It’s no secret that renewable energy in New England has gone mainstream. Just drive down the highway and you will see solar arrays on commercial buildings, installation trucks driving to their next project or wind turbines dotting the landscape; all reminding us that we are experiencing a clean energy boom. According to a recent report by the Mass Clean Energy Council (MassCEC) on clean energy jobs in Massachusetts, the Commonwealth’s clean energy economy employs nearly 100,000 people at over 6,400 companies, representing nearly $11 billion in investment.
One could argue that the Renewable Portfolio Standard (RPS) is the single policy that has done the most to create this boom and advance clean energy in the Northeast and 29 states total across the U.S.
What exactly is an RPS? An RPS is a program designed to promote the adoption of renewable energy. It requires utilities and other energy providers to procure a set amount of their energy from renewable sources. For example, in Massachusetts the rate increases each year by 1% through 2030 with a total target of 25%, and in Connecticut by 1.5% through 2020 with a target of 20%.
The RPS allows renewable energy generators like wind farms and solar energy system owners to sell Renewable Energy Certificates (RECS), in addition to the energy itself. A REC represents 1 megawatt hour of renewable power that can be bought and sold. In this way there is a liquid market where energy providers (utilities and other retail providers) can easily secure the RECs needed to meet their regulatory requirements. The additional revenue acts as an incentive for developers and owners and makes it easier to finance projects. The RPS is an efficient market-based policy that has provided the stimulus to launch the region’s clean energy industry and to help states meet their legal commitments to reduce green house gas emissions.
However, a new study by the Northeast Clean Energy Council shows that the supply of RECs is outpacing the regulatory demand requirement–supply is out-pacing demand. This puts at risk the ability of renewable energy developers to secure the financing they need to build their projects.
The study goes on to examine what would happen if Massachusetts and Connecticut increased their RPS requirements and the results were a bit surprising. Obviously increasing the RPS requirement would result in more renewable energy, but the study found that it would also help to stabilize or reduce energy prices and create new jobs. Specifically, the study looked at a few different scenarios for CT and MA, which entailed increasing current goals by 2-3%, and had the following conclusions:
• An increase in the Massachusetts and Connecticut RPS could create between 10,000 and 43,000 jobs over 12 years across the region.
•An increased RPS could lead to the construction of 2,000 to 4,900 megawatts (MW) of new, incremental renewables.
• Renewable energy that would be deployed with an increased RPS would diversify the region’s energy generation and could save consumers between $100 million and $2.1 billion if gas prices increase significantly.
•The report found that an increased RPS will stabilize or even decrease wholesale market prices by up to 8.1%.
• New renewables from an increased RPS could reduce electric sector Green House Gas (GHG) emissions by up to 71% by 2030, helping put Massachusetts on track to achieve its legally binding goal of 80% economy-wide GHG emission reductions by 2050.
Increasing the RPS is an important step towards a clean energy economy that allows building owners and others to further take advantage of solar power and other renewable energy technologies while lowering their energy costs. The added benefits of lower wholesale energy prices and new jobs are icing on the cake.
Craig Huntley is co-founder and CDO at Solect Energy, Hopkinton, Mass.