Midwestern Governors’ Association Renewable Energy and Advanced Coal Carbon Capture and Sequestration (RE/AC/CCS) Advisory Group
Summary List of Pending Options for Analysis
Policy Option / Policy Description / GHG Reductions(MMtCO2e) / Net Present Value
2008–2025
(Million $) / Cost-Effective-ness
($/tCO2e) / Level of Support /
2015 / 2025 / Total 2008–
2025 /
RE-1 / Stimulate the Development of New Renewable Electricity Generation / TBD / TBD / TBD / TBD / TBD / Pending /
RE-2 / Expand Collaborative Regional Transmission Planning and Siting / TBD / TBD / TBD / TBD / TBD / Pending /
RE-3 / Incorporate transmission development requirements into existing state renewable energy objectives and standards / TBD / TBD / TBD / TBD / TBD / Pending /
RE-4 / Pursue a Multi-State Transmission Initiative / TBD / TBD / TBD / TBD / TBD / Pending /
RE-5 / Encourage Orderly Development of Wind Resources / TBD / TBD / TBD / TBD / TBD / Pending /
RE-6 / Encourage a Diversity of Approaches to Renewable Electricity Development / TBD / TBD / TBD / TBD / TBD / Pending /
RE-7 / Maximize Electricity Generation from the Region’s Wind Resources Through Demonstration Efforts / TBD / TBD / TBD / TBD / TBD / Pending /
RE-8 / Attract Renewable Energy Component Manufacturers and Service Providers to the Region / TBD / TBD / TBD / TBD / TBD / Pending /
AC/CCS-1 / Promote the Establishment of a Regional Carbon Capture and Storage Infrastructure / TBD / TBD / TBD / TBD / TBD / Pending /
AC/CCS -2 / Coal Technology Incentives, Support or Requirements / TBD / TBD / TBD / TBD / TBD / Pending /
/ Sector Total After Adjusting for Overlaps / TBD / TBD / TBD / TBD / TBD / NA /
/ Reductions From Recent Actions / TBD / TBD / TBD / TBD / TBD / NA /
/ Sector Total Plus Recent Actions / TBD / TBD / TBD / TBD / TBD / NA /
GHG = greenhouse gas; MMt = million metric tons; t = metric ton; CO2e = carbon dioxide equivalent; TBD = to be determined; NA=not applicable
Note to RE/AC/CCS Members: The option write-ups below started with the options presented in the “MGA Advanced Coal and Carbon Capture and Storage Platform: Goals, Objectives, and Policy Options,” the ET2050 Forum participant input, and additional options and ideas generated in the Breakout Groups from the RE/CCS 20-21 May 2008 meeting in Indianapolis.
Subsequent to future conference calls with RE/AC/CCS members, the options that follow will be further elaborated, incorporating changes as proposed by working group members. Please bear in mind that the text you are seeing will continue to be edited/elaborated upon as the RE/AC/CCS group sees fit.
Previously discussed revisions have been incorporated. The most recent revisions are shown in track changes.
2
30 June Draft
RE-1: Stimulate the Development of New Renewable Electricity Generation
Policy Description
Policy-makers need to identify appropriate policies that can overcome existing barriers in the Midwestern region for the development of renewable electricity generation (REG). There are a number of barriers to renewable energy use, including poilcy, institutional, and marketing impediments which are holding back the penetration of renewable energy technologies. Examples of barriers include lack of sufficient government policy support, lack of information dissemination and consumer awareness, actual or perceived cost of renewable technology, difficulties bringing new technologies into traditional utility operation,, inadequate financing options for renewable energy projects, and others.
Policy Design
Elements for a stable regulatory environment for renewable energy development should include the following:
1. Enact, where appropriate, or enhance existing state Renewable Energy Standards or Renewable Energy Objectives (RES/REO) in the Midwestern Governor’s Association (MGA) region to stimulate the development of new renewable electricity generation. Maximize cost-effective renewable electricity production in the region and its integration on the grid.
2. Promote a multi-year extension of the federal production tax credit (PTC) for renewable energy for up to eight years, effective once the current two-year extension expires on December 31, 2008. A longer extension will bring needed industry stability and help achieve more development than would otherwise be possible with repeated short-term extensions.
3. Promote expansion of federal Clean Renewable Energy Bonds to increase incentives available for development of renewable energy projects by entities that cannot utilize the PTC effectively, such as tax-exempt electric cooperatives, municipal utilizes, and local and tribal governments.
Promote and assess coordination across all states in the region regarding meeting RES/REO goals. Attention should be devoted to developing a planning process for regional renewable buildout, including an assessment of ways to improve linkages between renewable-promoting policies, and the analysis of the effectiveness of various policy mechanisms. An effort is also needed to expand the Midwest Renewable Energy tracking System (MRETS) throughout the Midwest region and to integrate it with the various policies to promote renewables. Feed in tariffs could also be considered.
Goals:
The timing and targets for the penetration of increased levels of renewable energy generation in the region are as follows:
q By 2015: 10 percent of electricity consumed in the region (equivalent to 103 million MWh of retail sales) will be from renewable resources.
q By 2020: 20 percent of electricity consumed in the region (equivalent to 219 million MWh of retail sales) will be from renewable resources.
q By 2025: 25 percent of electricity consumed in the region (equivalent to 293 to million MWh of retail sales) will be from renewable resources.
q By 2030: 30 percent of electricity consumed in the region (equivalent to 376 million MWh of retail sales) will be from renewable resources.
Timing: As noted above.
Parties Involved: Parties involved in achieving the goals above include all power producers operating qualifying renewable facilities in the region and MISO, and be closely linked to the MRETS as a possible MGA wide tracking system for renewable energy. Political support is also necessary for success on these goals, so various governmental parties will need to be involved.
Implementation Mechanisms
Some of the key implementation mechanisms that will need to be explored for this policy option are as follows:
1. Multi-year extension of the federal production tax credit (PTC) for renewable energy: The Production Tax Credit (PTC) has been a key component in the growth of domestic wind energy use since Congress created it as part of the country’s energy policy in 1992. By renewing the tax credit, the Midwest can capitalize on creating jobs in the emerging renewable energy industry. Economic incentives will attract energy service providers. Political opposition from senators and the White House poses the largest barrier to its reauthorization. Many government officials may object to the PTC reauthorization, since many oppose funding strategies that compete with gas and oil tax incentives. Key implementation activities are as follows:
q Advocates of renewing the PTC must act quickly, before the credit expires.
q Government officials and members of the media must be solicited to help inform the public and put political pressure on decision makers.
q Legislators must pass unanimous joint resolutions urging Congress to renew the PTC,
q Governors and stakeholders should write letters urging Congress to renew the PTC.
q The MGA should speak to state legislatures, members of the media and the American Wind Energy Association (AWEA) to address renewing the PTC.
2. Expansion of federal Clean Renewable Energy Bonds: As some key entities are unable to utilize the PTC effectively, other supplementary mechanisms such as federal renewable energy bonds should be made available to such entities in order to promote the development of renewable energy in their jurisdictions. This will involve efforts to clarify the benefits of these bonds with key congressional offices and staff.
3. Promote coordination across states and assess policy mechanisms: Several efforts should be implemented including the following:
q Encourage all states in the region to adopt RES/REO goals which will help the Midwest Independent Transmission System Operator (MISO) planning process and have all states adopt credit market tracking such as the Midwest Renewable Energy tracking System (M-RETS).
q Look into how renewable energy credits (REC) trading should be incorporated into GHG Cap and Trade system and if M-RETS can help in tracking REC usage in both markets. M-RETS can be expanded to the MGA/MISO footprint so all states are included in the program.
q Study the possibility of feed-in tariffs, rate making incentives for RES/REO and other financing options for increasing renewable portfolio standard (RPS) percentages in each MGA state.
q Factor in technology development and economics in the timeline for RES/REO percentage increases as wind storage and alternative fuel production allow more wind without corresponding transmission needs.
q Quantification of these goals should model the outcome of this policy using the targets and timelines specified in the Platform’s goals and should assume that the RECs can be used regionally via an MRETS type tracking system.
q Consider how subsidies/incentives for oil and gas could be transferred to renewables to increase development.
Related Policies/Programs in Place
There are several states in the MGA that have implemented policies/programs to stimulate the development of renewable energy, as follows:
q Iowa: The Iowa law, passed in 1983, is a capacity-based standard requiring investor-owned utilities to purchase a shared total of 105 MW (averaged) of capacity each year from renewable energy generators. This is a fixed total of 105 MW, not an incremental total that is added to each year.
q Illinois: The Illinois House of Representatives passed a Renewable Portfolio Standard (RPS) requiring the state to buy 2% of its power from renewable energy sources by 2008, 10% by 2015, and setting a goal of 25% by 2025.
q Minnesota: The state has adopted a 25% renewable energy goal by 2025.
q North Dakota: North Dakota has a renewable energy objective to meet 10% of annual retail sales with renewables by 2015 with mandatory reporting to the PSC.
q South Dakota: South Dakota has a renewable energy objective to meet 10% of annual retail sales with renewables by 2015.
q Ohio: Ohio recently passed legislation which ramps up use of renewable energy by power companies from 0.25% in 2009 to 12.5% in 2025.
q Wisconsin: Wisconsin’s legislation requires a fixed 50 MW renewable capacity target for a portion of the state, as well as an RPS increasing from 0.5% in 2001 to 102.2% in 20151 that applies to all retail electricity providers
Type(s) of GHG Reductions
Reductions in GHG emissions associated with the displacement of fossil-fired electricity production.
Estimated GHG Reductions and Net Costs or Cost Savings
Data Sources:
Give complete information and include URL links if available.
Quantification Methods:
Briefly describe in a paragraph/several sentences. Okay to refer to information supplied above.
Key Assumptions:
Briefly describe in bulleted form or several sentences the key cost, performance or other assumptions incorporated into the analysis.
Key Uncertainties
Briefly describe using separate paragraphs for different topics.
Additional Benefits and Costs
q Use numerical listing.
q Keep the items brief – 1 or 2 sentences.
q Include social /non-quantifiable and indirect benefits
Feasibility Issues
This section to take note of RE/AC/CCS working group members raise feasibility questions, if any:
q Use bullet points.
q Give each a sentence.
q Add any other info relevant to the feasibility questions.
Status of Group Approval
This section to indicate the level of approval reached by the Group (e.g., full approval, approval with objections).
Level of Group Support
This section to indicate the level of group support.
Barriers to Consensus
This section to identify any barriers to reaching consensus in the group.
2
30 June Draft
RE-2: Expand Collaborative Regional Transmission Planning and Siting
Policy Description
This option involves the expansion of collaborative regional transmission planning and siting to enable future development of renewable electricity generation. There are a number of barriers to regional transmission planning and siting, the most noteworthy being that States are typically resistant to paying and supporting regional planning and transmission projects beyond those that provide direct benefit to their customers and utilities. There areis also a large dividemajor differences between East and West, with things like size of transmission grid, closeness to major wind development areas and access to coal which create different issues political issues between the regional power markets, the old MAPP (Mid-American Power Pool) region and the MISO. Moreover, cost allocation in the form of an approved transmission tariff does not exist for large regional transmission projects. These are long term issues that require significant time and effort to improve.
However, Iimproving the planning and siting process for new transmission will enable the region’s electricity load centers to better access the significant wind and other renewable resource potential that exists in the region’s areas distant from these centers. A collaborative regional transmission plan can provide long term cost savings and more efficient delivery of electricity for all. The policy will necessarily involve the development of an equitable cost-sharing system in order to provide long-term benefits for those who are paying for the system. In examining transmission needs in the region to accommodate greater levels of renewable energy generation, it will be essential to consider collaborative links and interconnections not only within the MGA region but beyond in order to enhance future markets for the region renewable resources.
Policy Design
Inter-jurisidictional transmission planning and siting involving state regulators, utilities, regional transmission organizations, project developers, advocates, and others must be strengthened to optimize future transmission investments and ensure that the region’s grid infrastructure enables robust development of renewable electricity generation and ensures broader system adequacy. In addition, state regulatory commissions need to be empowered to define the “public interest” more broadly to include regional benefits. Elements for a stable regulatory environment for regional transmission planning and siting should include the following: