Highlights: As little as 6% eligible renewables would be required to meet the 2030 target of "30%." Don’t be fooled by the “30%” headline number.
This summary is for folks who want to know the details of the RPS bill proposed by Sen Udall without reading the 25 page bill. This is a rough draft with the meat only (format and verbiage will be updated). Analysis and opinion may be added later.
Renewable portfolio standards—is the car a Daimler or Datsun?
A renewable portfolio standard is designed to increase renewable generation construction volume by "requiring" certain parties (usually investor-owned electric utilities) to buy minimum amounts of certain types of renewable power. However, just as a Daimler and a Datsun are both cars, not all RPS's are created equal. News coverage in the general press often has little more than the headline percentage of renewables "required." The headline number doesn't mean much unless you know the details:
Who is required to buy?
How much?
Of what?
By when?
What if they don't?
In Udall's version of a national RPS:
Who?
"Retail electricity suppliers" meaning some people selling power to end users. Municipal utilities, public power districts, co-ops, and small sellers (including some investor owned utilities, with less than ~114MW average load) would be exempt. Some exempt parties could opt-in at their option. Note that about 27% of end use power in the U.S. is sold by public and co-op sellers and an additional fraction is sold by IOU's and retail marketers which are below the size standard.
How much?
Percent of Sales (Usage) not Generation:
A rising percentage each year through 2030 (7.5 to 30%) of some kWh end use (not for resale) sales(not generation or purchases) by that provider. Using sales means system losses and plant use are excluded from the denominator, which means all of the requirements are about 15% (not percentage points) lower as a share of kWhs generated (that's the difference between 30% headline and ~26% of power generated.
Not all sales are included (Hydro and MSW Incineration):
Note that certain generation sources not allowed for use in the numerator ARE deducted from the denominator, effectively resulting in partial renewable credit. This includes:most hydro generation, and municipal solid waste incinerators(0.3% of US kWhs).
You can think of this as allowing a deduction from income prior to tax rather than a tax credit for included renewables. The amount of partial credit for these is effectively whatever the RPS percentage is for that year. 100% of power sold from these sources would have the same effect in law as 30% solar in 2030. This makes about another 7% difference in the denominator, so the difference between 30% headline and ~24% of generation in 2030.
Some sales are included that are not from fossil sources:
Nuclear, some industrial/commercial biomass, and some solid waste incineration. These are policy choices that I am not seeing spelled out but are conspicuous by their absence (meaning continued presence in the denominator).
Double and triple credits are provided for certain renewable locations:
This theoretically means the difference between a headline value of 30% renewables and just 6% of generation required to be from eligible renewables (all triple credits, losses and hydro not included in denominator, no opt-in by exempt power retailers).
Of what: Which power sources count as renewable for purposes of the bill?
"Solar, wind, ocean, tidal, geothermal energy, biomass, landfill gas, incremental hydropower, or hydrokinetic energy."
Hydro? Basically most new and existing hydropower would not count (just efficiency retrofits and capacity additions at existing hydro plants). That's understandable. The way it is written it is arguable, however, that even new conduit hydro wouldn't count, and that addition of generation at existing dams with no current generation wouldn't count. I hope I am wrong in that reading. That would be inexplicable in a law incentivizing new OTEC and tidal energy.
Biomass? There is also a good bit of verbiage about what biomass is counted and what is not, with an apparent focus on reducing incentive for logging certain public lands but possible unintended consequences for what has been one of the largest renewables sectors for decades. I have some open questions about that section too, as I suspect will Maine's Senators.
What power sources get extra credit?
Renewables on Indian land get double credit. Distributed generation co-located with customer site loads (up to 1MW) gets treble credit.
I agree strongly with incentivizing both of those things in many (not all) cases, however, I think the incentive mechanisms here are disproportionate and destructive of the overall intent of the bill.
When?: annually, ASAP, with an increasing target starting at 7.5% in 2015, increasing (in percentage points not percent) by 0.5% per year through 2018, by 1% in 2019, by 1.5% per year through 2024, and by 2% per year thereafter to 30% in 2030.
What if an individual seller doesn't source adequate renewables for a given year?
They can buy excess credits from a third party at a market rate, they can borrow against their own future credits, or they can pay a fee set at no more than the lesser of 3 cents per kWh or 2x the going market rate for buying excess credits.
What happens to the money if they pay the fee?
The Feds give it to the states to incentivize renewables production (and state funding of LIHEAP and weatherization assistance type programs).
Comments?
There are several other provisions but that hits the high points. Let me know if you have questions in comments. Don't expect instant replies, please.