A Survey of State-Level Cost and Benefit Estimates of Renewable Portfolio Standards J. Heeter1, G. Barbose2, L. Bird1, S. Weaver2, F. Flores-Espino1, K. Kuskova-Burns1, and R. Wiser2 1 National Renewable Energy Laboratory (NREL) 2 Lawrence Berkeley National Laboratory (LBNL) NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency & Renewable Energy, operated by the Alliance for Sustainable Energy, LLC, under contract DE-AC36-08GO28308. Berkeley Lab’s contributions to this report were funded by the Office of Energy Efficiency and Renewable Energy (Solar Energy Technologies Office and Strategic Programs Office) of the U.S. Department of Energy under Contract No. DE-AC02- 05CH11231. This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications. Technical Report NREL/TPNREL is a national-6A20- 61042laboratory of the U.S. Department of Energy, Office of Energy Efficiency & Renewable Energy, operated by the Alliance for Sustainable Energy, LLC. LBNL-6589E May 2014 A Survey of State-Level Cost and Benefit Estimates of Renewable Portfolio Standards J. Heeter1, G. Barbose2, L. Bird1, S. Weaver2, F. Flores-Espino1, K. Kuskova-Burns1, and 2 R. Wiser 1 National Renewable Energy Laboratory (NREL) 2 Lawrence Berkeley National Laboratory (LBNL) NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency & Renewable Energy, operated by the Alliance for Sustainable Energy, LLC, under contract DE-AC36-08GO28308. This work was supported by the Director, Office of Science, U.S. Department of Energy under Contract Number DE- AC02-05CH11231 Berkeley Lab’s contributions to this report were funded by the Office of Energy Efficiency and Renewable Energy (Solar Energy Technologies Office and Strategic Programs Office) of the U.S. Department of Energy under Contract No. DE-AC02-05CH11231. This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications. Technical Report NREL/TP-6A20-61042 LBNL-6589E May 2014 National Renewable Energy Laboratory Lawrence Berkeley National Laboratory 15013 Denver West Parkway 1 Cyclotron Road Golden, CO 80401 Berkeley, CA 94720 303-275-3000 • www.nrel.gov 510-486-4000 • www.lbl.gov NOTICE This report was prepared as an account of work sponsored by an agency of the United States government. Neither the United States government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States government or any agency thereof. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States government or any agency thereof. This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications. Available electronically at http://www.osti.gov/scitech Available for a processing fee to U.S. Department of Energy and its contractors, in paper, from: U.S. Department of Energy Office of Scientific and Technical Information P.O. Box 62 Oak Ridge, TN 37831-0062 phone: 865.576.8401 fax: 865.576.5728 email: mailto:[email protected] Available for sale to the public, in paper, from: U.S. Department of Commerce National Technical Information Service 5285 Port Royal Road Springfield, VA 22161 phone: 800.553.6847 fax: 703.605.6900 email: [email protected] online ordering: http://www.ntis.gov/help/ordermethods.aspx Printed on paper containing at least 50% wastepaper, including 10% post consumer waste. Acknowledgments The authors would like to thank the U.S. Department of Energy’s (DOE) Office of Energy Efficiency and Renewable Energy’s (EERE) Strategic Programs Office for primary funding support for this analysis. In particular, the authors are grateful to Steve Capanna and Jason Walsh of the Strategic Programs Office for their support of this project. Participation by Lawrence Berkeley National Laboratory (LBNL) was co-funded by EERE’s Solar Energy Technologies Office, and was made possible through long-standing support by the National Electricity Delivery Division of the DOE’s Office of Electricity Delivery and Energy Reliability. The authors would also like to thank the following individuals for their thoughtful review: Michael Casper and Paul McCurley, National Rural Electric Cooperative Association; Trish Fields and Malcolm Woolf, Advanced Energy Economy; Ed Holt, Ed Holt and Associates; Andrew Kell, Wisconsin Public Utilities Commission; Dwight Lamberson, New Mexico Public Regulatory Commission; Will Lent and Rick Umoff, Solar Energy Industry Association; Warren Leon, Clean Energy States Alliance; Kevin Mosier, Maryland Public Service Commission; Elizabeth Salerno, American Wind Energy Association; Virinder Singh, EDF Renewable Energy; David Smithson, Texas Public Utilities Commission; as well as Jeff Logan, David Keyser, Thomas Jenkin, Gian Porro, Robin Newmark, Bobi Garrett, and Doug Arent of the National Renewable Energy Laboratory (NREL), Andrew Mills of LBNL and Kelly Knutsen, Ookie Ma, and Rich Tusing of DOE. We also wish to thank Kendra Palmer and Scott Gossett of NREL for editorial support. iii This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications. Executive Summary More than half of U.S. states have renewable portfolio standards (RPS) in place and have collectively deployed approximately 46,000 MW of new renewable energy capacity through year-end 2012. Most of these policies have five or more years of implementation experience, enabling an assessment of their costs and benefits. Understanding RPS benefits and costs is essential for policymakers evaluating existing RPS policies, assessing the need for modifications, and considering new policies. This report surveys and summarizes existing state-level RPS cost and benefit estimates and examines the various methods used to calculate such estimates. The report relies largely upon data or results reported directly by electric utilities and state regulators. As such, the estimated costs and benefits itemized in this document do not result from the application of a standardized approach or the use of a consistent set of underlying assumptions. Because the reported values may differ from those derived through a more consistent analytical treatment, we do not provide an aggregate national estimate of RPS costs and benefits, nor do we attempt to quantify net RPS benefits at national or state levels. The report summarizes state-level RPS costs to date and considers how those costs may evolve going forward given scheduled increases in RPS targets and cost containment mechanisms incorporated into existing policies. The report also summarizes RPS benefits estimates, based on published studies for individual states, and discusses key methodological considerations. These estimates, for example, of the social value of carbon emissions reduction and the human health impacts of reduced air emissions, are based on a variety of methodologies and assumptions. In comparison to the summary of estimated RPS costs, the summary of RPS benefits is more limited, as relatively few states have undertaken detailed benefits estimates. Further, for those states that have estimated RPS benefits, most assess only a limited number of impact types; as a consequence, some types of benefits are not reflected in this report. RPS Costs Our analysis focuses specifically on the incremental cost of meeting RPS targets, i.e., the cost above and beyond what would have been incurred absent the RPS, over the 2010-2012 period. For states with restructured markets, we derive RPS compliance costs based on the cost of renewable energy certificates (RECs) and alternative compliance payments (ACPs). For traditionally regulated states, we instead rely upon RPS cost estimates reported directly by utilities or regulators within annual compliance reports or other regulatory filings (not prospective studies), and translate those estimates into a set of common metrics for comparison. The methods used by utilities and regulators to estimate incremental compliance costs vary considerably from state to state, in some cases reflecting statutory or regulatory requirements, and a number of states are currently engaged in processes to refine and standardize their approaches to RPS cost calculation. Importantly, the estimated RPS costs summarized within this report must be considered in light of what the underlying data represent and the limitations therein. First and foremost, the comparisons across states are imperfect, given the varying methods and assumptions used (especially among regulated states). Second, the data presented most closely correspond to the costs borne by utilities or other load serving entities; they do not represent net costs to society, iv This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications. nor do they necessarily represent the costs ultimately borne by ratepayers, such as in cases where ACPs or financial penalties are not passed