An Overview of State Renewable Portfolio Standards

1. An Overview of State Renewable Portfolio Standards Colin Hagan, JD 2012 Research Associate Institute for Energy and the Environment, Vermont Law School Chagan@vermontlaw.edu 864-982-2536

2. What is an RPS? Mandate to increase the use of renewable energy resources • Also called RES, REPS, etc. • 30 States + D.C.5 States with voluntary goals • Major factor for growth in renewable energy generation Source: Union of Concerned Scientists, RPS Toolkit

3. How Does an RPS Operate? Statute sets target for retail electricity providers (IOUs, COOPs, MUNIs, etc.) Targets increase according to statutory schedule Renewable Electricity Credits (RECs) issued for each unit of electricity generated from eligible sources; obligated utilities turn in credits for compliance Enforcement through Alternative Compliance Payment, administrative fee or as condition for licensing

4. Key Elements: RPS Target Target defines electricity providers’ obligation to generate electricity from renewable energy resources EIA estimates that States will meet established targets Does the target help predict where new renewable energy capacity will be built? Source: Lawrence Berkeley National Laboratory, Oct. 2010

5. Key Elements: Eligible Resources • Defines which renewable energy resources can be used to comply with RPS. • Eligible resources by the numbers: - Wind: 30 States - Hydro: 28 States (Excluding IA, WI) - Solar: 30 States - Geothermal: 23 States (Excluding IL, IA, KS, MN, MO, NY, PA) - Biomass: 30 States - Wave/Tidal: 15 States - Landfill Gas: 26 States (Excluding MN, NV, RI, AZ) - Solid Waste: 13 States - Efficiency: 10 States • Definitions vary significantly

6. Key Elements: Eligible ResourcesUnclear Definitions Invite Litigation • NC eligible resources include “a biomass resource, including agricultural waste, animal waste, wood waste, spent pulping liquors, combustible residues, combustible liquids, combustible gases, energy crops, or landfill methane” (N.C. Gen. Stat. § 62-133.8(a)(8)). • Duke Energy seeks to register a facility that co-fires whole trees derived from primary forest harvest. Source: LBNL, 50 MW biomass facility in Burlington, VT • NC Environmental Management Commission finds that the definition “allows for a range of interpretations as to what the legislature intended to include as a biomass resource . . . .” (See NC EMC, Evaluation of Natural Resource Impacts of the Woody Biomass Industry in North Carolina, March 2010). • Conservation group challenge Duke’s request; NCUC grants Duke’s request.

7. Key Elements: Incentives States use incentives to achieve local benefits and diversify renewable resources - REC multipliers - Carveouts or set-asides Source: Lawrence Berkeley National Laboratory, Oct. 2010 • State incentives have contributed to growth of renewable energy capacity in certain areas but pose significant challenges • Constitutional challenges to some incentives for local generation

8. Punitive or persuasive? 18 States + DC have ACP, fine or PUC authority to establish Are solar ACPs sufficient to make the resource cost effective? Alternative Compliance Payment

9. Recent action in the U.S. Senate - American Clean Energy Leadership Act (S. 3813) - Clean Energy Standard Act of 2010 (S. 20) Pay attention to: - federal preemption - eligible resources - ACP could present procedural challenges - Mid-term election results will affect ability to pass in lame duck session or next year Federal RPS? Source: National Renewable Energy Laboratory, Feb. 2009