Ramping Up Renewables: Study Spotlights Standard Strength
Size and design matter when it comes to regulations to promote renewable energy development. That is one of the main findings from a study led by an Indiana University researcher looking at the expansion of renewable energies and generation.
IU School of Public and Environmental Affairs Associate Professor Sanya Carley lead the research team, which also included Assistant Scientist Nikolaos Zirogiannis and law professors from the University of Utah and the University of Texas at Austin. The group interviewed more than 40 experts about renewable portfolio standards and analyzed their history and evolution.
The top takeaway, Carley says, is that specifics matter when it comes to putting together standards.
“Our main finding is that the design of the policy really matters,” says Carley. “It’s one thing just to say, ‘We’ll have this portfolio standard, we’ll mandate renewables and therefore our markets will develop.’” It’s a completely different thing to say, ‘We’re going to have this standard, and these are exactly the ways we will design it, these are the different design features that we will introduce, and these different design features will lead to different outcomes.”
She says a strong economic climate as well as natural resources, such as Iowa’s strong winds or Arizona’s abundant sun, are also important.
For Indiana’s part, Carley says there are some standards in place, but adds there is plenty of room for improvement.
In 2011, the Indiana Utility Regulatory Commission finished its rulemaking on the Comprehensive Hoosier Option to Incentivize Cleaner Energy, or CHOICE program. The voluntary standard is for utilities to have 10 percent of their portfolios be clean energy by 2025. The program offers incentives, in the form of potential increases return on equity (which drives profit) in exchange for increasing renewable energy sources, ranging from wind and solar to hydropower and animal waste.
However, the mere fact that it’s voluntary, Carley says, means the program could be much stronger.
“One of the things that we actually find in our paper is that having a mandatory policy leads to significantly more renewable energy than having a voluntary program,” Carley says. “Voluntary is more of a symbolic effort, and less so…not only incentivizing but mandating renewables to happen within your state.”
Carley hopes policymakers throughout the United States can use the research to figure out what type of design would work best for their portfolio standard policies. She suggests looking into factors including geographic restrictions, cost recovery programs and resources allowing utilities to meet with stakeholders and commissions to work through compliance and future planning.
Armed with the new data, Carley and her team hope states looking to boost renewable energy will put their energy into policy designs that point to greener portfolios.