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Renewable Portfolio Standards Help Wind Industry to Sail

AWEA Convenes Workshop on RPS Design and Implementation

New York, Mar 08, 2006

In the United States, wind power is the fastest growing form of electricity generation. In 2005, more than 2,400 megawatts of wind energy were added to the nation’s power grid, and it is expected that the market will continue to grow in 2006. According to the American Windy Energy Assocation (AWEA), an ANSI (American National Standards Institute) member and accredited standards developer, the growth in the market is largely due to federal support over the past three years through the renewal of tax credits for wind energy.

A renewable portfolio standard (RPS) is a market-driven policy set by federal or state governments that helps to sustain renewable energy markets like the wind industry. An RPS requires that a percentage of electricity be derived from renewable sources, such as wind, solar, biomass, or geothermal energy. By setting the level of the standard and its rate of increase over time, a properly-designed and implemented RPS encourages the growth and competitiveness of renewable energy markets. An RPS can enable long-term contracts and financing for the renewable energy industry and fuel lower renewable energy costs.

Renewable portfolio standards require electricity generators or retailers to prove, through ownership of renewable energy credits (RECs), that they have achieved a certain percentage of renewable energy generation. Government involvement is limited to monitoring compliance, certifying credits, and imposing any necessary penalties. It is up to investors and generators to decide how to meet the requirement; they must determine the type of energy and technology they will use, as well as the price and terms of the contract.

AWEA convened a two-day seminar this week in Chicago, IL, to explore the legislative, regulatory, and business issues relating to RPSs. The workshop, Business and Regulatory Challenges and Solutions, was designed to educate all RPS stakeholders on how to design and implement an effective RPS within legislative and regulatory requirements. Key points of focus included emerging RPS design elements; the costs and benefits of implementation; the impact of state policies on wind development and contracting; and the impact of an RPS on utilities and wind developers. Discussions highlighted developments and challenges at the state and regional level.

There are currently wind turbine installations in thirty of the nation’s states. AWEA estimates that the wind energy facilities now in place in the U.S. can provide enough electricity to support 2.3 million American households while displacing more than 15 million tons of carbon dioxide annually. Wind power, which generates energy without using fuel, requires no mining or drilling, and produces no toxic waste. If the U.S. wind energy market meets the 40% growth estimate for 2006, the resulting 3,400 megawatts of added energy could power up to 1,020,000 more U.S. households.

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