New Study Finds Big Benefits From State Renewable Portfolio Standard

Renewable Portfolio Standard

A new study by researchers from the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL) and Lawrence Berkeley National Laboratory (Berkeley Lab) estimates that $2.2 billion in benefits came from reduced greenhouse gas emissions and $5.2 billion from reductions in other air pollution, in mid-range estimates, for state renewable portfolio standard (RPS) policies operating in 2013. RPS policies require utilities or other electricity providers to meet a minimum portion of their load with eligible forms of renewable electricity.

A Retrospective Analysis of the Benefits and Impacts of U.S. Renewable Portfolio Standards also shows national water withdrawals and water consumption by fossil-fuel plants were reduced by 830 billion gallons and 27 billion gallons in 2013, respectively.

In addition to environmental benefits, the study estimates that Renewable Portfolio Standard policies supported 200,000 renewable energy-related jobs in 2013. Renewable energy jobs from RPS projects were concentrated mostly in California, where large amounts of utility-scale photovoltaic generation was being built in 2013.

Renewable Portfolio Standard generation can displace gas-fired generation, which places downward pressure on natural gas prices; RPS generation also can lower wholesale electricity prices by “pushing out” the supply curve. These impacts saved consumers up to $1.2 billion from reduced wholesale electricity prices and another $1.3 to $3.7 billion from reduced natural gas prices.  The study is careful to explain that the additional renewable energy jobs, reduced wholesale electricity prices, and reduced natural gas prices are not net societal benefits but rather resource transfers from some stakeholders to others.

“This work is intended to inform ongoing policy discussions by helping states evaluate RPS programs,” Berkeley Lab’s Ryan Wiser, one of the report authors, said.

While the overall benefits reported are large, the study carefully documents its methods and highlights where uncertainties exist. For example, benefits from greenhouse gas reductions were found to range from $0.7 to $6.3 billion, reflecting differences in underlying estimates of potential damages caused by climate change. Similarly, air pollution reduction benefits-which arise primarily from avoided premature mortality-were estimated to range from $2.6 to $9.9 billion in 2013, reflecting differences in underlying epidemiological literature, among other factors.

“Our goal was to estimate the magnitude of Renewable Portfolio Standard benefits and impacts at a national-level, using established, consistent methodologies, while recognizing that states could perform their own more-detailed assessments,” NREL’s Jenny Heeter, one of the report authors, said.

This work was a follow-up and complement to an earlier study by the two labs that focused on the costs of state RPS programs to date that noted the need for a full understanding of the potential benefits, impacts, and costs of RPS programs. To that end, the most recent study provides a point of comparison for estimates of RPS program costs. Based on the results of this national study, benefits resulting from reduced greenhouse gas emissions equate to 0.7 to 6.4 cents per kilowatt-hour (kWh) of renewable energy, while benefits from reduced emissions of criteria air pollutants amount to 2.6 to 10.1 cents per kWh. Consumer savings from wholesale electricity market and natural gas price reductions represent another 0 to 1.2 cents per kWh and 1.3 to 3.7 cents per kWh, respectively. Ranges are presented as the models and methodologies used are sensitive to multiple parameters.

Although the study takes a national view — evaluating all state Renewable Portfolio Standard  programs as a whole — many of the associated benefits and impacts were highly regional. For example, the economic benefits from air pollution reductions are associated mostly with reduced sulfur dioxide (SO2) emissions from coal-fired power plants, and are concentrated primarily in the Mid-Atlantic, Great Lakes, Northeast, and Texas.

Reductions in water withdrawal and consumption were largest in California and Texas, respectively-both states that experience intermittent drought conditions.  Having examined both the costs and benefits of state Renewable Portfolio Standard programs historically, the researchers are planning a follow-up effort to evaluate the costs and benefits of RPS programs prospectively, considering scheduled increases to each state’s requirements as well as potential policy revisions.

The research was supported by funding from the U.S. Department of Energy’s Strategic Programs Office within the Office of Energy Efficiency and Renewable Energy.

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