High and Low Renewable Technology Cases

Incorporating more optimistic assumptions about improvements in the cost and/or performance of new renewable generating plants also has a significant impact on the estimated renewable credit prices and the level of qualifying renewable generation achieved (Table 5). The S. 1766 RPS target is projected to be achieved in the High Renewable Technology RPS case even with the sunset provision. The more optimistic cost and performance assumptions for new renewable technologies used in the High Renewable Technology cases lead to more renewables even without an RPS and lowers the credit price needed to stimulate enough new renewable generation to meet the target when an RPS is imposed. For example, in the Reference case (without the RPS) the share of sales coming from renewables that would qualify for the S. 1766 RPS reaches 1.2 percent in 2010 and 1.7 percent in 2020. In the High Renewable Technology case (without the RPS) these values are 1.6 and 4.1, respectively. In the RPS 10 case, the renewable credit price is projected to be 2.1 cents per kilowatt-hour in 2010 and 3.0 cents per kilowatt-hour in 2020. In contrast, in the High Renewable Technology RPS case, the renewable credit prices are 1.5 and 2.0, in 2010 and 2020, respectively. Because new renewable facilities are assumed to be less expensive in the High Renewable Technology cases, the cumulative resource costs between 2001 and 2020 are only $2 billion higher in the High Renewable Technology RPS case than in the High Renewable Technology case. It is important to note that this result is contingent on renewable technologies improving more rapidly that do nonrenewable technologies. If more optimistic cost and performance assumptions for nonrenewable technologies were also included in this case, the results would likely be very similar to those in the RPS 10 case.

Among the renewable technologies, new wind plants and increased biomass co-firing are expected to be the key compliance options in the High Renewable Technology RPS case, as they are in RPS 10 case. Relative to the RPS 10 case, however, there is a slight shift towards wind and geothermal technologies. This occurs because of the cost and performance improvements assumed for these technologies that are shown in Table 2. In total, non-hydroelectric renewable generation in 2020 is 57 billion kilowatt-hours higher in the High Renewable Technology RPS than in the RPS 10 case where the S. 1766 target is not reached.

As might be expected the opposite result occurs in the Low Renewable Technology cases (Table 6). If renewable technologies do not improve as much as is expected in the Reference case it will be even more difficult to comply with the RPS called for in S. 1766. As in the RPS 10 case, the required RPS target is not projected to be met in the Low Renewable Technology RPS. Where the RPS 10 case was projected to achieve an 8.4 percent share in 2020, the Low Renewable Technology RPS is projected to achieve a share of 6.9 percent. After 2014, retail electricity suppliers are projected to pay the civil penalty of 3 cents per kilowatt-hour because the credit price that would be required to support additional renewable development with only 6 years of credits remaining is too high. Increased generation from wind plants and biomass cofiring are the key options used to reach the 6.9 percent share achieved. Relative to the other RPS cases presented in this report, biomass cofiring is more important in the Low Renewable Technology RPS. This occurs because the less optimistic renewable technology assumptions made in this case make biomass cofiring relatively more attractive.