Maryland has increased the renewables generation target in its renewable portfolio standard (RPS) to 25 percent of retail electricity sales by 2020, up from the earlier target of 20 percent by 2022.
Legislators in both houses of the state’s General Assembly voted to override Gov. Larry Hogan’s veto of legislation they had first passed in 2016.
Maryland's Renewable Energy Portfolio Standard (RPS) requires electricity suppliers, which includes all utilities and competitive retail suppliers in the state, to procure a minimum portion of their electric retail sales by eligible renewable energy sources.
The Maryland RPS is divided into two tiers.
Tier 1 includes electricity generated from solar, wind, biomass, geothermal, fuel cells, ocean, small hydro, as well as some qualified waste technologies. Tier 1 also includes two technology-specific targets (or set-asides), solar and offshore wind.
Tier 2 renewables include hydroelectric power other than pump-storage generation. Tier 2 requirements will sunset, dropping to 0 percent in 2019 and beyond.
The Tier 1 solar generation set-aside, which was included in the state’s previous RPS, now ramps up from its current 1.15 percent to 2.5 percent of sales by 2020.
The U.S. Energy Department says the solar set-aside is projected to result in the development of more than 1,250 megawatts of solar capacity by 2020.
The Tier 1 set-aside for offshore wind has not been determined yet, but will be set by the Maryland Public Service Commission starting in 2017 and will be no more than 2.5 percent of sales, according to the U.S. Energy Information Administration (EIA).
In 2015, Maryland’s RPS target was 10.5 percent of electricity sales, which EIA data show equaled 8 million renewable energy credits (RECs). RECs are tradeable certificates representing generation of one megawatt hour from eligible renewable electricity sources.
From 2008 to 2015, EIA data show Maryland’s renewable generation requirements have grown from 2.7 million RECs to 8 million RECs. Over that same time period, EIA says compliance cost for the RPS has increased from a total of $3.26 million to $127 million.
EIA notes that solar technologies have made up a small part of the RECs used for compliance, but a relatively larger share of the cost of compliance.
Of the RECs used for compliance in 2015, the data show only 4 percent were from solar. In comparison, solar made up 31 percent of the cost of compliance.
During 2015, the average cost for solar RECs in Maryland was $130 per REC, nearly 10 times the cost of Tier 1 non-solar RECs, EIA notes.
However, the data show that with an increase in the number of solar facilities in the state, solar REC costs have declined from as high as $345 per REC in 2008. Conversely, Tier 1 non-solar REC prices have increased from just under $1 per REC in 2008 to almost $14 per REC in 2015.
Under Maryland’s RPS, electric service providers can choose to make alternative compliance payments (ACPs) in lieu of purchasing RECs.
EIA notes that ACPs, which are set by Maryland’s Public Service Commission, are often viewed as a ceiling for REC prices. If a market lacks sufficient supply to meet RPS requirements, the average price of a REC would be at or near its ACP.
In 2015, the data show the ACP was $40 for Tier 1 non-solar RECs and $350 for solar RECs. ACPs made up only 0.02 percent of the total cost of compliance in 2015.