Status and implications
for district energy
Mark Spurr, IDEA Legislative Director
Amid the uncertainty regarding energy and climate policy in the United States, one trend is gaining
strength: standards that require electricity
and (less commonly) natural gas utilities
to obtain a certain percentage of their
requirements from renewable energy
and/or energy efficiency. Variously called
“portfolio standards,” “renewable portfolio
standards,” “renewable energy standards,”
“energy efficiency resource standards” or
“clean energy standards,” these policies
will affect district energy systems in
the coming years, in both positive and
negative ways. Portfolio standards have
the potential to benefit district energy
systems by creating an economic value for
combined heat and power. On the other
hand, at least in the near term, they will
increase electricity prices.
How Do Portfolio
Utilities can meet portfolio standard requirements in a number of ways.
Although there are variations, most
programs usually include the following
options for utilities to meet their renewable energy requirements:
• Construct their own renewable
• Buy renewable energy credits (RECs) in
the credit-trading program authorized in
the legislation establishing the standard.
• Pay a set “buyout” rate per kilowatt-hour
or therm of natural gas to help fund programs promoting renewable energy.
Similarly, to meet energy efficiency standards, utilities have the following options:
• Implement end-use efficiency programs
for utility customers.
• Improve distribution system efficiency.
• Pay a “buyout” rate.
• Buy tradeable energy efficiency credits.
• Purchase energy savings through
contracts with other utilities, third-party efficiency service providers or
other third-party entities.
States Lead the Way
Chances are good that your state has
one or more of these standards, as illustrated in figure 1. Thirty states have a mandatory renewable portfolio standard (RPS),
Mandatory RPS + EERS or combined standard
Voluntary Renewable Goals
Voluntary Efficiency Goal
Mandatory RPS or EERS including CHP
Voluntary Efficiency Goal including CHP
Mandatory RPS + Voluntary Efficiency Goal including CHP
No portfolio standard at this time
Source: FVB Energy Inc., based on data provided by
the Database of State Incentives for Renewables and
Efficiency, American Council for an Energy-Efficient
Economy and the Pew Center.