Almost half of U.S. states now insist that their investor-owned electric utilities serve a specified percentage of their load with electricity from renewable resources by a date certain. Utilities struggling to comply with their mandate increasingly warn that they will be unable to achieve the required level on time.
Yet even as utilities express these doubts, more states are considering adopting renewable portfolio standards (RPS), and those with existing mandates are considering beefing them up. For example, the California Legislature is now debating whether to increase its requirement from the current target of 20% by 2010 to 33% by 2021.
Edicts aren't enough
State imperatives to foster development of renewable power projects should be applauded. However, legislative and regulatory initiatives to do so cannot remain one-way streets. They call on utilities to procure more renewable capacity sooner but ignore the technical, political, regulatory, and economic obstacles standing in their way.
Three factors cap the absolute amount of renewable power that can be environmentally produced and economically delivered within a specific time frame. First, political preferences have served to arbitrarily reduce the supply of "renewable" power by denying that status to some objectively renewable resources, such as most hydroelectric plants.
The second factor is limited transmission capacity from the remote areas where wind farms and solar power projects tend to be sited. This shortage significantly constrains the economics of proposed renewable energy projects. More projects would be developed if the ability to construct, and the schedule to complete construction of, new lines and expand existing corridors were more certain. But current regulatory policies and procedures for determining whether and where new transmission capacity should be constructed (and who will pay for it) are unwieldy and time-consuming. Extended hearings of environmental and economic opposition to a transmission project make its permitting less certain and thereby increase the risk borne by its developer.
Third, state renewable mandates are beginning to jostle one another for space. For example, California utilities are now looking to satisfy their mandates by pursuing renewable capacity from northwestern and southwestern states. A single cross-border outreach initiative by a big utility could accelerate renewable development over a broad region. But having many procurement programs competing for the same scarce resources may produce an anomalous result: Utilities in states rich in renewable energy potential may be unable to meet their renewable targets.
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