While a federal renewable portfolio standard (RPS) was ultimately trimmed out of the 2007 Energy Bill, states and local communities are picking up the slack. About half of the states have some sort of RPS, sometimes called renewable electricity standards, which requires a certain percentage of utility electricity to be generated from renewable sources. Just this week the city of Los Angeles signed a 20-year agreement for 185 MW of wind power.
Though a federal RPS would have generated a lot more investment into utility grade solar, biomass, and wind, state level RPS programs are spurring funding of renewable energy projects. Given that a federal RPS was just taken out of the Energy Bill it will likely not be until late 2009, once a new administration is in and settled, that a national RPS policy could actually move through the legislature. This means that for the time being state level programs will be the drivers of clean tech on the industrial utility scale in the coming decade.
For example the Minnesota House of Representatives released a report in November 2006, An Inventory of State Renewable Energy Standards, listing the various programs of the 23 states that had RPS in place. The report clearly lists which investor-owned, municipal utilities, and electric cooperatives are subject to the standards as well as a list of acceptable renewable energy sources by state. While solar (PV) and wind power are good across the board, not surprisingly states with no coastline don’t include wave or tidal energy in their RPS.
Minnesota’s own Xcel Energy is working to meet its RPS where 30 percent of its power will be generated by renewable sources by 2020 and doled $23 million to renewable energy generation projects this month. States are even actively pushing utilities away from fossil sources to renewable energy. The denial of Delmarva Electric’s application for a new coal power plant by the Delaware Public Service Commission was followed by the commission ordering the utility to buy power from Bluewater Wind instead.
Can the states do it on their own? They have so far. And state level RPS will increasingly drive large utilities to switch to renewable energy sources and allow for new energy players to take advantage of state incentives. Greening the economy increasingly is becoming the states’ responsibility and states rights are being fought over when it comes to environmental standards. In 2008 the race to see which state will lead the green economy will continue to heat up and a strong RPS program will be a big incentive for renewable power companies.