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  • July 15, 2008

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  • Nov. 13, 2016, 7:26 p.m.

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  • Jan. 4, 2017, 6:03 p.m.

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Barbose, Galen; Wiser, Ryan & Bolinger, Mark. State Policies Provide Critical Support for Renewable Electricity, article, July 15, 2008; Berkeley, California. (digital.library.unt.edu/ark:/67531/metadc928478/: accessed November 19, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.