Texas Renewable Energy Portolfio - Review
Texas Renewable Energy Portolfio is a Texas law that requires that Power generators produce increasing amouts of renewable energy. In effect, electricity providers (competitive retailers, municipal electric utilities, and electric cooperatives) must collectively generate 2,000 megawatts (MW) of additional renewable energy by 2009. The 2005 Texas Legislature increased the state's total renewable-energy mandate to 5,880 MW by 2015 and a target of 10,000 MW in 2025. Each provider is required to obtain new renewable energy capacity based on the their market share of energy sales times the renewable capacity goal. For example, a competitive retailer with 10 percent of the Texas retail electricity sales in 2009 would be required to obtain 200 megawatts of renewable energy capacity.
Texas is the nation's leader in wind energy thanks to our long-term commitment to bolstering renewable energy sources and diversifying the state's energy portfolio. Rick Perry, Texas Governor
A Renewable Portfolio Standard (RPS) ensures that the public benefits of renewable energy, such as wind and solar, continue to be recognized as electricity markets become more competitive. It requires companies that sell electricity to retail customers to support renewable energy generation.The Texas RPS is one of the most effective and successful in the nation, widely considered a model RPS. It is one of the greatest influences on the rapid growth of the Texas wind energy industry.
When Texas produced its first Renewable Portfolio Standard as part of the state's electricity industry restructuring legislation in 1999 (Senate Bill 7), it mandated the construction of certain amounts of renewable energy and prompted the renewable energy industry to rapidly accelerate its production on Texas sites.
Qualifying renewable energy sources include
The Texas Public Utility Commission implemented the program.
The RPS mandated that electricity providers (competitive retailers, municipal electric utilities, and electric cooperatives) collectively generate 2,000 megawatts (MW) of additional renewable energy by 2009. The 2005 Texas Legislature increased the state's total renewable-energy mandate to 5,880 MW by 2015 and a target of 10,000 MW in 2025. Each provider is required to obtain new renewable energy capacity based on the their market share of energy sales times the renewable capacity goal. For example, a competitive retailer with 10 percent of the Texas retail electricity sales in 2009 would be required to obtain 200 megawatts of renewable energy capacity.
The state of Texas estimates that more megawatts of renewable energy came on-line as a result of the RPS program than has in the past 100 years. After the RPS was implemented, Texas wind corporations and utilities invested $1 billion in wind power, creating jobs, adding to the Texas Permanent School Fund and increasing the rural tax base.
The Texas RPS has been so successful that its 10-year goal was met in just over six years. Wind power development in Texas has more than quadrupled since the RPS was established. Due to its competitive pricing, available federal tax incentives and the state's immense wind resources, wind power is expected to remain competitive with coal- and gas-fired plants.
Renewable Energy Credits
With an increasing number of states and municipalities introducing renewable portfolio standards, and a large number of high-profile companies looking to improve their image and reduce their environmental impact, the market for green tags in the US has never been stronger. Elisa Wood, U.S. writer on energy issues
The RPS provides for a Renewable Energy Credit (REC) trading program that will continue through 2019. To meet the RPS targets, utility companies may buy or trade RECs. One REC represents one megawatt-hour of qualified renewable energy that is generated and metered in Texas.
The REC trading system created great flexibility in the development of renewable energy projects. The renewable energy capacity required by the electricity sellers can be provided directly or through the REC market. If a utility earns extra credits, it can sell the credits to utilities who need credits to meet the RPS requirements. This enables electricity providers that do not own or purchase enough renewable energy capacity to purchase credits instead of capacity.
RECs are issued quarterly, based on meter readings. The REC market is administered by ERCOT, the Texas electric grid operator. Penalties for non-compliance with the RPS requirements are enforced by the PUCT. The PUCT has the authority to cap the price of RECs and may suspend the standard if necessary to protect the reliability and operation of the grid.
For an excellent discussion of RECs, see the Renewable Energy World article, Green Trading: Why the Chase Is on for U.S. RECs.
Senate Bill 20
This new goal is the next step toward Texas realizing its potential to be the nation's leading producer of renewable energy. Wind power, in particular, will play a major role in meeting our future energy needs. Tom "Smitty" Smith, Director, Public Citizen
The Renewable Portfolio Standard proved so successful that in 2005 the Texas Legislature passed a major extension and expansion of the legislation. Senate Bill 20 greatly increased the state's RPS goal to 5,880 MW by 2015, of which, 500 MW must come from non-wind resources. The legislation also set a goal of 10,000 MW in renewable energy capacity by 2025. The Texas RPS continues to be one of the most effective in the nation, and Texas is now the number one wind energy producer in the nation.
Non-Wind Renewable Energy Requirement
This clear-cut policy encouraged construction of some of the world's largest wind power projects that now deliver clean energy at prices lower than ever before achieved. The current cost competitiveness of wind power has Texas five years ahead of its renewables construction schedule, almost half way to meeting its 2,000 Megawatt goal. Texas Renewable Energy 2007
Currently wind represents the bulk of renewable energy development occurring under the Texas RPS, largely due to wind's relatively low cost and the abundance of exceptional wind resources in the state. In an effort to diversify the state's renewable generation portfolio, Senate Bill 20 includes a requirement that the state must meet 500 MW of the 2025 target with non-wind renewable generation. This provision indirectly promotes solar power and biomass in Texas and provides farmers and ranchers with new revenue sources from the use of crops and animal waste to produce energy.
Energy Transmission Plan
Inadequate transmission is frequently cited as the most significant obstacle to (wind power development) in Texas. Public Utility Commission of Texas
To meet the RPS goal, Senate Bill 20 includes a transmission plan for remote regions such as McCamey that have a tremendous capacity for renewable energy generation but are handicapped by lack of sufficient transmission infrastructure. The goal is to increase transmission capacity to get clean energy (especially wind) from remote areas to the cities. See the wind transmission page.
Texas Competitive Renewable Energy Zones
Texas electric regulators voted to designate eight zones as the best sites for construction of new power lines to serve more than 20,000 megawatts of proposed wind generation' The boldness of the PUC's decision is hard to overstate. Texas Renewable Energy 2007
Senate Bill 20 requires that competitive renewable energy zones (CREZ) be designated in the best areas in the state and that an electric transmission infrastructure be constructed to move renewable energy from those zones to markets where people use energy. The Electric Reliability Council of Texas (ERCOT), the state's transmission operator, is charged with collecting wind data and nominating a number of CREZs based on transmission cost calculations for each CREZ. See this Public Utility Commission of Texas (PUC) web page on CREZ for the PUC's legal language.
Resources
PUCT Substantive Rule 25.173: Goal for Renewable Energy
Full text of Senate Bill 20 (SB 20)
Texas Legislative Session: 79(1)
Renewable Portfolio Standards Fact Sheet
This U.S. Environmental Protection Agency fact sheet describes the benefits of RPS for states, how RPS encourage CHP projects, and some of the different state requirements for those that have implemented them.
AWEA Transmission Policy
An American Wind Energy Association (AWEA) web site.
Fair Transmission Access for Wind
An AWEA publication.
Western Governors Association Transmission Report March 2006
Map of States with Renewable Portfolio Standards
Updated September 2006.
Increasing the Texas Renewable Energy Standard: Economic & Employment Benefits
A Union of Concerned Scientists 2005 study.
Send comments, questions, and suggestions to website manager.
Window on State Government | Privacy and Security Policy | Accessibility Policy
Texas is the nation's leader in wind energy thanks to our long-term commitment to bolstering renewable energy sources and diversifying the state's energy portfolio. Rick Perry, Texas Governor
A Renewable Portfolio Standard (RPS) ensures that the public benefits of renewable energy, such as wind and solar, continue to be recognized as electricity markets become more competitive. It requires companies that sell electricity to retail customers to support renewable energy generation.The Texas RPS is one of the most effective and successful in the nation, widely considered a model RPS. It is one of the greatest influences on the rapid growth of the Texas wind energy industry.
When Texas produced its first Renewable Portfolio Standard as part of the state's electricity industry restructuring legislation in 1999 (Senate Bill 7), it mandated the construction of certain amounts of renewable energy and prompted the renewable energy industry to rapidly accelerate its production on Texas sites.
Qualifying renewable energy sources include
- solar
- wind
- geothermal
- hydroelectric
- tidal energy
- biomass, including landfill gas
The Texas Public Utility Commission implemented the program.
The RPS mandated that electricity providers (competitive retailers, municipal electric utilities, and electric cooperatives) collectively generate 2,000 megawatts (MW) of additional renewable energy by 2009. The 2005 Texas Legislature increased the state's total renewable-energy mandate to 5,880 MW by 2015 and a target of 10,000 MW in 2025. Each provider is required to obtain new renewable energy capacity based on the their market share of energy sales times the renewable capacity goal. For example, a competitive retailer with 10 percent of the Texas retail electricity sales in 2009 would be required to obtain 200 megawatts of renewable energy capacity.
The state of Texas estimates that more megawatts of renewable energy came on-line as a result of the RPS program than has in the past 100 years. After the RPS was implemented, Texas wind corporations and utilities invested $1 billion in wind power, creating jobs, adding to the Texas Permanent School Fund and increasing the rural tax base.
The Texas RPS has been so successful that its 10-year goal was met in just over six years. Wind power development in Texas has more than quadrupled since the RPS was established. Due to its competitive pricing, available federal tax incentives and the state's immense wind resources, wind power is expected to remain competitive with coal- and gas-fired plants.
Renewable Energy Credits
With an increasing number of states and municipalities introducing renewable portfolio standards, and a large number of high-profile companies looking to improve their image and reduce their environmental impact, the market for green tags in the US has never been stronger. Elisa Wood, U.S. writer on energy issues
The RPS provides for a Renewable Energy Credit (REC) trading program that will continue through 2019. To meet the RPS targets, utility companies may buy or trade RECs. One REC represents one megawatt-hour of qualified renewable energy that is generated and metered in Texas.
The REC trading system created great flexibility in the development of renewable energy projects. The renewable energy capacity required by the electricity sellers can be provided directly or through the REC market. If a utility earns extra credits, it can sell the credits to utilities who need credits to meet the RPS requirements. This enables electricity providers that do not own or purchase enough renewable energy capacity to purchase credits instead of capacity.
RECs are issued quarterly, based on meter readings. The REC market is administered by ERCOT, the Texas electric grid operator. Penalties for non-compliance with the RPS requirements are enforced by the PUCT. The PUCT has the authority to cap the price of RECs and may suspend the standard if necessary to protect the reliability and operation of the grid.
For an excellent discussion of RECs, see the Renewable Energy World article, Green Trading: Why the Chase Is on for U.S. RECs.
Senate Bill 20
This new goal is the next step toward Texas realizing its potential to be the nation's leading producer of renewable energy. Wind power, in particular, will play a major role in meeting our future energy needs. Tom "Smitty" Smith, Director, Public Citizen
The Renewable Portfolio Standard proved so successful that in 2005 the Texas Legislature passed a major extension and expansion of the legislation. Senate Bill 20 greatly increased the state's RPS goal to 5,880 MW by 2015, of which, 500 MW must come from non-wind resources. The legislation also set a goal of 10,000 MW in renewable energy capacity by 2025. The Texas RPS continues to be one of the most effective in the nation, and Texas is now the number one wind energy producer in the nation.
Non-Wind Renewable Energy Requirement
This clear-cut policy encouraged construction of some of the world's largest wind power projects that now deliver clean energy at prices lower than ever before achieved. The current cost competitiveness of wind power has Texas five years ahead of its renewables construction schedule, almost half way to meeting its 2,000 Megawatt goal. Texas Renewable Energy 2007
Currently wind represents the bulk of renewable energy development occurring under the Texas RPS, largely due to wind's relatively low cost and the abundance of exceptional wind resources in the state. In an effort to diversify the state's renewable generation portfolio, Senate Bill 20 includes a requirement that the state must meet 500 MW of the 2025 target with non-wind renewable generation. This provision indirectly promotes solar power and biomass in Texas and provides farmers and ranchers with new revenue sources from the use of crops and animal waste to produce energy.
Energy Transmission Plan
Inadequate transmission is frequently cited as the most significant obstacle to (wind power development) in Texas. Public Utility Commission of Texas
To meet the RPS goal, Senate Bill 20 includes a transmission plan for remote regions such as McCamey that have a tremendous capacity for renewable energy generation but are handicapped by lack of sufficient transmission infrastructure. The goal is to increase transmission capacity to get clean energy (especially wind) from remote areas to the cities. See the wind transmission page.
Texas Competitive Renewable Energy Zones
Texas electric regulators voted to designate eight zones as the best sites for construction of new power lines to serve more than 20,000 megawatts of proposed wind generation' The boldness of the PUC's decision is hard to overstate. Texas Renewable Energy 2007
Senate Bill 20 requires that competitive renewable energy zones (CREZ) be designated in the best areas in the state and that an electric transmission infrastructure be constructed to move renewable energy from those zones to markets where people use energy. The Electric Reliability Council of Texas (ERCOT), the state's transmission operator, is charged with collecting wind data and nominating a number of CREZs based on transmission cost calculations for each CREZ. See this Public Utility Commission of Texas (PUC) web page on CREZ for the PUC's legal language.
Resources
PUCT Substantive Rule 25.173: Goal for Renewable Energy
Full text of Senate Bill 20 (SB 20)
Texas Legislative Session: 79(1)
Renewable Portfolio Standards Fact Sheet
This U.S. Environmental Protection Agency fact sheet describes the benefits of RPS for states, how RPS encourage CHP projects, and some of the different state requirements for those that have implemented them.
AWEA Transmission Policy
An American Wind Energy Association (AWEA) web site.
Fair Transmission Access for Wind
An AWEA publication.
Western Governors Association Transmission Report March 2006
Map of States with Renewable Portfolio Standards
Updated September 2006.
Increasing the Texas Renewable Energy Standard: Economic & Employment Benefits
A Union of Concerned Scientists 2005 study.
Send comments, questions, and suggestions to website manager.
Window on State Government | Privacy and Security Policy | Accessibility Policy
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