A Look At Renewable Portfolio Standards
Thursday, February 16, 2012 at 4:45PM From the Commodities Management Group at Constellation Energy —
Renewable Portfolio Standards or RPS are guidelines established by individual states to increase the amount of electricity generated from renewable sources. Renewable sources of electricity include wind, solar, geothermal, biomass and some types of hydro, but can also include landfill gas, municipal solid waste and tidal energy.
The U.S. has always relied heavily on fossil fuels such as natural gas, coal and nuclear to generate the lion-share of its electricity. Those fuels are considered nonrenewable because they represent a finite resource that will ultimately become exhausted or will be too expensive or environmentally damaging to retrieve. The attraction to renewable energy is that it relies on “renewable” resources that are constantly being replenished.
Though there have been numerous attempts, on the federal level, to establish national standards for RPS, no proposals have made it through Congress to become enacted into law. Most state RPS programs establish a minimum percentage requirement for the share of electricity to be supplied by designated resources by a certain year.
For instance, California has set a goal of having their electric utilities source 33% of its retail sales from renewable resources by the year 2020. Oftentimes, they will design programs around specific sources that are more abundant or easily accessible to their state.
Wind, for instance, would play a larger role in states like Texas or in the Midwest due to the development of the infrastructure and the abundance of wind required to optimize this particular source.
Though most of us can agree that sourcing energy from renewable resources is beneficial to our environment as a whole, there are certain limitations that inhibit it from growing faster than it has. Renewable energy has been more expensive to develop than fossil fuels. Many times the sources of this energy are located in remote areas that require transmission lines to be built to link the source to the populated demand areas.
Renewable sources are also limited by the intermittency of the conditions necessary for the source to actually produce power. Solar can be limited by cloudy days, hydro by drought and low water flows and wind turbines by stagnant air. These conditions limit the overall reliability of these generating sources to provide power to the grid.
These reasons, coupled with the decreasing prices of most fossil fuels over the last few years, have made it difficult for renewable technology to always be economical. As a result, many of these sources rely on federal and state tax incentives and grants to help the growth of these sources in the future.
Though we will still rely heavily on fossil fuels to meet most of our energy needs in the foreseeable future, we should still see steady growth of renewable development to meet state mandates and also contribute to our growing energy needs in a responsible manner.
Sources: EIA, NREL. To learn more about the Constellation Energy & IMA Energy Program, visit constellation.com/ima