Interim Report Concerning the Maryland Renewable Portfolio
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Acknowledgments This report was prepared by Exeter Associates, Inc., under the direction of the Power Plant Research Program of the Maryland Department of Natural Resources. Kevin Porter of Exeter Associates was the project manager. Important contributions to the report were made by Laura Miller, Stacy Sherwood, Rebecca Widiss, Matthew Hoyt, Katherine Fisher, William Cotton, Nick DiSanti, Cali Clark and Angela Richardson. The authors thank the members of the Maryland Renewable Portfolio Standard Work Group (see Appendix B) for their contributions. The authors also thank the Maryland Public Service Commission, the Maryland Energy Administration, the Maryland Office of People’s Counsel, PJM Interconnection, LLC and the Maryland Department of Natural Resources for their review of several drafts. The Maryland Public Service Commission provided technical feedback in the preparation and accuracy of this report. The Commission takes no position with respect to any of the regulatory or policy options or recommendations presented. i TABLE OF CONTENTS Page Abstract .......................................................................................................................................... IV Executive Summary .................................................................................................................... ES-1 I. Introduction ............................................................................................................................ I-1 II. Background on the Maryland RPS ......................................................................................... II-1 III. Progress to Date .................................................................................................................... III-1 IV. Future Activities .................................................................................................................... IV-1 V. Tracking Renewable Energy Credit and Solar Renewable Energy Credit Prices .................... V-1 Appendix A – Executive Summary of the 2017 Inventory of Renewable Energy Generators Eligible for the Maryland Renewable Energy Portfolio Standard .......................... A-1 Appendix B – Maryland RPS Work Group Members ................................................................... B-1 Appendix C – Strengths, Weaknesses, Opportunities and Threats Analyses .............................. C-1 Appendix D – List of Acronyms ................................................................................................... D-1 ii LIST OF TABLES Page Table III-1. Solar RPS Requirements in Maryland Compared to Projected Solar Energy Generation in Maryland .......................................................................................... III-2 Table III-2. Non-carve-out Tier 1 RPS Requirements in PJM Compared to Projected Available PJM Renewable Energy Generation ........................................................ III-3 Table III-3. Non-carve-out Tier 1 RPS Requirements in PJM Assuming a Maryland 50% RPS Requirement ............................................................................................................ III-4 Table III-4. Scenario for 14.5% Maryland RPS Requirement for Solar Compared to Projected Maryland Solar Energy Generation ........................................................ III-5 LIST OF FIGURES Page Figure III-1. Solar RPS Requirements in Maryland Compared to Projected Solar Energy Generation in Maryland .......................................................................................... III-2 Figure III-2. Non-carve-out Tier 1 RPS Requirements in PJM Compared to Projected Available PJM Renewable Energy Generation ........................................................ III-3 Figure III-3. Non-carve-out Tier 1 RPS Requirements in PJM Assuming a Maryland 50% RPS Requirement ............................................................................................................ III-5 Figure III-4. Scenario for 14.5% Maryland RPS Requirement for Solar Compared to Projected Maryland Solar Energy Generation ........................................................ III-6 Figure V-1. Non-carve-out Tier 1 REC Prices in Maryland .......................................................... V-3 Figure V-2. Non-carve-out Tier 1 REC Prices in PJM ................................................................... V-3 Figure V-3. Maryland Non-carve-out Tier 1 REC Futures ........................................................... V-4 Figure V-4. SREC Prices in Maryland ........................................................................................... V-5 Figure V-5. SREC Prices in PJM .................................................................................................... V-6 Figure V-6. Maryland SREC Futures ............................................................................................ V-7 Figure V-7. Tier 2 REC Prices in Maryland ................................................................................... V-8 Figure V-8. Tier 2 REC Prices in PJM............................................................................................ V-8 iii Abstract The Interim Report Concerning the Maryland Renewable Portfolio Standard (Interim Report) is a statutory requirement enacted by Chapter 393 of the Acts of the Maryland General Assembly of 2017. The statute calls on the Maryland Department of Natural Resources Power Plant Research Program to prepare a comprehensive study of the Maryland Renewable Portfolio Standard. The purpose of this Interim Report is to update the General Assembly on the focus of program’s efforts to date and to document the steps for completing the final report. iv Executive Summary The Interim Report Concerning the Maryland Renewable Portfolio Standard (Interim Report) is required by Chapter 393 of the Acts of the Maryland General Assembly of 2017. Under Ch. 393, the Maryland Department of Natural Resources (DNR) Power Plant Research Program (PPRP) is directed to conduct a comprehensive study of the Maryland Renewable Portfolio Standard (RPS) in cooperation with the Maryland Energy Administration (MEA), the Maryland Department of the Environment, the Maryland Public Service Commission (PSC), and other state and local units, encompassing the economic, socioeconomic, environmental and reliability impacts of the Maryland RPS. More specifically, Ch. 393 requires a comprehensive review of whether there are sufficient renewable energy resources to meet the Maryland RPS, the overall costs and benefits, and the effectiveness of the Maryland RPS as well as what changes might be necessary to improve the performance of the Maryland RPS or to alleviate any unintended consequences. In October 2017, PPRP issued a Request for Proposal (RFP) seeking companies to perform the RPS study and PPRP subsequently selected Exeter Associates Inc. (Exeter) of Columbia, Maryland. PPRP’s contract with Exeter was approved by the Board of Public Works in May 2018 and commenced in June 2018. To assist in the study and to ensure a diverse set of opinions, PPRP formed the RPS Work Group consisting of stakeholders from electric utilities, power generators, environmental groups, state and local governments, and community representatives. One of the primary requirements of Ch. 393 is to determine whether there are sufficient renewable energy resources to meet current and projected RPS targets in Maryland and within the PJM Interconnection, LLC (PJM) service area. This determination will serve as a foundation upon which to build the analysis in the study. To make this determination, this study will draw upon the forthcoming 2017 Inventory of Renewable Energy Generators Eligible for the Maryland Renewable Energy Portfolio Standard (2017 Inventory Report). The Executive Summary of the 2017 Inventory Report is incorporated as Appendix A to this Interim Report. Based on the 2017 Inventory Report, this Interim Report finds that, from known renewable energy projects under development and projected growth, there is sufficient non-carve-out Tier 1 renewable energy generation to meet the current (as of October 2018) requirements of state RPS policies within PJM, including Maryland, through 2030 except for small deficits from 2022 through 2025. In addition, the present solar carve-out of 2.5 percent within Tier 1 of the Maryland RPS is expected to be met every year through 2030. ES-1 While this Interim Report covers some preliminary results of required tasks from Ch. 393, many tasks are currently being prepared for the final report. An example of analysis required by Ch. 393 that is not in this Interim Report but will be in the final report is the ratepayer impact associated with long-term contracts tied to clean energy projects. Some of the data provided in this Interim Report include: • Renewable energy capacity and generation presently in Maryland as compared to 2004 (the RPS initial year); • Use of renewable energy credits (RECs) and solar renewable energy credits (SRECs) as compliance tools; • Geographic and technology sources of RECs and SRECs used for meeting the Maryland RPS; • Cost trends for RECs and SRECs; and • Costs of the Maryland RPS in general. Ch. 393 provides requirements for this Interim Report, including an assessment of any change in SREC prices over the 24-month period leading up to the date this Interim Report is submitted to the Maryland General Assembly; i.e., up to December 1, 2018. This Interim Report also assesses non-carve-out Tier 1 REC prices as well as SRECs.