State-scale evaluation of renewable electricity policy: The role of renewable electricity credits and carbon taxes

Todd Levin, Valerie M. Thomas and Audrey J. Lee

Energy Policy, 2011, vol. 39, issue 2, pages 950-960

Abstract: We have developed a state-scale version of the MARKAL energy optimization model, commonly used to model energy policy at the US national scale and internationally. We apply the model to address state-scale impacts of a renewable electricity standard (RES) and a carbon tax in one southeastern state, Georgia. Biomass is the lowest cost option for large-scale renewable generation in Georgia; we find that electricity can be generated from biomass co-firing at existing coal plants for a marginal cost above baseline of 0.2-2.2Â cents/kWh and from dedicated biomass facilities for 3.0-5.5Â cents/kWh above baseline. We evaluate the cost and amount of renewable electricity that would be produced in-state and the amount of out-of-state renewable electricity credits (RECs) that would be purchased as a function of the REC price. We find that in Georgia, a constant carbon tax to 2030 primarily promotes a shift from coal to natural gas and does not result in substantial renewable electricity generation. We also find that the option to offset a RES with renewable electricity credits would push renewable investment out-of-state. The tradeoff for keeping renewable investment in-state by not offering RECs is an approximately 1% additional increase in the levelized cost of electricity.

Keywords: Renewable; electricity; standard; Carbon; tax; Renewable; electricity; credits (search for similar items in EconPapers)
Date: 2011
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