SB 178: Don’t fear the multiplier
As we stated in an earlier post, there are plenty of reasons for concern over SB 178, State Senator Angela Giron’s attempt to increase significantly the state’s renewable energy mandate, including:
- Dramatic increase in electric rates.
- Lack of input from stakeholders including ratepayers and some utilities.
- Significant policy change introduced just days before the end of the session.
Oddly enough, none of those issues bothers bill supporters. Instead a commonplace multiplier (explained here) used in numerous states to soften the financial burden of renewable energy for ratepayers is the burr in their saddle and the impetus for SB 178.
We did a little research and found the examples of how several states use a similar multiplier or “credit” that Colorado environmentalists think is imperative to expunge from statute. The following information came from the Database for State Incentives for Renewables and Efficiencies (DSIRE).
Extra credit multipliers may be earned for early installation of certain technologies, in-state solar installation, and in-state manufactured content. The multipliers are additive, but cannot exceed 2.0.
Several compliance multipliers are currently available under the Delaware RPS. The details of these multipliers are described below:
- 300% credit toward RPS compliance for in-state customer-sited photovoltaic generation and fuel cells using renewable fuels that are installed on or before December 31, 2014. The 300% multiplier cannot be applied to SRECs used for compliance with the PV carve-out (see PSC notice), thus for PV carve-out compliance purposes, SRECs are counted on a 1-to-1 basis. The 300% credit formerly applied to all solar electric generation prior to the 2007 amendments.
- 150% credit toward RPS compliance for energy generated by wind turbines sited in Delaware on or before December 31, 2012. This provision dates to the 2005 legislation that established the RPS.
- 350% credit for PSC-regulated electric companies (i.e., Delmarva Power & Light, the state’s only investor-owned utility) for energy derived from offshore wind facilities sited on or before May 31, 2017. This provision was added by S.B. 328 in 2008.
District of Columbia:
Certain renewable resources have in the past received preferential treatment through the use of compliance multipliers. Before January 1, 2007, electricity suppliers received 120% credit toward meeting the RPS for energy generated by wind or solar. Between January 1, 2007 and December 31, 2009, electricity suppliers received 110% credit for energy generated by wind or solar. Before January 1, 2010, electricity suppliers received 110% credit for energy generated by landfill methane or wastewater-treatment methane. Suppliers that fail to comply with the requirements must pay $0.05 per kilowatt-hour (kWh) of shortfall from required Tier 1 resources, $0.01 for each kWh of shortfall from Tier 2 resources.Solar energy sources have an unique set of shortfall payment requirements, from 2011 through 2016 at $.50 per kWh, $0.35 in 2017, $0.30 in 2018, $0.20 in 2019 and 2020, $0.15 in 2021 and 2022, and $0.05 in 2023 and thereafter. Alternative compliance fees are deposited into the D.C. Renewable Energy Development Fund and may be used to provide support to renewable energy projects. Energy supply contracts entered into prior to August 1, 2011 will not be subject to the increased solar requirements.
Each MW of eligible capacity installed in Kansas after January 1, 2000 will count as 1.1 MW for the purpose of compliance.
Initially, the RPS included credit multipliers for wind, solar, and methane. The multiplier for solar was replaced by the 2% solar requirement in 2007. Multipliers for wind and methane remained for facilities placed in service on or after January 1, 2004, although both have subsequently expired:
- A supplier received 120% credit toward meeting its Tier 1 obligations through RECs associated with wind energy through December 31, 2005. Beginning in 2006 and through 2008, a 110% credit was in effect.
- A supplier received 110% credit toward meeting its Tier 1 obligations through RECs associated with energy derived from methane through 2008.
Bonus Credits The standard also contains a series of bonus credits, termed Michigan incentive renewable energy credits, for each megawatt-hour (MWh) of electricity generated by certain types of systems. These credits act in addition to the single credit that a facility receives for producing 1 MWh of electricity from a qualified resource. Thus it is possible to earn multiple credit bonuses on a single MWh of electricity generation. The bonuses are described below.
- Electricity produced using solar power receives an additional 2 credits per MWh.
- Renewable electricity produced at peak demand times by technologies other than wind receives an additional 1/5 credit per MWh. Peak demand time was defined by the PSC in a December 2008 temporary order as weekdays between 6:00 AM and 10:00 PM, excepting certain holidays.
- Off-peak renewable electricity generation stored using advanced electric storage technology or hydroelectric pumped storage and used during peak demand times receives an additional 1/5 credit per MWh. The credit is calculated based on the initial amount of electricity used to charge the storage device, not the amount that is discharged.
- Renewable electricity produced using equipment manufactured within the state of Michigan receives an additional 1/10 credit per MWh. This add-on is only available for three years after the in-service date of the facility.
- Renewable electricity produced using a system which was constructed using an in-state workforce receives an additional 1/10 credit per MWh. This add-on is only available for three years after the in-service date of the facility.
Pursuant to meeting the 500 MW non-wind goal contained in S.B. 20 of 2005, the PUCT has elected to award a “compliance premium” for each non-wind REC generated after December 31, 2007. Compliance premiums are functionally equivalent to a REC for the RPS compliance purposes and may only be awarded to non-wind facilities that were installed and certified by the PUCT after September 1, 2005. This method effectively doubles the compliance value of electricity generated by renewable resources other than wind.
Electricity may be produced within the state, or within the geographic boundary of the Western Electricity Coordinating Council. Notably, each kWh of electricity produced using solar energy counts as 2.4 kWh for the purposes of meeting the goal.
Credits will be awarded in the following way:
- One credit for each MWh of electricity generated or purchased from an alternative energy resource facility. It should be noted that utilities may meet no more than 10% of the standard with credits obtained from electricity generated from natural gas.
- Two credits for each MWh of electricity generated or purchased from a renewable energy resource facility
- Three credits for each MWh of electricity generated or purchased from a renewable energy resource facility located on a reclaimed surface mine in West Virginia
- Customer-generators will be awarded one credit for each MWh of electricity generated from an alternative energy resource facility and two credits for each MWh of electricity generated from a renewable energy resource facility.
- The PSC is authorized to award one credit to an electric utility for each ton of carbon dioxide-equivalent reduced or offset by approved projects.
- The PSC is also authorized to award one credit to an electric utility for each MWh of electricity conserved by an approved energy efficiency or demand-side management project, provided that the project savings are verified and certified according to PSC rules (to be determined).
Bottom line is don’t fear the multiplier. It serves to save ratepayers money. Fear the environmentalists and the lawmakers who want it to go away.