Ted Niblock

September 7, 2017 | General

Bioenergy Outlook: Renewable Portfolio Standard Diaspora

Ted Niblock

Ted Niblock
BioCycle September 2017

During a relatively compressed period of time roughly 10 to 15 years ago, approximately 35 U.S. states and territories enacted some form of Renewable Portfolio Standard (RPS), following the lead of 8 states that had one prior to 2000. Specific terms varied, but most shared the general structure of annually increasing the percentage of electric power to come from renewable sources. Each state tweaked the format to suit its own potential renewable resource base, drive certain manufacturing goals, or solve related environmental problems. But by and large they looked and acted fairly similarly. Renewable Energy Credits or Certificates were (and are) traded across state lines in multistate compacts, and there was a general sense of universality.
Many of these laws are approaching maturity, either by achieving their maximum targets (e.g., 20% of energy from renewable sources by “x” year), reaching the year of their maximum target, or just plain expiring. As this happens, states are divergent in how they approach these coming milestones and deadlines, and how they seek to spur the growth of renewable energy production. To the casual observer, this seems to be a looming mass extinction event for the state RPS, but that is incorrect. Knowledgeable observers and longtime experts on this topic see simply an emerging diversity of views and approaches, as each state has developed its own perception of what is needed to maintain robust growth of renewable energy. In this way, the states will continue to play their role as “laboratories of democracy.”
A recent report on this topic, prepared for the Clean Energy States Alliance and the RPS Collaborative by Holt & Associates in June 2017, provides a thorough summary of these coming state RPS milestones. Much of what follows comes from, and is covered in more detail within, this report.

Current Situation

States with plenty of time: The most encouraging news is that seven states have extended their RPS. New goals and milestones now extend out for another 10 or more years in: California (2030); Hawaii (2045); Illinois (2026); New York (2030); Oregon (2040); Rhode Island (2035); and Vermont (2032). Additionally, Massachusetts has no end date, and Ohio is already at 2026, although that is due in part to a two-year freeze from 2014 to 2016.
States with modest headroom: Two states — Nevada and Arizona — will reach the year of their maximum target in 2025, which is not imminent but borders on ineffective as an incentive for new projects.
States with impending deadlines: The RPS in each of the following states will reach the year of its maximum target and/or expire in the next few years, beginning with Maine in 2017. Shortly thereafter the District of Columbia will follow in 2020, along with seven states: Colorado, Connecticut, Maryland, Minnesota, New Jersey, New Mexico, and Washington. The RPS in Michigan, Missouri, North Carolina and Pennsylvania expire in 2021.
States past their deadlines or over their targets: Four states have already “crossed the finish line,” and do not yet have clear paths to future policies: Iowa (2007); Montana (2015); Texas (2015); and Wisconsin (2015).
A thankfully rare footnote in this story is the occasional decision to stop spurring the growth of renewable energy. One state repealed its RPS in 2015. Given the very weak requirements of that particular RPS to begin with, this was the policy equivalent of stabbing, shooting and then drowning renewable energy as if it were a modern day Rasputin.

Every State Is Different

Each state listed has a different story behind its expiration date. Michigan’s 2021 date is an extension of recently achieved 2015 targets, so there is fresh demand for capacity to drive new projects. The Michigan case also indicates that further extensions and increases are possible in that state. Iowa has reached its targets with wind but is trying to find different and innovative policies to spur biogas development. Biogas projects in Wisconsin have the additional challenge of an expiring feed-in-tariff program. Minnesota has severely weakened its Biomass Mandate, which might have a greater impact on biogas projects than any RPS changes.
In states such as Pennsylvania and New York, the RPS is overlaid by other policy challenges such as net metering changes (changes in the way renewable electricity projects can sell electricity to the grid through the same meter by which they buy it at other times). Some states, such as North Carolina, will reach the year of their RPS maximum target soon, but be well behind in its goals, leaving considerable demand for additional capacity and therefore potential biogas projects.
In several states, efforts to spur the growth of biogas projects have diverged from the RPS discussion. This is partly a recognition that the RPS was perhaps never the ideal incentive for biogas. Factors such as the head start of wind and solar and the more complex nature of biogas project development (feedstock and back end management, generator engines, interconnection complexity) put biogas at the bottom of many RPS compliance matrices. Finally, in some states the RPS is, has been, and will be relatively weak, with targets and timetables that do not translate into favorable markets for any renewable energy projects, least of all biogas.
Furthermore, the dates themselves have different statutory significance. In many states, the RPS does not end in the year indicated, but instead the law simply applies the final required percentage to that year and “thereafter.” In these cases, the maximum target percentage will most likely continue as a requirement, and if demand grows then so will the total kWh required. In some other states, the law does not provide for years after the maximum date, and in those states the utilities might stop tracking and reporting their renewable portfolio. In any state where the language provides any ambiguity, expect obligated utilities having trouble with the goals to seek relief from their respective public utility commissions. A review of state RPS language indicates the following:
States with continuing language such as “Thereafter”: Arizona, California, Colorado, Connecticut, Delaware, Maine, Maryland, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, Ohio, Pennsylvania, Washington and Wisconsin, and the District of Columbia.
States where RPS appears to stop: Illinois, Iowa, Michigan, Minnesota, New York, Oregon, Rhode Island, Texas and Vermont.
Again, these lists do not tell the whole story. There are states in the “stop” category that are very progressive and favorable to renewable energy policy, and will most likely install new incentives for renewables. Conversely, there are states in the “thereafter” category where large utilities, public service commissions, or other stakeholders may use the uncertain afterlife of the RPS to push for reduced or more flexible requirements.
As these policies fracture and disperse, it will become more important for the biogas industry to qualitatively discriminate amongst various state RPS laws, to find those truly beneficial to its growth.
Ted Niblock develops anaerobic digester projects in the U.S. and abroad.

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