A Renewable Portfolio Standard (RPS) allows states to diversify their electricity supply portfolio and promote deployment of clean energy technologies.

The standards can be applied in both regulated and unregulated states, and they require electric utilities, as well as retail electric providers (REP), to supply a specified quantity of customer load from eligible sources of renewable power.

According to the U.S. Environmental Protection Agency, one goal of a RPS is to “stimulate market and technology development so that, ultimately, renewable energy will be economically competitive with conventional forms of electric power.”

Today, 29 states and the District of Columbia have RPS requirements. Six states have a goal. The following map is published by the Database of State Incentives for Renewables & Efficiency (DSIRE) website and shows those states having a RPS and what the specified amounts are.


Source : www.dsireusa.org

One way for suppliers such as GDF SUEZ Energy Resources NA to be in line with a RPS is to own renewable energy generation assets or to buy Renewable Energy Certificates (RECs) produced by generating facilities that meet certain criteria. A REC is a tradable commodity that is non-tangible and gives the rights to the purchaser to claim the environmental, social and other attributes associated with 1 MWh of electricity generated by a specific power facility.

In Massachusetts, there are 3 separate RPS requirements:

Class I. Per DSIRE’s website: “Under the Class I RPS, all retail electricity suppliers must provide a minimum percentage of kilowatt-hours (kWh) sales to end-use customers in Massachusetts from eligible renewable energy resources installed after December 31, 1997…”
Class II. Per DSIRE’s website: “The Class II RPS requires all retail electricity suppliers to provide annually 3.6% of kWh sales to end-use customers in Massachusetts from Class II renewables, starting in 2009. Eligible Class II renewables include systems operating before December 31, 1997…”
Class II Waste Energy. Per DSIRE’s website: “Class II Waste Energy Minimum Standard […] requires all retail electricity suppliers to provide annually 3.5% of kWh sales to end-use customers in Massachusetts from waste energy starting in 2009.”

Class I RPS requirements were applied in 2003 when the Massachusetts Department Of Energy Resources (DOER) imposed that all REPs must provide 1% of their overall load from Renewable Electricity Sources. The goal was to increase this RPS by 0.5% every year to reach 4% by 2009. Starting in 2010, REPs would have to increase that percentage by 1% each year until the DOER determines it was no longer necessary.

Since January 1st, 2009, The DOER also established an alternative energy portfolio standard (APS) that requires all REPs to also provide a minimum percentage of customer load from alternative energy generating sources. For a list of these sources, refer to the website: http://dsireusa.org/incentives/incentive.cfm?Incentive_Code=MA05R&re=1&ee=1

The DOER has issued an Emergency Regulation for the State of Massachusetts. This imposes REPs to begin a solar RPS carve-out beginning January 1, 2010. Although the final regulation will not be promulgated until May 2010, REPs will be accountable for compliance purposes starting on 1/1/2010.

This regulation imposes a sub-category within Massachusetts RPS Class I for solar requirements. Therefore, the existing Class I requirements will be reduced by the percentages allocated for solar. This percentage figure will be known when the final Emergency Regulation is received in May 2010.

On Friday January 8th, 2010, the DOER issued an emergency regulation to incorporate this proposed Solar Carve-Out rules into the Code of Massachusetts Regulations (225 CMR 14). Part of that regulation establishes an Alternative Compliance Payment (ACP) which, per DSIRE’s website, is defined as a payment that retail suppliers will have to make “[…] if they are unable to procure enough renewable energy attributes […]”.

This payment was set at $600/MWh for Cal10. However, for load contracted before 1/1/2010, a graduated ACP rate discount will apply: $400/MWh for Cal10, $450/MWh for Cal11 and $500/MWh for Cal 12.

If you have any questions regarding the changes occurring in your state because of the solar RPS carve-out, do not hesitate to contact your sales representative here.