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Renewable Portfolio Standards Produce Big Savings

A study by two national labs finds that benefits from renewable energy requirements added up to billions of dollars in 2013

Projects like this wind farm in Mars Hill, Maine, are often the result of renewable portfolio standards adopted by state regulators. They result in lower greenhouse gas emissions and reductions in other air pollutants, a new study finds, and together are worth billions of dollars in benefits.

Opponents may complain that state requirements for renewable energy drive up costs for consumers, but a study by two national laboratories says that renewable portfolio standards (RPS) yielded benefits of $7.4 billion in 2013, far outweighing earlier estimates of the cost of complying with the rules.

The study, A Retrospective Analysis of the Benefits and Impacts of U.S. Renewable Portfolio Standards, was published this month by the National Renewable Energy Laboratory and the Lawrence Berkeley National Laboratory.

In it, researchers estimated benefits of $2.2 billion from lower greenhouse gas emissions and another $5.2 billion from other reductions in air pollutions. Water use was lower as well, with national water withdrawals reduced by 830 billion gallons and water consumption by power plants burning fossil fuels lowered by 27 billion gallons.

Twenty-nine states have RPS programs requiring a certain percentage of the electricity utilities sell to come from renewable sources. Greentech Media reported that an earlier study found that consumers paid an extra $1 billion for electricity between the years 2010 and 2013 because of PRS.

In this new report, researchers said that renewable energy can replace electricity supplied by gas-fired power plans, pushing down the price of natural gas, and lower the wholesale cost of electricity. Taken together, these factors saved consumers a total of between $2.5 billion and $4.9 billion.

In addition, the report says that renewable energy policies supported 200,000 jobs in 2013, concentrated mostly in California where a number of utility-scale photovoltaic installations were going up that year.

Some uncertainties exist

In a press release, the Berkeley Lab said that benefits from greenhouse gas reductions would range from $700 million to $6.3 billion, “reflecting differences in underlying estimates of potential damage caused by climate change.” In the same way, reductions in air pollution were estimated to be worth $2.6 billion to $9.9 billion, due to differences in certain assumptions — in this case, how premature mortality rates should be estimated.

“Our goal was to estimate the magnitude of RPS benefits and impacts at a national level, using established, consistent methodologies, while recognizing that states could perform their own more detailed assessments,” Jenny Heeter of NREL, one of the authors, said.

A 2014 study concentrated on the costs of RPS rules and noted the need for followup work to understand the full benefits, impacts, and costs of renewable portfolio requirements. Based on the new work, reducing greenhouse gas emissions equated to benefits of 0.7 to 6.4 cents per kilowatt hour of renewable energy; benefits of lower air pollution amounted to 2.6 cents to 10.1 cents per kWh.

The consumer savings in wholesale electricity markets was 0 to 1.2 cents per kWh; natural gas price reductions represented another 1.3 to 3.7 cents per kWh, the authors said.

Many benefits, however, are regional. For example, lower air pollution is mainly associated with lower levels of sulfur dioxide emissions from coal-fired plants concentrated mainly in the Mid-Atlantic, Great Lakes, Northeast, and Texas. California and Texas were the biggest beneficiaries of reduced water use.

The labs said that many states adopted their RPS programs in the late 1990s and 2000s. They will expire by the end of this decade. “As states consider revising renewable portfolio standard programs or developing new ones, careful assessments of the costs, benefits, and other impacts of existing policies will be critical,” a joint statement said.


  1. vensonata | | #1

    Does anybody know
    Does anybody know if the 30% tax rebate for home solar applies to the Tesla home battery? If it does, it could be a game changer. Are there any state rebates that would also include the battery?

  2. Expert Member
    Dana Dorsett | | #2

    Batteries not included...
    ... and ground source heat pumps didn't make it into 30% tax credit extension either, much to the disappointment of many in that industry.

    If I were going to guess, batteries still have a bright future going forward even without tax credit subsidy, whereas the cost of ground source heat pump systems is harder to rationalize against tighter-better houses + PV + lower cost air source heat pumps in high cost regions.

    So far no states I know of are subsidizing behind-the-meter batteries, but it wouldn't surprise me if that came to pass in California in the next couple of years. For now the biggest market for rate-payer side batteries are for commercial ratepayers that are assessed demand charges, a charge based on the highest 15-minute or half-hour use during the billing period, and often the highest single line-item on the bill. Operations with spiky energy use patterns get hammered on demand charges, but those spikes can be smoothed out considerably with batteries, saving quite a bit on their power bill (saving wear & tear on the grid infrastructure too.)

    As states cut back on net metering for small scale PV, that too would drive the battery market. If regulators and utilities were to pay battery owners for some amount of control over behind-the-meter battery resource, that would drive the battery market by quite a bit, since the utility could offset peaking power use by quite a bit, and eliminate it for services such as frequency control, at a lower overall cost than current standard practices. (In most states this would require changes in regulations about who gets to bid into the ancillary services markets.)

  3. Tim C | | #3

    Don't forget the Power Factor
    In addition to demand charges, there's also power factor, which also places additional load (and efficiency losses) on transmission infrastructure. Residential ratepayers don't get (directly) charged for it, but some commercial/industrial users do (and it can be cost effective for them to install dedicated equipment to reduce it). An inverter with spare capacity can perform power factor compensation for pretty much free

  4. vensonata | | #4

    reply to Dana
    Thanks for the info. What about package installations where the battery goes in the with PV system? Any hope there? If not now though, I have a feeling that rebates etc are coming for stationary batteries. They are here for EV's and every other cleantech so I would be surprised if home storage was left out in the cold in the near future.

  5. Expert Member
    Dana Dorsett | | #5

    Reply to Tim & Ven
    Tim: Commercial power factor correction equipment has been around for quite awhile in the commercial & industrial world. I'm not sure if smaller inverters are normally set up to deliver power factor correction, but it's quite possible that they all do that anyway ( particularly transformerless inverters). I've never looked into it.

    ven: I strongly suspect that unless there's an argument that the behind the meter battery could not be separated from the PV system for it to function, the battery portion would be dis-allowed. If any company is on top of the answers to that question it would be Solar City, all of whose PV systems installed in the past year or so are battery-capable, even if the batteries aren't installed (or explicitly dis-allowed by local regulation.) They fought the good legal fight in California to make it legal to install behind-the meter batteries with PV a few years ago, which required new regulation, and software/hardware that would prevent owners charging the battery using off-peak power then selling back to the grid at peak-retail, etc. (Even though that would be GOOD for both the grid, and peak-power pricing, since it lowers the grid-peak draws.)

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