Background
According to the State Energy Conservation Office (SECO), a Renewable Portfolio Standard (RPS) ensures that the public benefits of renewable energy, such as wind and solar power, continue to be recognized as electricity markets become more competitive. It requires companies that sell electricity to retail customers to support renewable energy production. The Texas RPS is one of the most effective and successful in the nation, widely considered a model RPS. It is one of the greatest influences on the rapid growth of the Texas wind energy industry.
When Texas produced its first Renewable Portfolio Standard as part of the state’s electricity industry restructuring legislation in 1999 (Senate Bill 7), it mandated the construction of certain amounts of renewable energy and prompted the renewable energy industry to rapidly accelerate its production on Texas sites. Qualifying renewable energy sources include solar, wind, geothermal, hydroelectric, tidal energy, and biomass, including landfill gas. Also eligible are renewable energy sources on the customer side of the meter that offset electricity demand, such as the installation of photovoltaic panels and solar water heating. The Public Utility Commission of Texas (PUC) implemented the program.
The RPS mandated that electricity providers (competitive retailers, municipal electric utilities, and electric cooperatives) collectively generate 2,000 megawatts (MW) of additional renewable energy by 2009. The 2005 Texas Legislature increased the state’s total renewable-energy mandate to 5,880 MW by 2015 and a target of 10,000 MW in 2025.
The state law that defines the goals for renewable energy in Texas reads in part:
“It is the intent of the legislature that by January 1, 2015, an additional 5,000 megawatts of generating capacity from renewable energy technologies will have been installed in this state. The cumulative installed renewable capacity in this state shall total 5,880 megawatts by January 1, 2015, and the commission shall establish a target of 10,000 megawatts of installed renewable capacity by January 1, 2025. The cumulative installed renewable capacity in this state shall total 2,280 megawatts by January 1, 2007, 3,272 megawatts by January 1, 2009, 4,264 megawatts by January 1, 2011, 5,256 megawatts by January 1, 2013, and 5,880 megawatts by January 1, 2015. Of the renewable energy technology generating capacity installed to meet the goal of this subsection after September 1, 2005, the commission shall establish a target of having at least 500 megawatts of capacity from a renewable energy technology other than a source using wind energy.”
The full law can be found on page 182 of the Public Utility Regulatory Act, under the heading “Sec. 39.904. GOAL FOR RENEWABLE ENERGY.”
SECO estimates that over the course of the past 100 years, the RPS program was responsible for generating more megawatts of renewable energy than any other source. After the RPS was implemented, Texas wind corporations and utilities invested $1 billion in wind power, creating jobs, adding to the Texas Permanent School Fund (PSF) and increasing the rural tax base.
The Texas RPS has been so successful that its 10-year goal was met in just over six years. Wind power development in Texas has more than quadrupled since the RPS was established. Due to its competitive pricing, available federal tax incentives and the state’s immense wind resources, wind power is expected to remain competitive with coal- and gas-fired plants.
