Environmental Energy Technologies Division News

Environmental Energy Technologies Division News
  • EETD News Home
  • Back Issues
  • Subscribe to EETD News
  • Print

State Renewables Portfolio Standards Drive U.S. Solar Development

Solar Panels

Researchers at the Environmental Energy Technologies Division (EETD) of Lawrence Berkeley National Laboratory (Berkeley Lab) have documented the design of and early experience with U.S. state-level renewables portfolio standard (RPS) programs designed to encourage solar energy.

According to the study, these state-level RPS programs have proven to be an important driver for solar energy deployment in the U.S., and have resulted in more than 250 megawatts (MW) of new solar capacity installed through the end of 2009. "These impacts are expected to grow considerably in coming years; however, states and utilities are likely to face a number of challenges in meeting aggressive solar energy targets," says EETD report co-author Ryan Wiser.

Currently, 29 states and the District of Columbia have enacted mandatory RPS policies that require retail electricity sellers to supply a minimum percentage or amount of their retail load with eligible forms of renewable energy. The RPS policies for 20 of these jurisdictions provide greater support to solar energy—the most common approach being a "set-aside" requiring a specific percentage of the RPS requirements to be met with solar energy or distributed generation (DG).

These policy designs are driven partly by the recognition that RPS policies have yet to yield significant renewable resource diversity, with wind energy being the dominant renewable technology installed to date. This is partly because of the attractive economics of wind energy, though this situation may change as the economics of large solar energy projects continue to improve significantly, as they have in recent years.

The study estimates that, by 2025, the solar and DG set-asides already established under existing state RPS policies will require the equivalent of 9,400 MW of solar capacity, representing roughly a six-fold increase over the amount installed at the end of 2009. New Jersey, Illinois, Arizona, and Maryland represent more than two-thirds of that total. The RPS for California, by far the largest U.S. solar market, does not include a solar set-aside and is not included in that tally, though it will continue to drive solar additions significantly over the coming years as well.

Experiences thus far in meeting RPS set-aside targets have been somewhat mixed. Of the nine states that had active solar or DG set-aside obligations in 2008, only three fully met their targets through the purchase of qualifying renewable energy or renewable energy certificates. As Wiser explains, "The difficulties that some states have already faced in meeting solar targets demonstrate the importance of policy design details to ensure that program goals are achieved."

One issue highlighted in the report is that many states cap the costs that utilities may bear in meeting RPS targets. Therefore, the amount of funding allocated to procuring solar resources in several states has been below the level necessary to meet the existing targets. Wiser adds: "As solar targets in many states rise over time, current cost caps may increasingly become binding, thereby limiting future solar capacity additions at levels below what was originally envisioned. States may be able to mitigate this potential issue by developing cost caps that are appropriately matched to their solar targets."

A second challenge identified is to encourage long-term contracting for solar energy resources, because renewable project developers often require such contracts to secure financing. Berkeley Lab co-author Galen Barbose explains: "This is a major issue in restructured electricity markets, where competitive retail electricity suppliers often have an interest in meeting their RPS requirements through short-term transactions. As documented in our study, several states have recently developed innovative approaches to supporting long-term contracts for solar energy projects."

The research was supported by funding from the U.S. Department of Energy's Office of Energy Efficiency and Renewable Energy (Solar Energy Technologies Program) and Office of Electricity Delivery and Energy Reliability (Permitting, Siting, and Analysis Division), the National Renewable Energy Laboratory, and the Clean Energy States Alliance.

 

For more information, contact:

  • Galen Barbose
  • (510) 495-2593

Additional information:

Report by Ryan Wiser, Galen Barbose, and Ed Holt, Supporting Solar Power in Renewables Portfolio Standards: Experience from the United States, may be downloaded from the Electricity Markets and Policy web site.

A PowerPoint presentation of the same title that summarizes key findings can be found here.

↑ home | ← previous article | next article →