May 31, 2007

U.S. Congress introduces Federal RPS legislation

Up to now, much of the responsibility for buying renewable energy to replace existing sources is being placed by state legislatures squarely on the back of their electric utilities. Progressive states have been enacting renewable portfolio standards (RPS) which place a set MW quantity or percentage number to be achieved by a specific date (click on chart below to enlarge). According to a recent issue in The Wall Street Journal the utilities used to be highly resistant but some are now realizing that the standards are not as difficult to comply with as they feared.

After several false starts, the federal government is considering similar legislation:

A bill about to be introduced in the Senate would push utilities to generate drastically more of their power -- 15%, compared with the current 2% -- from sources such as wind or the sun by 2020.

The good news is that entrepreneurs and developers who have long held out for capitalization of their innovative technologies, are suddenly finding a ready market to sell to, at a reasonable price.

Obviously, such requirements would have to be filled with different forms of renewable energy depending on which part of the country is involved. Some, like Rick Boucher of Virginia (Democratic chairman of the Energy and Commerce subcommittee) would like coal to be included as long as the carbon emissions are successfully sequestered. Expect this largely unproven technology to receive priority treatment as the voting nears.

Those states that have fewer renewable resources could purchase green tags, aka "Renewable Energy Credits" (RECs), from those states that produce surpluses.

Here are some excerpts from the article published May 25th...

Senate Pushes Utilities on 'Green' Sources
Proposal to Require Significant Increase Has Broad Support
by John J. Fialka

The Senate proposal, authored by Sen. Jeff Bingaman, the New Mexico Democrat who is chairman of the Committee on Energy and Natural Resources, defines renewable energy sources as wind, solar, geothermal, wood chips and other biofuels, as well as various ways to make energy from tides and ocean waves.

So far, state laws, which cover 40% of the U.S. population, haven't made a big difference. The percentage of renewable fuels used in the U.S. has hovered from 2% to 2.5% in recent years and will reach only 5.5% by 2020, when most of the state standards are fully phased in. Dr. Wiser estimates state laws have raised the average consumer's utility bill by 38 cents a month. "Clearly, if you want to expand renewable fuels, something has to be done beyond this," he says.

Backers of the Bingaman legislation think the bill could do the trick.

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