Fostering Renewable Electricity Markets in North America Commission for Environmental Cooperation April 2007 This publication was prepared for the CEC Secretariat as a background paper. The information contained herein does not necessarily reflect the views of the CEC or the governments of Canada, Mexico or the United States of America. Acknowledgements This paper was written by Meredith Wingate, Jan Hamrin and Lars Kvale of the Center for Resource Solutions, and Claudio Alatorre of the Institute of Engineering of the Autonomous National University of Mexico. The authors would like to thank the members of the Commission for Environmental Cooperation Renewable Energy Expert Committee (REEC) for their contributions to the initial outline and design of this paper and their subsequent comments on earlier drafts. In particular, we would like to acknowledge the contribution of Odón de Buen, Chantal Line Carpentier, Jeremy Brown, Louise Comeau, Pierre Deschamps, Gilles Favreau, Ed Holt, Jorge Huacuz, Florian Laberge, Michel Lesueur, Joanne McKenna, Brian Moghadam, Mary Pattenden, Michael Paunescu, Philip Raphals, Leslie-Ann Robertson, Helen Ryan and Blair Swezey for their expert comment. Reproduction of this document in whole or in part and in any form for educational or nonprofit purposes may be made without special permission from the CEC Secretariat, provided acknowledgment of the source is made. The CEC would appreciate receiving a copy of any publication or material that uses this document as a source. Commission for Environmental Cooperation 393, rue St-Jacques Ouest, Bureau 200 Montréal (Québec) Canada H2Y 1N9 [email protected] - www.cec.org © Commission for Environmental Cooperation, 2007 Un résumé est disponible en français–Un resumen ejecutivo está disponible en español Please cite as: Commission for Environmental Cooperation. Fostering Renewable Electricity Markets in North America. Commission for Environmental Cooperation, Montreal, February 2007. <http://www.cec.org/pubs_docs/documents/index.cfm?varlan=english&ID=1986> Publication details Publication type: Background Paper Publication date: April 2007 Original language: English Review and quality assurance procedures: Reviewed by the Renewable Energy Expert Committee: 24 March 2006 Reviewed by the Trade and Environment Working Group: 14 April 2006 Reviewed by the Parties: May 2006–December 2006 For more information: see Acknowledgements. ii TABLE OF CONTENTS SECTION I. INTRODUCTION .......................................................................................................................1 1.1 Current Policy Framework for Renewable Electricity in Canada........................................................................................... 2 1.2 Current Policy Framework for Renewable Electricity in the United States............................................................................ 3 1.3 Current Policy Framework for Renewable Electricity in Mexico ............................................................................................ 4 1.4 Electricity Generation in North America................................................................................................................................. 5 SECTION II. CURRENT RENEWABLE ELECTRICITY MARKET DEMAND DRIVERS..........................9 2.1 Regulatory and Voluntary Drivers.......................................................................................................................................... 9 2.1.1 Canada.......................................................................................................................................................................... 9 2.1.2 United States............................................................................................................................................................... 11 2.1.3 Mexico ......................................................................................................................................................................... 16 2.1.4 Summary of Cumulative Demand from Existing Mandates 2005–2017...................................................................... 17 2.2 Voluntary Market Drivers: Green Pricing, Renewable Electricity Marketing, RECs and Voluntary Carbon Reduction ....... 18 2.2.1 Canada........................................................................................................................................................................ 19 2.2.2 United States............................................................................................................................................................... 20 2.2.3 Mexico ......................................................................................................................................................................... 23 2.2.4 Summary of Cumulative Voluntary Demand in North America.................................................................................... 23 2.3 Government Procurement ................................................................................................................................................... 24 2.3.1 Canada........................................................................................................................................................................ 24 2.3.2 United States............................................................................................................................................................... 25 2.3.3 Mexico ......................................................................................................................................................................... 26 2.4 Other Demand Drivers......................................................................................................................................................... 26 2.4.1 United States............................................................................................................................................................... 26 SECTION III. ANALYSIS OF SUPPLY-SIDE DRIVERS .............................................................................28 3.1 Self-Supply, On-Site Distributed Generation and Off-Grid Generation ............................................................................... 28 3.1.1 Canada........................................................................................................................................................................ 28 3.1.2 United States............................................................................................................................................................... 29 3.1.3 Mexico ......................................................................................................................................................................... 31 3.2 Other Market Supply Drivers ............................................................................................................................................... 33 3.2.1 Canada........................................................................................................................................................................ 33 3.2.2 United States............................................................................................................................................................... 37 3.2.3 Mexico ......................................................................................................................................................................... 41 SECTION IV. REGULATORY AND LEGAL OPPORTUNITIES IN MEXICO..............................................42 4.1 The LAFRE Bill and Article 253-B ....................................................................................................................................... 42 iii 4.2 The Potential Effects of the LAFRE Bill............................................................................................................................... 43 4.2.1 Regulatory Mandate .................................................................................................................................................... 43 4.2.2 Voluntary Green Pricing Scheme ................................................................................................................................ 44 4.2.3 Large-Scale Grid-Connected Self-Supply ................................................................................................................... 44 4.2.4 Small-Scale Grid-Connected Self-Supply.................................................................................................................... 44 4.2.5 Off-Grid Self-Supply .................................................................................................................................................... 44 4.2.6 Other Instruments........................................................................................................................................................ 45 4.3 Wind Power Environmental Standard.................................................................................................................................. 45 SECTION V. OPPORTUNITIES FOR GROWING THE RENEWABLE ELECTRICITY MARKET..............46 5.1 Canada...............................................................................................................................................................................