Renewables Portfolio Standard

Summary

Established in 1998 and subsequently revised several times, Connecticut's renewables portfolio standard (RPS) requires each electric supplier and each electric distribution company wholesale supplier to obtain at least 24% of its retail load by using renewable energy by January 1, 2020. The RPS also requires each electric supplier and each electric distribution company wholesale supplier to obtain at least 4% of its retail load by using combined heat and power (CHP) systems and energy efficiency by 2010. In 2018, Public Act No. 18-50, according to Substitute Senate Bill 9, extended the renewable portfolio standard to year 2030, demanding at least 40% Class I renewable energy resources and 4% Class I or II renewable energy resources by January 1, 2030. Public Act No. 18-50 also increased the 2020 target from 20% to 21%, with the exception of utilities under certain conditions.

Eligible Technologies:

Separate portfolio standards are required for energy resources classified as "Class I," "Class II," or "Class III." Class I resources include electricity derived from solar power, wind power, fuel cells, geothermal,  landfill methane gas, anaerobic digestion or other biogas derived from biological sources, thermal electric direct energy conversion, ocean thermal power, wave or tidal power, low-emission advanced renewable energy conversion technologies, run-of-the-river hydropower facilities not exceeding 60 megawatts (MW) in capacity,  nuclear power generating facilities constructed on or after October 1, 2023, and biomass facilities that use sustainable biomass fuel and meet certain emissions requirements.   In 2018, Substitute Senate Bill 9 defined low emission advanced renewable energy conversion technologies as including, but not limited to, zero emission low grade heat power generation systems based on organic oil free rankine, kalina or other similar nonsteam cycles that use waste heat from an industrial or commercial process that does not generate electricity. Substitute Senate Bill 9 also made run-of-the-river hydropower facilities that received a new license after January 1, 2018 an eligible Class I energy source. 

Class II resources include trash-to-energy facilities that have obtained required permits.

Class III resources include: (1) customer-sided CHP systems, with a minimum operating efficiency of 50%, installed at commercial or industrial facilities in Connecticut on or after January 1, 2006; (2) electricity savings from conservation and load management programs that started on or after January 1, 2006, and (3) systems that recover waste heat or pressure from commercial and industrial processes installed on or after April 1, 2007. 

Requirements and Carve-outs:

Electric providers must meet the standard with at least 40% Class I resources and 4% Class I or II resources by January 1, 2030, and 4% Class III sources by 2010, and thereafter, according to the following schedule:

• On and after 1/1/2006: 2.0% Class I + 3% Class I or II
• On and after 1/1/2007: 3.5% Class I + 3% Class I or II + 1% Class III
• On and after 1/1/2008: 5.0% Class I + 3% Class I or II + 2% Class III
• On and after 1/1/2009: 6.0% Class I + 3% Class I or II + 3% Class III
• On and after 1/1/2010: 7.0% Class I + 3% Class I or II + 4% Class III
• On and after 1/1/2011: 8.0% Class I + 3% Class I or II + 4% Class III
• On and after 1/1/2012: 9.0% Class I + 3% Class I or II + 4% Class III
• On and after 1/1/2013: 10.0% Class I + 3% Class I or II + 4% Class III
• On and after 1/1/2014: 11.0% Class I + 3% Class I or II + 4% Class III
• On and after 1/1/2015: 12.5% Class I + 3% Class I or II + 4% Class III
• On and after 1/1/2016: 14.0% Class I + 3% Class I or II + 4% Class III
• On and after 1/1/2017: 15.5% Class I + 3% Class I or II + 4% Class III
• On and after 1/1/2018: 17.0% Class I + 4% Class I or II + 4% Class III
• On and after 1/1/2019: 19.5% Class I + 4% Class I or II + 4% Class III
• On and after 1/1/2020: 21.0% Class I + 4% Class I or II + 4% Class III
• On and after 1/1/2021: 22.5% Class I + 4% Class I or II + 4% Class III
• On and after 1/1/2022: 24% Class I + 4% Class I or II + 5% Class III
• On and after 1/1/2023: 26% Class I + 4% Class I or II + 5% Class III
• On and after 1/1/2024: 28% Class I + 4% Class I or II + 5% Class III
• On and after 1/1/2025: 30% Class I + 4% Class I or II + 4% Class III
• ...
• On and after 1/1/2030: 40% Class I + 4% Class I or II + 4% Class III

*From 2025 to 2030, the Class I requirement increases by 2% annually, with 4% Class I or II and 4% Class III requirement keeping the same.

The Public Utilities Regulatory Authority has the right to allow hydropower to meet up to 2.5% of Class I's annual portfolio standards, if there is insufficient amount of Class I sources to meet the target. As a whole, hydropower cannot meet more than 5% of Class I's portfolio standards on and after October 1, 2023.

RPS requirements may be satisfied by purchasing electricity generated using Class I or Class II resources within the jurisdiction of the regional independent system operator (ISO New England). However starting January 2014, the Public Act 13-303 prohibits any renewable energy credits that are already claimed or counted by another State towards meeting their own renewable portfolio standards or goals to be eligible for compliance towards CT’s RPS requirement. This measure was to put in place to stop double counting of RECs, where RECs produced by an out of state facility were being used to meet RPS requirement in two different States. 

Renewable energy credit trades and purchases are tracked through the New England Power Pool Generation Information System (NEPOOL GIS). Connecticut renewable energy sources can be located in the Independent System Operator of New England (ISO-NE) Control Area or the Adjacent Control Area. The ISO-NE Control Area includes: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. The Adjacent Control Area that can import into ISO-NE includes: New York, Quebec and the Maritime Provinces (New Brunswick, Nova Scotia and Prince Edward Island). 

Beginning in 2015, REC values for Class I biomass and landfill methane gas (not including anaerobic digestion and other biogas facilities) will gradually decrease per a schedule established by the Department of Energy and Environmental Protection (DEEP). Any facility that has entered into a power purchase agreement before June 5, 2013 will not be effected by the decreasing REC values.

Public Act 11-80 of 2011 requires the Connecticut Green Bank (formerly known as the Clean Energy Finance and Investment Authority) to develop a residential solar incentive program that will result in a minimum 30 megawatts of new residential solar by December 31, 2022, and will be funded by the state's existing public benefits fund. Energy produced from systems funded in this way help reduce utility RPS obligations.

Public Act 13-303 also allows the DEEP commissioner to issue RFPs and require electric companies to enter into contracts with renewable energy system owners. All RECs will be sold in the regional REC market to be used by suppliers or electric companies to meet RPS obligations. RFPs may be issued for (1)  Class I resources built on or after January 1, 2013 (limited to 4% of power distributed by electric companies); (2) Class I resources built before January 1, 2013 and hydropower over 30 MW built on or after January 1, 2003 in the New England REC market area (limited to 5% of the load distributed by electric companies); (3) Class I hydropower, landfill methane gas, and biomass (limited to 4% of the load distributed by electric companies).

Compliance:

 Electric providers that fail to comply with the RPS during an annual period must pay $0.055 per kWh ($55/MWh) to the PURA. Unlike most other states that have an increasing compliance payment systems, CT has a fixed compliance payment. As compliance payment, theoretically represent the maximum price the REC can achieve, the price of RECs in CT are traded below $55. Starting calendar year 2018 and up to and including calendar year 2020, the compliance payment is set to $0.055 per kWh if the wholesale supplier fails to comply for Class I renewable energy resource, and $0.025 per kWh if the wholesale supplier fails to comply with Class II standard. Starting from calendar year 2021, the compliance payment rate is set to $0.04 per kWh for Class I and $0.025 per kWh for Class II. 

CT offers a 5th year compliance, where a Load Serving Entity (LSE) can purchase RECs in January through March of the following year to use them for prior year compliance. The RECs can be banked for 2 years and is limited to 30% of the load. 

Compliance payments were historically used for the Connecticut Clean Energy Fund (CCEF) for the development of Class I renewables. However, beginning in 2013, those payments will be used to refund ratepayers to offset the cost of LREC and ZREC contracts (see below) and other costs passed through to ratepayers. The PURA Renewable Energy web site provides additional documents related to its RPS.

Long-term contracts for LRECs and ZRECs:

Public Act 11-80 of 2011 also requires that utilities enter into long-term contracts (15 years) for renewable energy credits from zero emission Class I renewable energy facilities (on the customer side of the meter) up to 1 MW. Zero emission Class I facilities include solar, wind, and hydro generators. Resulting zero emission renewable energy credits (ZRECs) may be used for RPS compliance during the year of generation or the subsequent year. Utilities are required to spend $8 million on contracts in year one, $16 million in year two, $24 million in year three, and $32 million in year four -- at which point the PURA will conduct a review. The maximum payment per ZREC authorized during the first year is $350. PURA may reduce this maximum per ZREC price yearly by 3-7%. The electric distribution companies submitted their six-year solicitation plan to PURA in December 2011. A Request for Proposal will be issued in the first half of 2012. See PURA docket 11-12-06 for additional details.

Public Act 11-80 of 2011 also requires that utilities enter into long-term contracts (15 years) for renewable energy credits from low emission Class I renewable energy facilities (on the customer side of the meter) up to 2 MW. The law establishes the emission criteria required to achieve "low emission facility" status, but could include facilities that generate using fuel cells, biomass, and landfill gas. Resulting low emission renewable energy credits (LRECs) may be used for RPS compliance during the year of generation or the subsequent year. Utilities are required to spend up to $4 million on contracts in year one, and an additional $4 million in subsequent years. PURA will conduct a review in year three. The maximum payment per LREC authorized during year one is $200. As part of the six-year solicitation plan for ZRECs, the utilities companies also included their solicitation plan for LRECs. The RFP for ZRECs will also solicit LRECs.

Solar Home Renewable Energy Credits (SHRECs)

HB 6838 enacted on June 2015 expanded the Green Bank’s Residential Solar Investment program to support up to 300 MW of new solar PV by 2022. A significant portion of the funding for the expansion of the program will be derived through the sale of Solar Home Renewable Energy Credits (SHRECs). SHRECs represent the environmental attributes of one megawatt hour of electricity generated through residential solar PV systems that are installed through CT Green Bank on or after January 1st, 2015. These SHRECs are similar to the Solar Renewable Energy Credits (SRECs) that are popular in other States that include a solar carve-out in their RPS. CT RPS does not include a solar carve-out, however it has created SHRECs to facilitate the growth of its residential solar by requiring the electric distribution companies to sell a portion of electric load through SHRECs. 

Any SHRECs created by the residential solar system that participate in the Residential Solar Investment program will automatically be transferred to the Green Bank. These SHRECs will have a term life of 2years, including its year of production and the following year. The Green Bank will sell the SHRECs to the electric distribution companies (EDCs) through a master purchase agreement with a term of 15 years. EDCs will be required to purchase SHRECs based on their respective distribution system loads. The price of the SHRECs will be determined by the Green Bank, which shall not exceed the price of small ZRECs, or will be set five dollars less than the State’s Alternative Compliance Payment (ACP). The EDCs may retire the SHRECs for their compliance with the Class I portion of their Renewable Portfolio Standard (RPS) requirement, or resell the credits. All the proceeds from the resale of SHRECs will be credited to the EDCs customers. Systems that participate in the state’s ZREC program cannot participate in the SHREC program. 

 * Previously known as the Connecticut Department of Public Utilities (DPUC).