Understanding federal renewable portfolio standards.

• Author: Simeone, Christina
• Position: Reducing Energy

Combining all sources of energy available in the US (electricity, petroleum, coal, nuclear, natural gas, renewables, etc), the industrial sector consumes the greatest share of energy, followed by the transportation, residential and commercial sectors [1]. Just to make electricity, which is only one energy source, enormous amounts of energy inputs are required. The act of simply creating electrical power in the United States uses about 38.9% of primary energy consumption [2]. In 2004, this electrical power was derived from about 50% coal, 20% nuclear power, 18% natural gas, 7% hydroelectric power and 6% other (petroleum, wood, waste, geothermal, other gases, wind, solar and others) [3].

With respect to electrical power, the residential sector has become the largest consumer, followed by commercial, industrial and transportation sectors [4]. Of all energy sources available in the US, the electricity sector releases the largest proportion (39%) of carbon dioxide emissions [5]. In 2004 energy consumption for electricity production released 2,444,443 thousand metric tons of carbon dioxide, 10,307 thousand metric tons of sulfur dioxide, and 3,951 thousand metric tons of nitrogen oxides and significant amounts of mercury and particulate matter [6]. These electrical power plant pollutants significantly contribute to environmental problems such as global warming, acid rain production, and ozone layer depletion. These pollutants also pose negative health risks to the human population.

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In the electricity sector, the use of renewable energy sources (such as solar, wind, geothermal, and biomass) have been focused on as a way to diversify the electricity supply, help stabilize the country's long-term energy prices and reduce environmental deterioration. Hydroelectric power is currently the most utilized renewable energy source, contributing about 7% of the nation's electric power [7].

Hydroelectric is not the ideal form of renewable energy generation, due to the significant costs associated with building dams and the ecosystem damage that occurs as a result. Underdeveloped, emerging renewable resources such as solar, wind and biomass hold greater opportunities for growth.

A renewable portfolio standard (RPS), also known as a minimum renewable generation requirement, is a government policy mechanism used to support the development and market penetration of renewable energy. A state-level RPS requires a state to generate a percent of its electricity from renewable sources. For example, in 2000 the Massachusetts RPS required 1% of its electricity to be generated from renewable sources by 2003, rising by 0.5% annually until 4% is reached in 2009, and then increasing by 1% each year until regulators decide to end the program.

Usually electric utility companies are encouraged to derive a percentage of their energy sales from renewable energy sources to meet these requirements. For example, in order to qualify for certain government bids and programs the Philadelphia Electric Company (PECO) was required to produce 2% of its electricity via renewables in 2001 and increase that...