Illinois renewable portfolio standards

Recently enacted state Renewable Portfolio Standards (RPSs) collectively require that U.S. electricity generation by non-hydro renewables more than double by 2025. These goals are not certain to be met, however, because many RPSs apply cost caps that alter requirements if costs exceed targets. We have analyzed the 2008 Illinois RPS, which is fairly typical, and have found that at current electricity prices, complete implementation will require significant decreases in renewables costs, even given the continuation of federal renewables subsidies. While full implementation is possible, it is not assured.

We also find that the statutory design raises additional concerns about unintended potential consequences. First, the fact that wind power and solar carve-outs fall under a single cost cap leaves each technology vulnerable to the economics of the other. In failure mode, a less cost-effective technology can curtail deployment of a more cost-effective one. Second, adjacent-state provisions mean the bulk of the wind power requirement under the Illinois RPS can be met by existing facilities in Iowa, where new builds will likely also occur. We conclude that the Illinois RPS, and likely those of many other states, appear to combine objectives inherently in conflict and whose conflicts can create legislative failure: preferences for local jobs, for specific technolo- gies, for environmental benefits, and for low costs. Since RPSs are the principal policy mechanisms in the U.S. at present for combating climate change, it is important to revisiting existing legislation if necessary to ensure legislative success. The Illinois analysis can provide an example and guidelines for other states that will face similar pressure on their RPSs in the near future.

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Elisabeth Moyer | Alison BriziusSean Johnson | Lexi Goldberger | Joe Zhu

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