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Study: State RPS Policies Have Yielded Sizable Consumer Savings

February 9, 2016 By Cheryl Kaften

A new study estimates that the United States has accrued $2.2 billion in benefits nationwide by reducing greenhouse gas (GHG) emissions; and $5.2 billion, by diminishing other forms of air pollution, in conformity with state renewable portfolio standard (RPS) policies effective since 2013.

RPS policies require utilities or other electricity providers to meet a minimum portion of their load with eligible forms of renewable electricity. Such policies have been among the major drivers for adoption of renewable electricity generation in the United States over the past decade. From 2013 through 2016, 29 states plus the District of Columbia and Puerto Rico have had an RPS in place.

Consumer savings from reduced electricity and natural gas prices are possible because renewable electricity displaces other electricity generation with higher operating costs, the researchers said.

The report, entitled A Retrospective Analysis of the Benefits and Impacts of U.S. Renewable Portfolio Standards, was conducted by researchers from the U.S. Department of Energy’s Lawrence Berkeley National Laboratory (Berkeley Lab) and National Renewable Energy Laboratory (NREL) and evaluates the benefits and other impacts of RPS policies.

Specifically, the research estimates that RPS policies:

  • Supported 200,000 renewable energy-related jobs in 2013,
  • Saved consumers up to $1.2 billion from reduced wholesale electricity prices, and
  • Saved consumers another $1.3 billion to $3.7 billion in reduced natural gas rates.

However, most of these RPS policies will reach their terminal targets within the next decade. As states consider extending, eliminating, or otherwise revising existing RPS programs, or developing new ones, increasing attention is being paid to the costs, benefits, and other impacts of these policies.

“This work is intended to inform these ongoing discussions by helping states evaluate RPS programs,” said Berkeley Lab’s Senior Scientist and Deputy Group Leader Ryan Wiser, one of the 11 authors of the report.

The study takes care to describe its methods and highlights uncertainties in its findings. For example, benefits from greenhouse gas reductions were estimated to range from $0.7 to $6.3 billion – revealing differences in underlying estimates of 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 RPS benefits and impacts at a national level, using established methodologies, while recognizing that individual states can perform their own, more-detailed assessments,” added NREL Senior Energy Analyst Jenny Heeter, another of the report’s authors.

This work was intended to serve as a follow-up and complement to an earlier study by the two labs that focused on the costs of state RPS programs to date; and that noted the need for a full understanding of the potential benefits, impacts, and costs of RPS programs.

To that end, this most recent study provides a point of comparison for estimates of RPS program costs. Based on the results of this national study, benefits from reduced greenhouse gas emissions equate to from 0.7 cents to 6.4 cents per kilowatt-hour (kWh) of renewable energy, while benefits from reduced emissions of criteria air pollutants amount to 2.6 cents to 10.1 cents/kWh.

Consumer savings from wholesale electricity market and natural gas price reductions represent another 0 cents to 1.2 cents/kWh and 1.3 to 3.7 cents/kWh, respectively.

Although the study takes a national view—evaluating all state RPS 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.

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

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