POWER November 2013 - 22

Beyond the Renewable
Portfolio Standard
Thomas Overton
R
enewable portfolio standards (RPSs) have been remarkably
successful in boosting renewable generation, especially in
the western U.S., where most states enjoy large areas of
prime wind and solar potential (and, to a lesser extent, geothermal).
Of the 11 western states, eight (Arizona, California, Colorado,
Nevada, New Mexico, Oregon, Montana, and Washington)
have RPS mandates. Utah has a voluntary standard, while Idaho
and Wyoming have no RPS. The mandates range from 15% (Arizona
and Montana) up to 33% (California). Most have deadlines
of either 2020 or 2025 (Montana's is in 2015).
Most discussion surrounding RPSs in the U.S. has focused on
the resources and regulations that are necessary to meet them.
Some experts, however, have begun thinking about what happens
after these standards are met and the deadlines have passed.
There are good reasons to look beyond the current RPS approach.
In several western states, such as Arizona, momentum
for boosting RPSs beyond their current levels has stalled, and
pressure has even begun in some quarters for reversal (see " The
Lurking Threat to State RPSs " in the August issue of POWER).
But there is another reason to think that the future of RPSs in
the western U.S. is likely not to be continued ratcheting up of
state-level mandates but rather a broader regional solution. The
problem is that meeting the current RPSs in several states, most
notably California, will require developing most or all of the easily
exploited solar and wind resources in those areas, and going
beyond existing mandates will require developing more expensive,
less-efficient resources, or facilitating large-scale imports
from elsewhere in the West.
This dilemma is the subject of a report from the National Renewable
Energy Laboratory (NREL), " Beyond Renewable Portfolio
Standards: An Assessment of Regional Supply and Demand Conditions
Affecting the Future of Renewable Energy in the West, "
published in August. NREL began by assuming that all RPSs in the
western U.S. would be met by 2025 and calculated what prime
renewable potential was likely to be unexploited after that. (It
defined " prime-quality " resources as wind with annual capacity
factors of at least 40%, solar with direct normal insolation of at
least 7.5 kWh/m2
/day, and all geothermal.)
The study had several notable findings:
■ Western states will collectively need 127 TWh to 149 TWh of
renewable generation annually to meet current RPSs; California
accounts for nearly 60% of this.
■ Colorado, Montana, Nevada, and New Mexico will have surpluses
of prime renewable resources after meeting their RPSs.
Wyoming and Idaho will also have large undeveloped prime
resources.
■ California, Oregon, Utah, and Washington have already devel22
oped
most or all of their prime in-state resources and will need
all of it and more to meet RPS-related demand.
What this suggests, the study says, is that future renewable development
in the West is likely to involve transmission corridors
from prime resource areas inland to demand centers on the West
Coast. The authors then worked from current cost projections for
generation and transmission to determine how competitive this
imported power would be compared to new combined cycle gas
turbine generation after 2025. Notably, the study assumed that
the production tax credit and investment tax credit would not
be extended beyond their current expiration dates. It also based
competitiveness on a hypothetical doubling of current transmission
costs in order to maintain a conservative approach.
While geothermal was not competitive with gas under any of
the transmission scenarios, the results were different for wind and
some solar. Wind from Wyoming and New Mexico to California and
Arizona-and from Montana and Wyoming to Oregon, Washington,
and California-was competitive with gas, again, without any assumed
subsidies. The same was true for solar from Nevada to Arizona
and California. Though transmission from Wyoming to coastal
demand centers would be expensive given the long distances, the
state's wind potential is high enough to keep it competitive. Indeed,
the report found that Wyoming wind could generate 37.3
TWh annually at a delivered cost of $69/MWh to $81/MWh purely
by building out those areas with a 40% capacity factor or better.
The figures for New Mexico were not quite as good, but the
higher generation cost was offset by lower transmission costs due
to closer proximity to Southern California. (The picture was not
so rosy for Colorado; its large wind surplus would be handicapped
by prohibitively high transmission costs over the Rockies.)
What this study suggests is that future renewable resource
planning may need to focus less on fixed generation numbers and
more on how to get the generation where it needs to go. That will
also require a move beyond state-level planning to regional and
federal cooperation in facilitating large-scale interstate transmission-always
a complicated prospect.
How all this transmission would be paid for is not clear, especially
given that the large majority of renewable generation in
the West operates on a merchant basis, with costs being recovered
via power purchase agreement rather than a rate base. That
suggests that transmission would not be built without market
signals favoring renewable generation over other sources. That
may come from clear cost competitiveness, if the NREL study is
accurate, but history suggests that regulatory incentives may be
necessary along the way. ■
-Thomas W. Overton, JD is POWER's gas technology editor.
Follow him on Twitter @thomas_overton and @POWERmagazine.
www.powermag.com
POWER | November 2013
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POWER November 2013

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