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Abstract
As states across the country struggle to increase local development of renewable energy, policymakers are turning to innovative program designs to meet their renewable electricity targets. Massachusetts recently adopted a unique, auction-based price support mechanism for the solar portion of its renewable portfolio standard. During the program development process, the Massachusetts Department of Energy Resources (DOER) used system dynamics to simulate potential solar renewable energy certificate market conditions under the proposed regulations. The modeling exercise resulted in several program design changes that will lead to a more stable certificate market. System dynamics can be a useful tool for developing and improving sustainability programs.
Highlights
States are increasingly interested in encouraging sustainable energy generation through various policies and financial support mechanisms
The system dynamics model described above allowed the state to consider a broad range of complex market interactions and permitted the Department of Energy Resources (DOER) to make a series of refinements to its proposed regulations
One major change that the DOER made to the program design was to take a different approach to calculating the minimum standard each year
Summary
States are increasingly interested in encouraging sustainable energy generation through various policies and financial support mechanisms. One of the most popular policies in the United States for promoting renewables is the renewable portfolio standard (RPS). As of April 2010, 29 states and the District of Columbia have RPSs, while six states have non-binding renewable goals [1]. An RPS requires that electricity providers procure a portion of their electricity from renewable sources. The provider is typically obligated to show compliance with the standard via the purchase of renewable energy certificates/credits (RECs) that correspond to a unit (e.g., megawatt-hour) of renewable electricity. The provider can purchase these certificates at the same time that it purchases the renewable power or it can purchase the RECs independently
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