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Renewable Energy: Toward A Portfolio Standard?

Fortnightly Magazine - August 1998

Topping the list is a call for the Environmental Protection Agency to "correct the enormous disparity in emission rates among the nation's electricity generators." Among the other initiatives endorsed, however, is the phase-in of a statewide RPS that relies on marketable credits.

"New Jersey has had extremely tough air standards, and we've had to make a strong investment here," notes Tony Borden, PSE&G vice president. "We don't think it's fair for other utilities to just grind it up a few notches on the output of their plants and send that power here when they don't have to meet the standards we do. People say 'You're afraid of competition,' and we say, 'That's a dumb response.'

"The central-most notion that we share with the NRDC is, if you're going to restructure the energy industry, this is the time to fix the environmental issues as well," Borden adds. "They go hand in hand."

Arizona Public Service Co. also supports renewables development, but has reservations about the solar portfolio standard included in the rules for restructuring adopted by the Arizona Corporation Commission. Though lower than the commission's initial proposal, the goal of 1 percent solar by Jan. 1, 2002, beginning with 0.5 percent in 1999, may still be too much too fast, says Herb Hayden, coordinator of APS's renewable resources program.

"It's going to require 100 megawatts of solar installation for APS," he says. "The total for Arizona will be 250 megawatts of solar. The construction pace required is very rapid. You're talking about magnitudes of solar that are comparable to the global production of solar."

The SPS will cost Arizona consumers an estimated $500 million by 2003, Hayden says, adding, "Our analysis showed that it's cheaper to comply with the penalty than the solar standard." The penalty for noncompliance is 30 cents per kWh of shortfall.

Almost none of Arizona's power is supplied by solar, according to Hayden. But APS has recently built two plants -- one 82-kilowatt plant, and one 250-KW facility -- as part of its Solar Partners Program. Customers sign up to purchase 100-watt units of solar power at a cost of about $3 a month. The program has proven so popular it's scheduled for expansion.

An RPS that demands too much too soon could do more harm than good to green markets, says Karen O'Neill, vice president at Green Mountain Energy Resources.

"If it kicks in immediately in an area where there are very few renewables, it could suck up all the green resources," O'Neill says. "That would make it difficult for those marketing the supply to find the product."

On the other hand, an RPS set at a level close to what the market will achieve on its own will make it easy for every energy provider to look green, notes Rabago, of Planergy. That won't necessarily help the further development of renewables, he says, because companies dedicated to green power will have a much tougher sell.

"Today, the message a green marketer has to get out is, 'To be green, go with us.'" Rabago says. "[A] perfectly simple