Energy Portfolio Standard

Summary

Nevada established a renewable portfolio standard (RPS) as part of its 1997 restructuring legislation. Under the standard, NV Energy (formerly Nevada Power and Sierra Pacific Power) must use eligible renewable energy resources to supply a minimum percentage of the total electricity it sells. In 2001, the state increased the minimum requirement by 2% every two years, culminating in a 15% requirement by 2013. The portfolio requirement has been subsequently revised, most significantly by SB 358 (2019), which increased the requirement to 50% by 2030. In addition to solar, qualifying renewable energy resources include biomass, geothermal energy, wind, certain hydropower, energy recovery processes*, and waste tires (using microwave reduction).**

The following schedule is currently in effect:

• 6% renewables/efficiency in 2005 and 2006
• 9% renewables/efficiency in 2007 and 2008
• 12% renewables/efficiency in 2009 and 2010
• 15% renewables/efficiency in 2011 and 2012
• 18% renewables/efficiency in 2013 and 2014
• 20% renewables/efficiency in 2015 through 2019
• 22% renewables/efficiency in 2020 
• 24% renewables/efficiency in 2021
• 29% renewables/efficiency in 2022 and 2023
• 34% renewables/efficiency in 2024 through 2026
• 42% renewables/efficiency in 2027 through 2029
• 50% renewables/efficiency in 2030 and each year thereafter 

Energy Efficiency as an Eligible Resource

AB 3 (2005) allowed efficiency measures to be used to satisfy a portion of the requirement. To qualify as portfolio energy credits, efficiency measures must be: (1) implemented after January 1, 2005; (2) sited or implemented at a retail customer’s location; and (3) partially or fully subsidized by the electric utility. The measure must also reduce the customer’s energy demand (as opposed to shifting demand to off-peak hours). The contribution from energy efficiency measures to meet the portfolio standard was originally capped at one-quarter of the total standard in any particular year. SB 252 (2013) established a schedule for reducing the extent to which energy efficiency can be used to comply with the standard, which was later amended by S.B. 358 of 2019. Energy efficiency measures can be used to comply with up to 10% of the annual RPS requirement. Of that 10%, 50% must come from energy efficiency measures installed at residential customer service locations. For calendar year 2025 and each calendar year thereafter, no portion of that amount may be based on energy efficiency measures.

Carve-Outs

At least 6% of the total renewable energy requirement must be met with solar energy, starting in 2016. The requirement was 5% solar through 2015.

Portfolio Energy Credits and Credit Multipliers

The Public Utilities Commission of Nevada (PUCN) has established a program to allow energy providers to buy and sell portfolio energy credits (PECs) in order to meet energy portfolio requirements. One PEC represents one kilowatt-hour (kWh) of electricity generated by a portfolio energy system, with the exception of customer-sited photovoltaics (PV) placed into service by 2015, for which 2.4 PECs are credited per one actual kWh of energy produced. Per SB 252 (2013) this multiplier will end for new solar systems installed after December 31, 2015, but will continue for existing solar PV systems. For electricity saved during peak periods as a result of efficiency measures, the credit multiplier is 2.0. 

AB 388 (2013) clarified that the amount of energy provided by a system used in calculating PECs does not include any electricity generated by the system and used for its basic operations that reduce the amount of electricity delivered to the grid. The legislation specifically excludes electricity used for the heating, lighting, air conditioning and equipment of a building located on the site from portfolio eligibility, but specifically allows the electricity used by a geothermal facility for the extraction and transportation of geothermal brine or used to pump or compress geothermal brine.  These amendments apply to any facility placed into service on or after January 1, 2016; however, systems which are placed into service after that date but had contracts in place prior to December 31, 2012 are grandfathered in. 

350 Megawatt Requirement (NV Energy)
Senate Bill 123 (2013) requires NV Energy to retire 800 megawatts (MW) of coal-fired electric generating plants, in phases, by December 31, 2019. To offset these retirements, the legislation requires the utility to purchase, construct, or aquire 900 MW of power, in phases, from cleaner facilities. Of this total, 350 MW must come from new renewable energy facilities. By the end of years 2014, 2015, and 2016, the utility must issue a request for proposals for 100 MW of generating capacity from new renewable energy facilities. The final 50 MW of generating capacity from new renewable energy facilities must be owned and operated by the utility and construction must be completed by December 31, 2021. These requirements are separate from the 25% requirement under the RPS, and the PECs associated with these projects can be used to comply with the RPS.  

Temporary Renewable Energy Development Program
To help facilitate the renewable projects required by the renewable energy portfolio standard, the PUCN established the Temporary Renewable Energy Development (TRED) Program. The TRED Program is meant to insure prompt payment to renewable energy providers in order to encourage completion of renewable energy projects. The TRED Program establishes: (1) a TRED charge, allowing investor-owned utilities to collect revenue from electricity customers to pay for renewable energy separate from other wholesale power purchased by the electric utilities; and (2) an independent TRED trust to receive the proceeds from the TRED charge and remit payment to renewable energy projects that deliver renewable energy to purchasing electric utilities.


*The statutes define "energy recovery processes" as electricity generating systems with a nameplate capacity of 15 megawatts or less that convert the otherwise lost energy from "the heat from exhaust stacks or pipes used for engines or manufacturing or industrial processes; or the reduction of high pressure in water or gas pipelines before the distribution of the water or gas." To qualify, the system cannot use additional fossil fuel or require a combustion process to generate the electricity.

**Electricity produced from microwave reduction of tires must not involve combustion of the tire, and is credited as 0.7 kWh of renewable energy for every 1.0 kWh of actual electricity generated.