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Closing the Green Gap

Will wind power close the gap between state renewable portfolio standards and the current shortfall in viable technologies?

Fortnightly Magazine - April 2005
  • potential federal standard overriding state standards :
Chart 2 - Total NHRE Cumulative Capital Investment by State

o 10 percent national standard: 130 GW needed at a cost of $143 billion dollars;

Map 1 - 75 Companies in 20 States to absorb 76% of RPS Investment

o 20 percent national standard: 287 GW needed at a cost of $314 billion dollars.

State-Level Impacts

California, Pennsylvania, Illinois, and New York will see the largest impacts given their overall size and the extent of regulations in their RPS. Chart 2 illustrates the impact in cumulative investment expected by each portfolio state over the next 15 years. The map on the following page provides a geographic view of the RPS impact.

Three states, Maine, Iowa and Wisconsin, have enacted standards, yet already they comply with the 2020 goal. Power generated in these states and even non-RPS states where qualifying renewable energy exists would benefit greatly from a broad-based Renewable Energy Credit (REC) trading program by enabling "surplus" renewable energy to be sold to companies in deficit states to help meet RPS mandates. RECs currently exist in a handful of states.

Company Impacts

Map 2 - Operating and Planned Wind Capacity

Despite the varying rules and incentives unique to each state RPS, there is one common thread-the largest utility companies in each state are responsible for meeting a percentage of their load with qualifying renewable energy.

Five of the largest distribution utilities in America top the list of most affected companies by state portfolio standards. These include Southern California Edison (SCE), which could spend an estimated $3.3 billion to $4 billion to comply. SCE currently accounts for more than 22 percent of California's retail power sales. Commonwealth Edison, a subsidiary of Exelon, is second, with an estimated $3.2 billion to $3.9 billion in cumulative compliance costs. It accounts for more than 50 percent of all retail sales in Illinois.

Further, the top 25 companies account for nearly 63 percent of the cumulative investment expected to meet the standards by 2020, even though they represent less than 18 percent of the total U.S. retail power market. And the top 75 utilities affected by the state standards account for 76 percent of the cumulative 2020 investment.

Wind Fills In

Wind is expected to fill more than 75 percent of the gap created by the state RPS standards. Though most of the wind capacity operating today (80.9 percent) is in the RPS states, more than 30 percent of wind turbines under construction or in the planning stages are targeted to be built in states without current portfolio standards. These include most of the Northwestern states, and the Dakotas, Nebraska, Kansas, and Oklahoma. This is best illustrated by the wind capacity map.

Chart 4 shows that the cumulative investment in wind dwarfs the other technologies. Between now and 2020, in order to meet the current state RPS, more than 40 GW of wind capacity is needed. As of the end of 2004, operating wind capacity in the United States was only 6.7 GW. Most of today's operating capacity is located in California, Texas, the upper Midwest, and the Northwest.

Projects under construction or in the planning pipeline total more than 27 GW, and this number is growing every day. To put this