Potential Impact of Indian Lands Provision

As mentioned, using a Geographic Information System (GIS) it was found that Indian lands contain a substantial amount of wind resources, but little biomass or geothermal resources. As mentioned, few biomass or geothermal resources were found on Indian lands, but 8 percent of high-quality (wind classes 4, 5, and 6) windy land is on Indian lands (Figure 11). However, much of this resource is expected to be relatively high cost and unlikely to be stimulated by an RPS. In this analysis, the costs of new wind projects are adjusted to reflect increases that are expected to occur as developers move from the most economically attractive sites to less attractive sites. These costs adjustments are broken into 5 categories with the first category receiving no cost adjustment, the second receiving a 20 percent cost adjustment, the third a 50 percent cost adjustment, the fourth a 100 percent cost adjustment and fifth a 200 percent cost adjustment. The percentage of the wind resources expected to fall into each category varies from region to region, but the amount that falls into the first three categories is generally quite small – roughly 5 percent. If it is assumed that the cost adjustments on wind resources are distributed in the same pattern as for the total wind resource in each region, roughly 10 gigawatts of the 200 gigawatts of potential wind capacity on Indian lands could be developed in the first three cost adjustment categories which would be expected to become economical when an RPS with double credits for projects on Indian lands were imposed. Translating this into potential generation using a 35 percentage capacity factor gives 31 billion kilowatthours of increased wind generation from projects on Indian lands in response to the RPS.

In the RPS 10 case, over 50 gigawatts of new wind capacity is projected to be built. If the Indian lands double credit provision were incorporated in the RPS 10 case, up to 10 gigawatts of this capacity might be constructed on Indian lands. If this were to occur, it would lower the amount of qualifying renewable generation required to comply with the RPS. Essentially, the double credit provision would count the generation from new wind plants on Indian lands twice, reducing the overall amount of renewables needed for the RPS. However, given that only 10 gigawatts of wind resources on Indian lands are likely to be stimulated by an RPS, the overall results should be similar to those for the RPS 10 case shown in this analysis.

20 Percent RPS

The key result in the RPS 20 case is that, like in the RPS 10 case the targeted renewable share is not projected to be achieved (Table 7). By 2020 the share is projected to reach 12 percent, well below the 20 percent target. This mainly occurs because of the high cost of the level of renewables that would be needed to meet the RPS target. Also, as the December 31, 2020, program sunset date grows closer; new renewable facilities would not have enough time to recover their higher costs through credit revenue. Thus, retail electricity suppliers are expected to pay the penalty rather than support new renewable facilities (Figure 12). However, the RPS 20 case does build more renewables than the RPS 10 case. In fact, the 10 percent RPS target called for in the RPS 10 case is achieved in the RPS 20 case. This occurs because higher RPS shares are called for in the RPS 20 case earlier than in the RPS 10 case allowing new renewable facilities to recover their higher costs through credit sales before the end of the program. For example, in the RPS 20 case, the renewable share required reaches 10 percent between 2011 and 2012, versus in 2020 in the RPS 10 case. This means that new renewable facilities could be brought on in 2012 to bring the share to 10 percent allowing eight years to recover the higher costs through credit sales.

Increased generation from wind, biomass cofiring, biomass dedicated¹⁵ and geothermal are projected to be the key compliance options in the RPS 20 case. Relative to the RPS 10 case, wind and biomass dedicated are projected to see the largest increases. Renewable credit prices are projected to be higher in the RPS 20 than in the RPS 10. For example, in 2010 they are projected to be 2.1 cents per kilowatt-hour in the RPS 10 versus 2.7 cents per kilowatt-hour in the RPS 20 case. The impact on electricity prices and resource costs is projected to be larger in the RPS 20 case than in RPS 10 case (Figure 13). In 2020, retail electricity prices are projected to be 3 percent above the reference case level in the RPS 20 case. The increase in discounted resource costs over the 2001 to 2020 time period is projected to be $21 billion.

Notes