Delaware's Renewable Portfolio Standard: Why do we need it? How do we make it better?
Delaware's Renewable Portfolio Standard
Bruce Gillette, pastor of Limestone Presbyterian Church, the first church in Delaware to install solar panels, spoke about the urgent need for action on climate change.
Climate change has not been taken seriously, and we need to be united in addressing the reality of climate change. Politicians as a whole are not doing an adequate job of educating the public and taking action. Our challenge is to engage in conversations with others and to hold the feet of decision-makers to the fire. The status quo cannot continue, and many things can be done, but changing government policy is vital. Delaware can be a model for the rest of the nation in renewable energy policy.
Dennis E. Williams, State Representative for the 10th District, spoke about the history of the Renewable Portfolio Standard and the political process for making improvements.
Renewable energy and climate change policies are a “moral obligation” and the right thing to do. There are many benefits to renewable energy, including macro-economic benefits to the economy and jobs.
Background: The Renewable Portfolio Standard (RPS) was established in 2005 with the goal of 10% renewable energy in Delaware’s electricity fuel mix by 2020. This amount was increased to 20% by 2020 and the creation of a solar carve-out in a 2007 modification to the RPS, and increased again in 2009 to 25% renewables by 2025 and a solar carve-out of 3.5%. While efforts have been made to increase the percentage of renewable energy in the target year (2025), an effort should also be made to reach this goal faster.
There are more to energy costs than what is paid at the pump or on the electric bill, including health costs. Renewable energy becomes an even better choice when the real costs of fossil fuels are considered. Action to improve the renewable portfolio standard in the Delaware Legislature will require the widespread support from Delawareans.
Benjamin Farr, of the Delaware Solar Energy Coalition, spoke about the top five threats to renewable energy in Delaware.
Threat #1: Large industrial users can opt out of the RPS. Five companies have opted out so far, representing 10% of Delmarva Power & Light’s total electricity load, and this is expected to double to 20% by 2016. The Public Service Commission has allowed users with multiple meters to aggregate their consumption so that they are able to meet the minimum size capacity to opt out of the RPS. Unfortunately, the companies who have opted out of the RPS are not required to reveal their identity, so at this point they are anonymous.
Threat #2: Natural gas fueled fuel cells (Bloom Boxes), have been defined as renewable energy by the State of Delaware and qualify for Renewable Energy Credits (RECs). Currently, Delmarva Power and Light is using natural gas fuel cells towards the solar carve-out portion of their RPS requirements (SRECs), even if the energy is not yet being produced. Bloom Box fuel cells are currently covering 25% of Delmarva Power and Light’s solar carve-out requirements of the RPS, and will continue to do so for the next 5 years. This will increase to 30% of their RPS requirement for the following 4 years. Renewable energy policy is therefore being used to subsidize the natural gas fuel cell industry in Delaware, which defeats the purpose of the RPS.
Threat #3: Legislation enacted in 2010 allows for the RPS to be frozen if the cost cap (of 1% for solar and 3% for other renewables) is exceeded. Freezing the RPS is currently in the process of rule-making, yet achieving the renewable energy targets of the RPS with the current cost caps has left the RPS vulnerable. This is especially harmful because the fossil fuel industry does not need to consider the environmental, health and climate costs in its rate structure.
Threat #4: Legislation was introduced in 2012, and will likely be introduced again in 2013, that would enable energy efficiency improvements to qualify for Renewable Energy Credits. While energy efficiency is an important goal, such action would result in a lower demand for renewable energy and would weaken an already vulnerable solar market.
Threat #5: Large utility-sized projects are sacrificing the benefits of a distributed renewable energy system and have pushed individual residents, businesses and non-profits that have already invested in solar out of the SREC market, making it more difficult for them to pay for the solar panels that have already been installed or invest in new panels. Allowing utilities to circumvent buying SRECs also stresses the already aging distribution grid.
Finn McCabe, Delaware Solar Energy Coalition, spoke about policy options to improve the Renewable Portfolio Standard.
Even though solar energy is getting closer to grid parity and can better compete with fossil fuels, the RPS is needed to insure the payback of the up-front costs of system installation. With the costs of solar panels decreasing rapidly, the SREC value needed will also lessen over time. However, because people who have already made investments in solar are unable to sell their SRECs, growth in the solar market is slowing.
Alternative Compliance Payment: the amount that utilities must pay if they fail to comply with the solar carve-out of the RPS is currently set at $400 per SREC. With the declining cost of solar, this is now set too high and can be brought down to a more reasonable amount.
Solar to serve low-income households: distributed solar energy has many benefits for meeting the energy needs of low-income households. However, with the uncertainty in the SREC market, low-income families are less able to finance solar panels on their homes. Reserving a portion of the solar carve-out in the RPS for low-income families would provide price stability in the SREC market and would enable low-income families to install solar.
Repeal the exemptions to the RPS: large industrial users and municipalities are able to opt out of the RPS. Large industrial users already represent a 10% reduction in the load requirements of the RPS. While municipalities are required to have a comparable program that meets the final target deadline for 2025, municipalities do not need to meet the same interim annual targets of the RPS that investor-owned utilities must secure. Removing the municipal and industrial exemptions from the RPS would increase the amount of renewable energy that is required in Delaware, and would strengthen the REC and SREC markets.
Compensate for Bloom: because the natural gas fuel cells (Bloom Boxes) are earning SRECs, the amount of SRECs that are required in the RPS should be proportionally increased so that there is room for solar energy growth in Delaware, and so that the owners of existing solar panels are able to sell their SRECs.
It is very unfortunate that the Renewable Portfolio Standard (RPS) in Delaware has been modified to enable the definitions of renewable energy to include fossil fuels, to include exemptions for a significant portion of energy consumers in Delaware (large industries, the Delaware Electric COOP and municipalities), and to freeze the RPS. The RPS is in need of repair to protect Delawareans from the dangers of fossil fuels and climate change, restore the confidence of solar system owners who acted early to install solar on their homes, and to increase the solar market and enable wider growth of distributed solar energy in Delaware.
We thank our speakers, Bruce Gillette, Dennis E. Williams, Benjamin Farr and Finn McCabe, for sharing their expertise on this subject. We are grateful to the Delaware Solar Energy Coalition and Dale Davis for assistance in developing our agenda. We also thank our friends at Silverside Church for hosting this event, and our members and attendees who engaged in this discussion.
Photos of our event: