Electricity from Renewable Resources Status, Prospects, and Impediments (2010) / Chapter Skim
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1 Introduction
1 Introduction
Pages 15-44
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energy systems is the role that renewable resources will play in electricity generation. Renewable electricity presents a significant opportunity to provide domestically produced, low carbon dioxide (CO2)
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In response to the oil crisis and price shocks in the late 1970s, significant federal research funding was directed toward development of multiple alternative sources of energy and toward renewable resources in particular. The PURPA era was inaugurated with the passage of the Public Utility Regulatory Poli cies Act (PURPA)
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2008 27 states and the District of Columbia had enacted RPSs, and another 6 states had adopted goals for renewable electricity. 2008 Emergency Economic Stabilization Act extended the PTC for 1 year and the investment tax credit for residential and commercial solar through 2016.
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The amount of electricity produced from wind in particular began to increase, owing to advances in technology as well as favorable policies. Wind power electricity generation increased at a compounded annual growth rate of more than 20 percent from 1997 and 2006 and of more than 30 percent from 2004 to 2006 (EIA, 2008a)
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Typically, an RPS requires a specific percentage as the minimum share of the electricity produced (or sold) in a state that must be generated by some collection of eligible renewable technologies.
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Maryland's RPS, for example, requires 9.5 percent renewable electricity by 2022, whereas California's requires 20 percent by 2010. Maine's original RPS required that 30 percent of all electricity be generated from renewable resources by 2000 and was later extended to require that new renewable energy capacity increase by 10 percent.
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Other State Policies Other examples of state policies affecting renewable electricity generation include public benefit funds, net metering, green power purchasing agreements, tax cred its, rebates, low-interest loans, and other financial incentives. Public benefit funds typically collect a small surcharge on electricity sales and specify that the funds so raised must be used for renewables.
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The major incentive for increasing electricity generation from renewable resources, particularly wind power, is the federal renewable electric ity production tax credit. The PTC currently (in 2009)
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of the 30 percent solar investment tax credit for commercial and residential installations and approved $800 million in bonds to help finance energy efficiency projects. The 2008 and 2009 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 through 2013.
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estimates that, from fiscal year 2002 through fiscal year 2007, revenue of $2.8 billion was foregone by the U.S. Trea sury because of the Clean Renewable Energy bond tax credits, the exclusion of interest on energy facility bonds, and the new technology tax credits for renewable electricity production (the PTC)
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The ARRA budgeted a total of $11 billion to modernize the nation's electricity grid and required a study of the transmission issues facing renewable energy. Current Policy Motivations In the absence of a price on carbon, generating electricity from non-hydropower renewable resources generally is more expensive than generating electricity from coal, natural gas, or nuclear power at current costs.
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. Although this panel's report does not address the transportation sector, it is worth noting that with the advent of technologies such as electric and plug-in hybrid vehicles and concepts for using electricity from renewable resources to produce chemical fuels such as hydrogen, renewable electricity from a variety of sources has the potential in the long run to contribute to fueling the transporta tion sector.5 Because the United States has some of world's most abundant solar, wind, biomass, and geothermal resources, renewables may help to secure supplies of domestic energy for all sectors.
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CURRENT STATUS OF RENEWABLE ELECTRICITY GENERATION U.S. Electricity Generation The U.S.
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. In total, renewable resources supplied 8.4 percent of 6The electric power sector includes electric utilities, independent power producers, and large commercial and industrial generators of electricity.
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Data for 2008 indicate that wind power generating capacity increased by more 7Biomass electricity generation includes electricity generated using wood and wood waste, municipal solid waste, landfill gases, sludge waste, and other biomass solids, liquids, and gases.
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Texas, the leader in U.S. wind power generation, added 2,760 MW of new capacity in 2008, for a total wind power generation capacity of 7,116 MW.
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electricity generation. International Renewable Electricity Renewable resources such as hydropower and geothermal energy have long been a major component of many countries' electricity sectors.
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Private Investments Private investment is essential for the deployment of renewable electricity on a scale that would significantly reduce carbon emissions and increase domestic production of low-carbon sources. Although federal funds can help enable basic research and development, renewable electricity must compete in the electricity market and must attract private capital to expand significantly.
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. The larg est, in wind power, totaled almost $8 billion in 2007.
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This increasing trend of investment in clean energy projects continued in 2008, although recent constraints in credit have caused concern that investment capital for big renewable energy projects will tighten. A recent report by Dow Jones Ven tureSource found that, despite a 12 percent decrease in total venture capital invest ments in the second quarter of 2008, there was a strong increase in investment in energy and utility industries, with a total investment of $817 million, which repre sents an increase of 160 percent compared with the second quarter of 2007.14 Of 13Investment keeps growing.
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The program's objective is to increase the chances that new technolo gies will become commercially profitable. REFERENCE CASE PROJECTION OF FUTURE RENEWABLE ELECTRICITY GENERATION IN THE UNITED STATES Understanding how renewables fit into and compete in the wider electricity sector is critical for understanding the future of renewables and assessing the potential consequences of their large-scale deployment.
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, an energy sector model with a high degree of detail that captures market feedbacks among vari ous individual elements of the energy sector. AEO 2009 provides one scenario for the future of renewable electricity, albeit one used in a wide array of policy and technical settings.
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The main reason for the change in estimates between AEO 2008 and AEO 2009 is that additional state RPSs were taken into account in AEO 2009 that had not yet been passed when AEO 2008 was published. This dif ference demonstrates how reference case projections can change over time owing TABLE 1.3 AEO 2009 Estimate of Electricity Generation from Renewable Resources (billion kilowatt-hours)
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AEO 2009 does not give projections at the state level but shows aggregated renewable electricity generation by region as a result of individual state RPSs, as seen in Figure 1.7. A significant portion of the qualifying renewables capacity in the Midwest, Northeast, Southwest, and Pacific Northwest is expected to come from wind.
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will be a guiding factor in the regional growth of renewable electricity generation. The existing regional varia tion in electricity generation can also be seen in Figure 1.8, which shows the dif ferent fuel mixes used for generating electricity in different parts of the country.
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Nuclear Nuclear Nuclear 6% 7% 15% 23% Hydro 5% Natural Natural Gas Gas 5% 5% Natural Gas Coal Natural Coal Nuclear 24% 69% Coal Gas 74% 28% 58% 40% New England East North Central West North Central Mountain Pacific Contiguous Middle Atlantic Fuel Oil Other*
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In general, the panel considers it critical that the reader have a sense of the scale issues associated with potentially achieving an aggressive but attainable level of renewable electricity deployment. APPROACH AND SCOPE OF THIS REPORT The panel's charge was to examine the technical potential for electric power gen eration from renewable resources such as wind, solar photovoltaic, geothermal, solar thermal, and hydroelectric power (see this report's preface for the full state ment of task)
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, and deployment (Chapter 6) is intended to present an integrated picture of renewables rather than snapshots of the individual renewable electricity sources.
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2005. Renewable Energy Policies and Markets in the United States.
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2008. The development, deployment, and policy context of renewable electricity: A focus on wind.
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