Increased Renewable Portfolio Standards may burden utilities and customers

Last Updated: 2/10/2014

With Renewable Portfolio Standards (RPS) increasing from 20% to 33% by 2020, California legislators are already considering increasing these standards to 40% or even 50%. 

According to the report conducted by E3 Energy+Environmental Economics titled "Investigating a Higher Renewables Standard in California" electric rates will increase above 47 percent, mainly caused by the need to replace aging utility infrastructure and the 33 percent RPS by the year 2020. 

These renewable energy requirements will place additional costs to the electric utilities and its customers.  “The projected cost increases for the higher RPS scenarios are due primarily to the increasing cost of renewable integration and carbon emission costs,” the report noted.

In addition, Grid reliability will be decreased with more renewable energy on the grid.  “While it is difficult to assess, we heard from experts on this issue that California is already likely leaning on other parts of the Western Interconnection to assure adequate inertia to maintain reliability and that adoption of additional renewables without mitigation could only make this problem worse,” the IAP report states.

State legislators and the Governor's office have also discussed a 50 percent RPS, with impacts projecting an increase in annual revenue requirements ranging from $5.2 billion to $13.3 billion above the 33 percent RPS scenario, and this includes CO2, fuel, and capacity savings.  The report emphasized that an increase with RPS are going to increase electric rates and lower grid reliability for all California ratepayers. 

More information on this and other related reports can be found here.