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  My ANSWERS to Certain Questions Concerning Illinois' 2005 Renewable Portfolio Standard (RPS)

Michael Stavy  
Consulting Energy Economist  
312.832.1631  
432 North Clark Street  
Suite 204  
Chicago, Illinois USA 60610  

michaelstavy@covad.net  




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Indiana Dunes National Lakeshore where some of Illinois' air emissions passes through.  For more information on the Indiana Dunes National Lakeshore go to http://www.nps.gov/indu/ )


1 August 2005

rev: 16 October 2005


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RPS

What is the reason for a US state or for the US Federal government to have a Renewable Portfolio Standard (RPS)?

 

Greenhouse gas (GHG) emissions are causing global warming. Renewable Portfolio Standards (RPS) are created by US state governments to reduce global warming by reducing GHG emissions. The Kyoto Protocol measures GHG in metric tons (tm) of carbon dioxide (CO2), the major GHG.  In the Protocol, the other GHG emissions (i.e. CO, SOX, N2O, etc.) are standardized into tm-CO2 by their global warming potential (GWP).  Burning fossil fuels (coal, natural gas, oil) to generate electricity creates CO2 emissions. Electricity generated with renewable energy has no CO2 emissions. The reason for using a RPS is to require (request in Illinois) that electricity be generated with renewable energy is to avoid the carbon (CO2) emissions from the generation of electricity with fossil fuels. Coal electricity has 996 gm-CO2/kWh; a combined cycle gas turbine has 372 gm-CO2/kWh; the US grid average is 612 gm-CO2/kWh. A wind plant (and other renewable energy electricity) has 0 gm-CO2/kWh. Nuclear electricity also has 0 gm-CO2/kWh, but nuclear power has its own waste and possible emissions problems.

If global warming (and other air emission problems) are not an observed fact in Illinois; then there is no need for an Illinois RPS.




RPS

If global warming is not an observed fact in Illinois but is an observed fact in another US state, would a RPS be appropriate for that state?

Interesting question.

This question requires an office consultation.





Say's Law

What is the basic economic principal behind a RPS in a competitive electric market?

The basic economic principal behind a conventional (mandatory) RPS is to reverse Say's Law in the electric market. Say's Law is that supply creates its own demand. In an RPS market demand makes its own supply of renewable electricity, This is because retail electricity vendors that are not in compliance with their mandatory RPS requirement will be penalized.  The conventional RPS will cause demand to create its own supply because retail electric vendors will go to the wholesale electric market and ask for renewable electricity




Measuring Illinois' Greenhouse Gases

How can green house gas emissions be measured in Illinois?

Illinois already has the tool needed for a GHG emissions reduction program.  This tool is the Illinois Utility Environmental Disclosure Statement. To make the Utility Environmental Disclosure Statement into a tool for emissions reduction all that is required is that Illinois require each utility’s carbon emissions to be at or below a certain stated physical level (gm-CO2/GWh).

I have publicly commented on using the Illinois Utility Environmental Disclosure Statement to implement an Illinois  Renewable Electric Portfolio Standard.

You can read my comments at the Illinois Commerce Commission webpage.

http://www.icc.illinois.gov/en/ecEnergy.aspx

My comments are listed in the section; Implementation Plan Comments.

IL.ecEnergyLogo%20%282%29.gif

Source: Illinois Commerce Commission




Mandatory or Voluntary?

Is Illinois' 2005 Renewable Portfolio Standard mandatory or voluntary?

Voluntary.


Terminology and Algebraic Symbols

Is it conventional in the regulation of the US electric utility sector to call a voluntary requirement for renewable electricity generation a RPS?

No, it is not conventional in the regulation of US electric utility sector to call a voluntary program that asks electric utilities (retail electric vendors) to use a certain per cent of renewable electricity a renewable portfolio standard.  

According to the article, Illinois Enacts Requirement for Renewable Energy, Renewable Energy Access, Juley 28, 2005, there are 19 states (including Illinois and DC) that now have RPS. I believe that Illinois has the only voluntary program. You can read the article and my response to the article at  http://www.renewableenergyaccess.com/rea/news/story?id=34813

RE.Access.logo.gif

If some states call a voluntary RPS, a RPS, there is statistical problem in knowing how many states have RPS and in observing the effect of a RPS on a state's GHG emissions. To count the number of RPS in the US, the statistician must first define RFP. To test whether there is reduction in GHG emissions from a state RPS the research analyst has to know if the RPS is voluntary or mandatory. I recommend that regulators restrict the term, RPS, and the algebraic symbol, RPS, to mandatory RPS and require the longer term, "voluntary RPS", and the algebraic symbol, RPSv, for a voluntary RPS.

The terminology for % of retail demand covered by a RPS (or a voluntary RPS) should also be standardized.




Illinois' GHG Emissions

Will a mandatory Illinois' RPS result in the level of Illinois' carbon emissions to decline?

No, not even a mandatory RPS will always result in a decline in the level of carbon emissions from Illinois' electric sector.

A RPS only requires that a certain X% of electricity be generated with renewable energy. All the remaining % of electricity (100%-X%) can be generated with coal. 

Assume that you want Illinois' new generation to have an average carbon emissions equal to or less than the current US average carbon emissions. (612 gm-CO2/kWh). If 1,500 MW of coal generated electricity has been approved in Illinois, then 4,000 MW of wind generated electricity will have to be installed in Illinois to made the total new electric generation (1,500MW coal + 4,000MW wind) have its average carbon emissions equal to the current US  average. 

 




Per Cent of Total Illinois' Electric Demand

What per cent of Illinois' electric demand will be covered by Illinois' RPS? Will it be all of Illinois' electric load?

The per cent  of renewable electricity that Illinois' RPS suggests (not requires; this is a voluntary program) is a small per cent of Illinois' total retail demand. It is a per cent of Illinois' bundled retail demand for electricity; not a per cent of Illinois' total retail electric demand for electricity. In Illinois' competitive market, bundled retail electric demand means the residential demand; it does not include Illinois' industrial, commercial or government demand for electricity. I estimate that the residential demand is only 33% of Illinois' total demand for electricity.

 




Other Questions

My corporation (government agency or non-for-profit) has other questions concerning a RPS. Can you help our organization answer our questions?

Yes. Please make an appointment. 

I am an independent consulting energy economist.




Last Question

What did Freud say about setting up an appointment with a private consulting economist?

Freud said that if the client really wanted help, the client would pay a private consulting economist.

Of course Dr. Freud worked before Global Warming and he was referring to psychotherapy patients, but I think that the insight is still appropriate.


15 March 2007












Michael Stavy, Consulting  Energy Economist







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