WASHINGTON, DC, US, March 7, 2007.
Biomass and wind would benefit most from a U.S. clean energy portfolio standard, according to an assessment from the Department of Energy.
Senator Coleman of Minnesota asked the DOE’s Energy Information Administration to analyze a proposed standard that requires electricity suppliers to increase their share of power from non-hydroelectric renewable resources, new hydro or nuclear, fuel cells, and fossil-fired plants that capture and sequester CO2 emissions. Suppliers could also comply by purchasing tradable generation credits from other sellers or by buying credits from the federal government at 2.5c/kWh.
Starting in 2015 (the first year of mandatory program compliance), the proposal would spur development of clean energy resources well above reference case levels, concludes ‘Energy Market Impacts of a Clean Energy Portfolio Standard - Follow-up.’ By 2030, projected renewable energy generation is double the reference case and nuclear generation is 27% higher than the reference case.
Three-quarters of generation eligible for credits in 2030 is from non-hydro green technologies (669 billion kWh of the required 883 billion kWh). Most is from dedicated and co-fired biomass (366 billion kWh) and wind (210 billion kWh) generation.
New nuclear reactors, which receive one-half credit per kWh of generation, account for 291 billion kWh of eligible generation. Additional compliance generation comes from geothermal (60 billion kWh), with lesser amounts from landfill gas and solar technologies.
During the first phase of the CEPS (2015 through 2019), credit prices range from 0.4 to 1.0c/kWh. During the second phase of the program (2020 to 2024), credit prices rise but stay below 2c/kWh and, during the third phase (2025 and beyond), credit prices temporarily hit a 2.5c/kWh price cap when the required share first increases to 20%. However, as fossil fuel prices increase and new nuclear and renewable facilities are built, credit prices fall.
Biological sequestration programs would supply 10% of the credit requirements (the maximum share permitted) in all years. While there is uncertainty about the potential of such projects and their ability to sequester carbon, the 1,000 clean energy credits they earn for each metric ton sequestered make them economically attractive, the report explains.
From 2006 to 2030, the CEPS has a cumulative total cost to the electric power sector of US$7.8 billion, less than 0.5% of the cumulative discounted industry costs in the reference case. This estimation includes $22 billion in higher capital and fixed operations and maintenance expenditures that are partially offset by $14 billion in lower fuel costs.
