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Renewable Energy in the U.S.: Lessons Learned. Paul Komor University of Colorado komor@colorado.edu. 27/05/03. Outline of presentation. 1. Description of U.S. energy situation 2. Renewable energy policies: What works, what doesn’t 3. Lessons learned.
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Renewable Energy in the U.S.: Lessons Learned Paul Komor University of Colorado komor@colorado.edu 27/05/03
Outline of presentation 1. Description of U.S. energy situation 2. Renewable energy policies: What works, what doesn’t 3. Lessons learned
U.S. electricity generation • 7% Hydro • ~1% other renewables
Unexpected success story: Wind • 3000 MW installed in U.S. 1999-2002
Unexpected success story: Wind • 4.7 GW spread over 31 states
Wind economics • New wind competes against new natural gas • Natural gas prices very volatile • Wind contracts now typically €0.03 -€0.06 / kWh • Wind’s intermittency emerging as the key barrier
Renewable policies: what works • Federal wind production tax credit (PTC) • State renewable portfolio standards (RPS) • Green pricing • Bond funds • State system benefit charges (SBC)
National wind production tax credit • Only significant national policy • €0.016/kWh for generator • Good for 10 years of operation • Set to expire 12/03, may be renewed • Wind developer: ‘I’m dead without it’ • Wise use of public funds?
State Renewable Portfolio Standards (RPS) • Similar to UK’s RO • 16 U.S. states have RPSs • Some are using green tags (RECs) • Usually tied to restructuring (liberalisation) • Vary widely in goals, rules
RPS example: Texas • Restructuring legislation in 1999 • Required 2000 MW of new renewables (~2% of total generation) by 2009 • Requirement on retailers, not generators • Active green tag (REC) program • Over 1000 MW of new wind already
Green pricing • Voluntary, higher price electricity • 100+ utility green pricing programs • Many active green marketers • Green Mountain: 600,000 customers • 980 MW of new renewables (mostly wind) built to serve green pricing markets
Bond funds • San Francisco: borrowed €100 million for solar. • Projects cannot increase net costs (including loan repayment) • Package solar with efficiency • Model program, other cities are considering it
System benefit charges (SBC) • 15 states have SBCs • Usually passed as part of restructuring • A per-kWh tax, used to support renewables, efficiency, other public goods • Allocation of funds contentious and occasionally ugly
Renewable policies: what doesn’t work • Subsidies for capacity, not generation • Using RPS to target specific technologies • Requiring green programs without incentives for success • Failing to protect renewable funds
Policy challenges • Cost of uncertainty vs. need to update/improve/fine-tune policies • Goals: install new generation? Reduce costs? Promote economic development? Boost a lagging technology?
Political challenges • Lack of public interest • Political power of entrenched fossil fuel interests • Utility culture: risk-averse, few incentives for innovation
Conclusions • Work towards agreement on policy goals, then clarify and stick to them • Learn from others’ mistakes • If establishing renewable funding pots, have rigorous allocation agreements in place first • Set boundaries carefully, but promote/pursue private investment
Questions, comments? P. Komor komor@colorado.edu
