NV Energy exceeds RPS requirement for 9th year, warns of possible noncompliance ahead of major solar projects
NV Energy easily surpassed its requirements for renewable energy production in 2018, while still warning it could have difficulty meeting a ramped-up standard in the near future despite receiving approval to build six new large-scale solar plants last year.
According to the utility’s 2018 Portfolio Standard Annual Report, NV Energy reported a 24.2 percent compliance with the state's Renewable Portfolio Standard (RPS), well above the required 20 percent set in state law. The utility reported a 24 percent clean energy portfolio in 2017 and has met renewable standards set under state law over the last nine years.
"We have a long-term goal to serve our customers with 100 percent renewable energy while maintaining rate stability," NV Energy spokeswoman Jennifer Schuricht said in an email. "NV Energy supports an increase in our state’s renewable portfolio standard to 50 percent, as it aligns with our clean energy commitment to our customers.”
Like a “cap and trade” program for carbon emissions, a Renewable Portfolio Standard is essentially a state-created marketplace where producing renewable power results in the creation of “PECs” (Portfolio Energy Credits). The state runs a marketplace where PECs can be bought and sold and requires NV Energy and other applicable entities to meet a certain percentage standard by turning in enough credits as compared to their total electricity generation.
Utilities are also allowed to roll over and use excess PECs in future years, and can also receive them for energy efficiency programs. A PEC itself is equivalent to one kilowatt-hour of generated electricity, equivalent to a 100-watt television running for 10 hours.
Nevada’s current RPS was set in 2009 and is scheduled to go up to 25 percent by 2025. But raising Nevada’s RPS even more has recently become a top goal of environmental and clean energy groups, ever since a bill raising the standard to 40 percent by 2030 was vetoed by former Gov. Brian Sandoval in 2017. A group backed by liberal megadonor Tom Steyer helped qualify a 2018 ballot question designed to put a 50 percent renewable standard by 2030 in the state Constitution, which was passed by more than 60 percent of voters. The measure has to be approved again in 2020 to become part of the Constitution.
A bill gradually raising the portfolio standard to 50 percent by 2030 has been re-introduced in the 2019 Legislature and has so far seen a much warmer reception than it did in 2017 with casino industry groups, chambers of commerce and NV Energy all publicly supporting the bill.
But the report, which is required to be submitted by any utility or power purchaser to the Public Utilities Commission annually, also hints at some potential issues for the utility’s ability to meet the credit requirement down the line, summarizing its outlook toward meeting the standard in the future as “cautious.”
The report itself contains breakdowns of renewable compliance by Nevada Power, which provides power for Southern Nevada, and Sierra Pacific Power, which services Northern Nevada. For Nevada Power, the utility warned in the report that any increase in portfolio standards in the 2019 Legislature could have a “dramatic impact” on future compliance.
It also highlighted ongoing struggles by the Crescent Dunes Solar Energy Project, a 110 megawatt power plant outside of Tonopah that has produced significantly less energy than projected and could put future compliance with the portfolio standard in jeopardy.
“Although the plant improved its performance in 2018, it once again missed its contractual credit supply requirement by a significant margin,” the report stated. “If Crescent Dunes continues to perform at historical levels, Nevada Power’s current credit reserve may be insufficient to overcome chronic, multi-year credit shortfalls.”
According to the compliance report, the Crescent Dunes plant produced 196,179 megawatt hours of electricity in 2018, but is projected to increase to 242,486 megawatt hours in 2019.
Sierra Pacific, the company’s subsidiary business for Northern Nevada, also expressed caution at meeting a higher portfolio standard in the near future, given the lag between PUC approval of constructing six new solar power plants and actually getting them up and running.
“While Sierra should have sufficient credits to maintain compliance through 2021, that outlook is predicated on six development targets achieving their commercial operation targets,” the report stated. “If there are any unforeseen renewable generation shortfalls, upticks in retail sales, project delays or immediate changes in law, Sierra could be at risk of non-compliance earlier than 2021.”
The report also states that NV Energy (through Sierra Pacific) issued a call to sell its excess portfolio credits in November 2018, and received an offer to sell 60,000 PECs at $3.50 each for a total of $210,000. But the company chose not to complete the sale, amid a fear that it may need the excess credits later.
“Given this outlook, it is not in Sierra’s or its customer’s best interest to sell credits in 2018 that could potentially be needed in 2021,” the report states.
The report notes that both subsidiary companies have a joint “pool” of excess credits to draw from if either is unable to meet their portfolio requirement and stated that the company will “continue to explore all options,” including issuing contract requests for renewable energy production, to maintain full compliance with the standard.
If a utility or any other power provider required to meet the RPS fails to hit the standard, state law allows the PUC to impose an administrative fine based on the number of kilowatt hours “short” of meeting the standard and for the deficit of portfolio credits to be carried over to the next year. In 2009, Nevada Power failed to meet the standard, resulting in an agreement with the PUC to invest between $150,000 and $192,000 in one or more solar systems on a school or public building in its service territory.
The report also quantifies the estimated cost for NV Energy to comply with the portfolio standard (although information on financial benefits from sales are not reported). In total, the cumulative cost to Nevada Power and Sierra Pacific was more than $438 million.