Is market driving renewable energy more than state RPS?

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With plenty of utility-scale wind and solar projects already in the development pipeline, state renewable portfolio standards (RPS) will gradually fade as a driver of such facilities, Bernstein Research said in an analysis published on Dec. 4.

These standards, which typically require utilities procure a set percentage of the electricity they sell from renewable power sources, won’t drive renewable investment as they have in the recent past — with the single exception of California, Bernstein said.

“There is evidence, however, that the falling cost of renewable generation, combined with a growing consumer preference for clean energy, may be driving its uptake by utilities even as the state RPS requirements fade in importance,” according to the Bernstein assessment.

Bernstein Senior Analyst Hugh Wynne was the chief authority of the Dec. 4 commentary.

Bernstein notes in the analysis that although total electric generation fell slightly (0.5 percent) between 2015 and August 2015, the output of non-hydro renewable resources — wind, biomass, geothermal and solar power — grew by 70 percent, adding 118 million MWh. “Conventional generators have thus been severely squeezed, relinquishing ~134 million MWh of output, or 3.5 percent of their 2010 total,” according to Bernstein.

This surge in non-hydro renewable power primarily reflected state renewable mandates. To date, 29 states, accounting for ~65 percent of U.S. electricity demand, have adopted such mandates, with voluntary goals in eight additional states.

In aggregate, these mandates and goals add up to about 7 percent of 2015 U.S. retail electricity sales, rising to an estimated 10 percent in 2020 and 12 percent in 2025.

“We estimate that eligible generation will comfortably exceed aggregate requirements in 2015, and only a marginal amount of incremental capacity – estimated at just 1.7 GW per annum -- is needed to meet 2020 targets beyond what is already in advanced development,” Bernstein said in the report.

Wind accounts for the bulk of capacity additions through 2020. Bernstein expects that outside of California, new renewable capacity will be developed primarily in Texas and the Great Plains states.

These are the U.S. areas with the highest quality wind energy resources, the research firm said.

Bernstein Research and Sanford C. Bernstein are affiliated with Alliance Bernstein. Bernstein is a major global investment-management and research firm. The firm’s website indicates that Bernstein has 46 locations in 21 countries.

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