Regulation, Solar, Sourcing Renewables, Wind  -  December 8, 2016

Study: Renewable investments are eclipsing RPS targets

The U.S. electric power industry has been investing in renewable resources well beyond states' renewable portfolio standards and targets, according to a new presentation from economists at The Brattle Group.  

The majority of what the consulting firm calls "beyond-RPS" investments have occurred in regions that offer access to low-cost wind or solar potential and have organized regional electricity markets, The Brattle Group said in announcing the release of the presentation. Additionally, the presentation suggests that large commercial and industrial corporations are becoming increasingly influential in driving green energy investments beyond what is required by RPS. 

The Cambridge, Mass.-based firm suggests that this facilitation of clean energy development by regional markets should be considered by western U.S. states as they evaluate the future of their own electric industry and its impacts on the environment. 

The presentation, available on the firm's website,  reviews a number of industry statistics and practices to show how regions with regional transmission operators, or RTOs, and independent system operators, or ISOs, have been facilitating development of renewable generation. The firm said in announcing the presentation that it reveals the following key points: 

• RTO/ISO markets lead in the growth in U.S. renewable generation. They have achieved this growth through ready-made markets for real-time energy; lower-cost integration, balancing, and congestion management over large regions that provide diversity benefits; and improved regional transmission planning and generation interconnection processes.
• About half of the U.S. renewable generation investments in the last five years have been in excess of state RPS requirements. These beyond-RPS renewable generation investments are driven by voluntary purchases by utilities, public power entities, (increasingly) commercial and industrial customers, and by merchant renewable developments with spot sales (or short-term contracts) and financial hedges. Very few arrangements take place in nonmarket regions even if those nonmarket regions are endowed with locations suitable to constructing low-cost renewable generation. 
• Looking ahead, power purchase arrangements and "green tariffs" with commercial and industrial customers are expected to grow rapidly. Many large corporate users of electricity have already committed to purchasing 60,000 MW of new renewable generation by 2025. RTO/ISO markets provide an effective platform to support this activity and facilitate the development of the resources that customers seek.
• Renewable generation investments beyond RPS, which reduce carbon dioxide emissions by displacing fossil fuel generation, are already reducing annual CO2 emissions by approximately 100 million tons per year nationwide. This corresponds to about five percent of total U.S. electric sector CO2 emissions, or twice the entire electricity sector emissions of California.

"While the successful growth of renewable generation is well documented, we were surprised that half of all renewable generation development has moved beyond RPS mandates and that most of this beyond-RPS activity is contained to RTO/ISO markets," Johannes Pfeifenberger, a Brattle principal and co-author of the presentation said in a statement.  "You may see very little of it in the adjoining non-market region even if the quality of renewable resources is just as high." 

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