Renewable Portfolio Standard Introduced in Alaska Legislature
On Wednesday, March 15th, Alaska Senator Löki Tobin introduced Senate Bill 101 to establish a Renewable Portfolio Standard (RPS) for the Railbelt region of Alaska. The legislation would require the five electric utilities on the Railbelt (the interconnected grid that stretches from Fairbanks through Anchorage to the Kenai Peninsula) to generate a specified percentage of their electricity from renewable resources according to the following timeline: 25% by December 31, 2027; 55% by December 31, 2035; and 80% by December 31, 2040. Today, 30 states and several territories have RPS requirements.
In February 2022, the National Renewable Energy Laboratory (NREL) completed a report requested by Governor Mike Dunleavy that found five different scenarios in which the Railbelt could achieve 80% renewable generation by 2040 without impacting customer reliability. All scenarios take advantage of the region’s current flexible generators, and energy storage. The study also found that reaching the 80% renewable standard would save billions of dollars in fuel costs over the next two decades.
This legislation points Alaska towards the future. Cook Inlet natural gas prices keep rising as the cost of wind, solar and battery energy storage technologies are all rapidly declining. Today, Railbelt electric utilities rely on Cook Inlet natural gas for about 80% of the electricity they generate, and they pay twice as much for that gas as utilities in the Lower 48 are paying. A policy shift now toward using Alaska’s vast, local and stably-priced renewable energy resources will incentivize investment, create good-paying jobs and make Alaska more energy independent.
State laws for renewable energy
A Renewable Portfolio Standard (RPS) is a state law requiring utility companies to generate a specified percentage of their electricity from renewable resources by a certain date.
RPS requirements in the US vary widely on a number of factors, including the percentage and end-date. Today, 29 states and several territories have RPS requirements. In 2015, Hawaii became the first state to require 100 percent of its electricity to be generated by renewables (by 2045). California, the fifth largest economy in the world, now has an RPS that requires 60% percent of all of that state’s electricity to be produced by renewables by 2030, with a goal of 100% renewable energy by 2045. Other RPS policies include Nevada’s requirement of 50% renewable energy by 2030, Virginia’s requirement of 100% renewable energy by 2050, New Mexico’s requirement of 80% renewable energy by 2040, and Maine’s requirement of 100% renewable energy by 2050.
Utilities are typically given interim milestones and must pay a fine if they do not reach those milestones. Most states allow utilities to purchase Renewable Energy Credits (REC’s) to meet these standards and avoid paying fines.
Each REC represents the production of one megawatt-hour of renewable energy and the displacement of approximately 1,400 pounds of CO2 emissions. Buyers of REC’s include utilities trying to meet state RPS requirements and a growing number of corporations, agencies and municipalities committed to supporting increased renewable energy production. The RPS approach forces different entities and renewable energy resources to compete to meet the standard.
In 2010, Alaska set a nonbinding, aspirational goal to generate 50 percent of the state’s electricity from renewable sources by 2025. Bills have been proposed in Congress to create a mandatory national Renewable Electricity Standard (RES) but so far all have failed to pass both the House and Senate.