Here’s my latest article for Green Chip Stocks, about the proliferation of Renewable Portfolio Standards (RPS) all across the country. Almost half the states now have an RPS and that number is growing rapidly.

Climb Aboard the RPS Express

By Chris Nelder
Thursday, April 12th, 2007

The renewable energy industry got a major shot in the arm over the last week, in a flurry of announcements about state renewable portfolio standards (RPS) for power generation. (An RPS specifies a percentage, or a fixed amount, of a state’s overall electrical power generation that must be derived from renewables by a certain date.)

Four states announced increased standards, and New Hampshire joined the game for the first time, becoming the 24th state–I think–to enact RPS. I say “I think” because state governments are moving to enact RPS so quickly that most of the information on the Web is already out of date, even if it’s just two months old–including the Department of Energy’s Web site. It’s hard to know exactly where we stand.

In fact it’s starting to look like a friendly game of one-upmanship.

Wisconsin Raises the Bar

Among states with RPS, Wisconsin used to bring up the rear with its measly little 2.2% by 2011 target. But on April 5, Governor Jim Doyle announced a bold new “Declaration of Energy Independence,” his plan to make Wisconsin a leader in energy independence and global warming mitigation.

“With our vast agricultural and forestry resources, our strong research institutions, and our strong manufacturing base, I want the Midwest to become the Saudi Arabia of renewable energy–with Wisconsin at the forefront,” Governor Doyle said. “The fact is, if an oilfield in Iran has to compete against a farmfield in Wisconsin, that’s a very good thing for the environment, for our economy, and for the world.”

Among the governor’s goals are:

• A “25 by 25” goal (generating 25% from renewables by 2025). But this wasn’t your usual 25 by 25 goal–it applies to not only electricity, but transportation fuels! As far as I am aware, this is a first, and a very notable first at that, because as any reader of my columns knows, the most pressing problem we face due to peak oil is a shortfall of liquid fuels, not electricity.
• To take a 10% market share of renewable energy generation by 2030, bringing some $13.5 billion into Wisconsin’s economy every year. This is a very ambitious target.
• “To become a national leader in groundbreaking research that will make alternative energies more affordable and available to all.”

To help achieve those goals, the governor has created an Office of Energy Independence to serve as a single point of contact for all parties and to help round up federal incentive money for projects.

He also created a Task Force on Global Warming, a brain trust comprising members from industry, government, and environmental groups, and charged them to recommend a state plan of action to deal with global warming.

Further, he directed the Public Service Commission to explore technologies for capturing and sequestering carbon before it gets into the atmosphere.

To ensure they have buyers for all the excess renewable energy Wisconsin will generate, the governor launched the Midwest Renewable Energy Tracking System, a program for tracking and trading renewable energy credits with its neighbors (Minnesota, Iowa, South Dakota, North Dakota and Manitoba), so they can buy credits from Wisconsin in order to meet their own RPS.

All in all, it’s a breathtakingly ambitious program, and my hat is off to Governor Doyle!

New Hampshire Climbs Aboard

As if shamed into it, the day after the Wisconsin announcement the New Hampshire House of Representatives announced its new RPS: to generate 16 percent of new energy from renewable resources such as wind, solar, biomass and hydro by 2025. Combined with the state’s existing six percent of electricity from renewable resources, that will give New Hampshire nearly “25 by 25.”

Since the bill passed the House by an overwhelming margin of 253-37, it is expected to pass the New Hampshire Senate with a similar show of bipartisan support. No more will New Hampshire have the dubious distinction of being the only state in New England without RPS!

Colorado Doubles Up

On April 4, Colorado and New Mexico acted like twins in one of those old Doublemint Gum commercials, making the same moves in tandem. Both doubled up their RPS, raising their targets for investor-owned utilities to “20 by 20” for electricity from renewable sources. Both states also went one step further, requiring for the first time that rural electric cooperatives achieve a 10%-by-2020 target as well.

The states also committed funds and directives to upgrading their electrical grids in order to support the additional generation.

The primary utility companies in both states said that they will meet both the old targets and the new targets ahead of schedule.

Colorado expects to profit handsomely from its commitment to renewables. Xcel Energy, its largest utility, said it will save customers about $400 million by substituting electric generation from natural gas with wind generation. And the new Colorado RPS is projected to add $1.9 billion to the state’s gross domestic product by 2020.

Nevada Greenlights Geothermal

On April 9, Nevada’s state Assembly threw a new twist into the RPS game by adding geothermal power to its list of energy technologies that qualify for state incentive money and qualifying geothermal plants to earn renewable energy credits.

Actually, I always found it baffling that geothermal wasn’t one of their approved renewable technologies from the beginning, as it’s arguably the cleanest and greenest of all energy technologies.

Another bill offers a 50% property tax break to geothermal companies who are willing to invest between half a million and $50 million in Nevada.

Nevada already has a “20 by 20” RPS.

At the Tipping Point

Clearly, the states are taking the lead on climate change and domestic renewable energy generation.

With aggressive targets like these, renewable energy manufacturers have a guaranteed receptive market to go after. This is critical to attracting the hundreds of millions of dollars that will be needed to expand manufacturing capacity so that there will be enough generation equipment available to meet RPS.

“This is an indicator of the massive opinion shift we’ve seen over the past six months to a year,” said Jim Rubens of the Union of Concerned Scientists (UCS). “We’ve reached a tipping point now where Americans and legislators feel that we should be developing non-fossil sources of energy because of global warming, national security and economic reasons. I think Washington is taking notice.”

And it’s not just Washington. Wall Street is taking notice too. And that’s where we come in.

Until next time,

Chris