Texas
Introduction
This was enacted in December 16, 1999; effective January 1, 2002.
Senate Bill 7 originally mandated an additional 2,000 MW (approx. 3% of state usage) of renewable capacity be built by 2009, on top of the 880 MW existing capacity - any decrease in that existing capacity must be replaced. Effective 9/1/2005, Senate Bill 20 increased the mandate to 5,880 MW by 2015 (approx. 5% of state usage), including a target of 500 MW of renewable energy capacity from sources other than wind. The 2005 legislation also set a goal of reaching 10,000 MW renewable capacity by 2025. (Existing facilities are given a different status —REC Offsets'. Offsets can meet compliance requirements, but may not be traded and can't be banked.) Requirements are:
- 2,280 MW by 1/1/2007
- 3,272 MW by 1/12009
- 4,264 MW by 1/1/2011
- 5,256 MW by 1/1/2013
- 5,880 MW by 1/1/2015
- 10,000 MW by 1/1/2025
Eligible technologies include:
- Biomass or biomass-based waste products (including landfill gas)
- Geothermal
- Hydro
- Ocean thermal
- PV
- Solar thermal electric
- Tidal
- Wave
- Wind
The current renewable portfolio relies most heavily on wind, then hydro.
To earn RECs, a generator must be either a new facility (online or repowered on or after Sept. 1, 1999) or asmall producer (less than 2MW in size) that meets the requirements in PUCT Substantive Rule 25.173(c) and (e).
Out-of-State
Renewable generation from out-of-state that is sold and metered in Texas is eligible under the RPS.
Process
ERCOT allocates RECS to generators, then assigns REC holding requirements to retail electricity provides based on electricity sales. The calendar year runs from January 1st through to December 31st.
Credits can be banked for up to 3 years (year of generation + 2 years)
3-month "true up period" is allowed: ERCOT posts the exact REC requirements for each REP on March 1st of the year FOLLOWING the year in question; the REP has until March 31st to comply. The market itself is not overly liquid but between March 1st and March 31st compliance for the following year heats up and volumes go up.
Volume of RECs for Mandatory Retirement
Number of RECS for Mandatory Retirement can be calculated using the following formula:
Year's Capacity Target x # Hours/Yr x Current Capacity Conversion Factor (valid 2006/2007)
For example:
2006 » 1,730 MW * 8,760 * 27.9% = 5,304,180 RECs
Facilities can estimate the number of RECS they must retire by using the following formula: (REP Load Ratio % * RECs for Retirement) + (REP Load Ratio % * "Offsets for Redistribution)
Deficits/Alternative Compliance Payments
CR may incur a deficit allowance equal to 5.0% of its REC requirement, but it must make up the amount in the next compliance period. Retailers will be subject to penalty for any shortfall greater than 5% during this period the lesser of $50 per MWh or 200% of the average market value of credits for that compliance period.