tion capacity of almost 480 MW that, assuming a 15 percent capacity factor, produces approximately 630 GWh.

Current Policy Setting

At present, electricity generation from non-hydropower renewable sources is generally more expensive than from coal, natural gas, or nuclear power—the three leading U.S. options. Thus policies at the state and federal levels have provided the key incentives behind renewable sources’ recent penetration gains.

One such policy is the renewables portfolio standard (RPS), which typically requires that a minimum percentage of the electricity produced or sold in a state be derived from some collection of eligible renewable technologies. Given that these RPSs have been developed at the state level, there are many different versions of them. The policies differ by the sources of renewables included (some states specify conventional hydropower or biopower); by the form, timeline, and stringency of the numerical goals; and by whether the goals include separate targets for particular renewable technologies. As of 2008, 27 states and the District of Columba had RPSs and another 6 states had related voluntary programs. Wiser and Barbose (2008) estimate that full compliance with these RPSs would result in an additional 60 GW of new renewables capacity by 2025. Assuming a 35 percent capacity factor, which means that the capacity produces electricity for approximately 3070 hours per year, an additional 180,000 GWh from renewable sources would be generated. This is compared to the estimated total of 4.2 million GWh generated in 2007.

Federal policies are also contributing to this era of strong growth in renewable-energy development. The major incentive, particularly for wind power, is the Federal Renewable Electricity Production Tax Credit (referred to simply as the PTC), which provides a $19 tax credit (adjusted for inflation) for every megawatt-hour (equivalent to 1.9¢/kWh) of electricity generated in the first 10 years of life of a private or investor-owned renewable electricity project brought on line through the end of 2008.4 Congress most recently extended the PTC and expanded incentives for 1 year in the Emergency Economic Stabilization Act of 2008 and the ARRA of 2009. These two bills together extend the PTC for wind through 2012 and the PTC for municipal solid waste, qualified hydropower, biomass, geothermal, and marine and hydrokinetic renewable-energy facilities

4

After adjusting for inflation, the current PTC is 2.1¢/kWh.



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