Benchmarks

A successful initiative should reduce state dependence on volatile supplies.

California's Renewables Portfolio Standard (RPS) requires retail sellers of electricity to increase the relative percentage share of all such sales represented by renewable electricity by an absolute increment of at least 1 percent of additional share per year, thus achieving a releative share of at least 20 percent of all power sales by 2017. This will be a formidable task, even in resource rich California, where renewable energy sales already account for 11 percent of all utility sales today. This requirement raises interesting questions:

• How will the RPS affect generation and capacity from all power sources moving forward?
• How will that development affect electric secto natural gas use?
• What will happen to the market price of power?

To answer these questions, we conducted an hourly unit-level simulation of California's power market through 2015. We constructed a "No RPS" case that assumes only currently planned renewable energy additions are added to California's capacity mix, and a "Full RPS" case that assumes the RPS targets are met fully with in-state resources. In this analysis, we assume that the vast majority of new renewable power capacity will be developed in-state since California possesses very favorable resources.

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