Wind Power in Texas - Renewable Portfolio Standard

Renewable Portfolio Standard

The Texas Renewable Portfolio Standard was originally created by Senate Bill 7 in 1999. The Texas RPS mandated that utility companies jointly create 2000 new MWs of renewables by 2009 based on their market share. In 2005, Senate Bill 20, increased the state’s RPS requirement to 5,880 MW by 2015, of which, 500 MW must come from non-wind resources. The bill set a goal of 10,000 MW of renewable energy capacity for 2025, which was achieved 15 years early, in 2010.

According to DSIRE.org, "In 1999 the Public Utility Commission of Texas (PUCT) adopted rules for the state's Renewable Energy Mandate, establishing a renewable portfolio standard (RPS), a renewable-energy credit (REC) trading program, and renewable-energy purchase requirements for competitive retailers in Texas. The 1999 standard called for 2,000 megawatts (MW) of new renewables to be installed in Texas by 2009, in addition to the 880 MW of existing renewables generation at the time. In August 2005, S.B. 20 increased the renewable-energy mandate to 5,880 MW by 2015 (about 5% of the state's electricity demand), including a target of 500 MW of renewable-energy capacity from resources other than wind. Wind accounts for nearly all of the current renewable-energy generation in Texas. The 2005 legislation also set a target of reaching 10,000 MW of renewable energy capacity by 2025.

The schedule of renewable energy capacity required and the corresponding compliance dates are as follows:

2,280 MW by 1/1/2007

3,272 MW by 1/1/2009

4,264 MW by 1/1/2011

5,256 MW by 1/1/2013

5,880 MW by 1/1/2015

Qualifying renewable energy sources include solar, wind, geothermal, hydroelectric, wave or tidal energy, biomass, or biomass-based waste products, including landfill gas. Qualifying systems are those installed after September 1999. The RPS applies to all investor-owned utilities. Municipal and cooperative utilities may voluntarily elect to offer customer choice.

The PUCT established a renewable-energy credit (REC) trading program that began in July 2001 and will continue through 2019. Under PUCT rules, one REC represents one megawatt-hour (MWh) of qualified renewable energy that is generated and metered in Texas. A capacity conversion factor (CCF) is used to convert MW goals into MWh requirements for each retailer in the competitive market. The CCF was originally administratively set at 35% for the first two compliance years, but is now based on the actual performance of the resources in the REC-trading program for the previous two years. For the 2010 and 2011 the CCF will be 30.5%." Each retailer in Texas is allocated a share of the mandate based on that retailer’s pro rata share of statewide retail energy sales. The program administrator maintains a REC account for program participants to track the production, sale, transfer, purchase, and retirement of RECs. Credits can be banked for three years, and all renewable additions have a minimum of 10 years of credits to recover over-market costs. An administrative penalty of $50 per MWh has been established for providers that do not meet the RPS requirements.