Introduction

Power Generation, Transmission, and Use

Markets, Regulation, and Oversight

Impacts of Power Generation and Transmission

Looking Ahead

Appendices

CEIR Report Map

PPRP Home

Maryland Power Plants and the Environment (CEIR-18)

5.1.1 Maryland RPS

The Maryland Renewable Energy Portfolio Standard (RPS) was enacted in May 2004. The RPS requires retail electrical suppliers to provide a specified percentage of their electricity deliveries from Maryland-certified Tier 1 and Tier 2 renewable resources. Every megawatt-hour (MWh) generated by qualified renewable resources is eligible to be registered as one Maryland-certified Renewable Energy Credit (REC). Eligible RECs may come from a certified renewable energy facility that is either located within PJM or for the electricity the facility delivers into PJM from outside the PJM footprint. The 2004 RPS law was modified by legislation six times from 2007 through 2013 to effectuate change in qualifying resources, the percentage requirements, and other aspects of the statute. The current RPS law contains the following provisions:

Figure 5-1 illustrates the renewable sources that are required for the RPS, shown as a percentage of total energy sales over time. If a supplier does not provide the required amount of renewable electricity to its customers, it must pay a non-compliance penalty, referred to as an alternative compliance payment (ACP). These payments amount to $0.04 for each kilowatt-hour (kWh) short of the Tier 1 resource requirement (i.e., $40/MWh) and $0.015 for every kWh short of the Tier 2 requirement. The penalties for the solar energy set-aside started at $0.45/kWh in 2008, decreased to $0.40/kWh for 2009 through 2014; to $0.35/kWh in 2015 and 2016; to $0.20/kWh in 2017; and then will decrease by $0.05/kWh every other year to a level of $0.05/kWh in 2023.

Figure 5-1 Maryland RPS Summary, 2006-2022

Line chart with % of total sales by years 2006-2022

Source: Maryland Public Service Commission, Renewable Energy Portfolio Standard Report With Data for Calendar Year 2014, January 2016, http://www.psc.state.md.us/wp-content/uploads/2016-Renewable-Energy-Portfolio-Report.pdf (Download Adobe Acrobat Reader)

At the conclusion of 2015, there were 23,635 renewable energy facilities certified by the PSC, providing approximately 12,065 MW of renewable capacity in PJM (See Table 5-1).

Table 5-1 Maryland RPS Certified Capacity as of December 2015 (MW)

  Tier 1 Tier 2  
  Solar Wind Hydro Landfill Gas Biomass Black Liquor Municipal Solid Waste Wood Waste Geothermal Hydro Total
Maryland 412 190 20 33 69 65 268 4 1 474 1,536
Delaware --- --- --- 707 --- --- --- --- --- --- 707
Illinois --- 2,535 20 117 --- --- --- --- --- --- 2,672
Indiana --- 1,652 8 --- --- --- --- --- --- --- 1,660
Iowa --- 145 --- --- --- --- --- --- --- --- 145
Kentucky --- --- 2 16 --- --- --- 5 --- --- 23
Michigan --- --- 15 --- --- --- --- --- --- --- 15
Missouri --- 146 --- --- --- --- --- --- --- --- 146
New Jersey --- 8 11 76 --- --- --- --- --- --- 95
New York --- --- 153 --- --- --- --- --- --- --- 153
North Carolina --- --- --- 6 --- 152 --- --- --- 568 726
North Dakota --- 180 --- --- --- --- --- --- --- --- 180
Ohio --- 316 --- 64 7 93 --- 17 --- 47 544
Pennsylvania --- 1,084 84 168 1 164 --- --- --- 501 2,002
Tennessee --- --- --- --- --- 50 --- --- --- 52 102
Virginia --- --- 60 128 --- 288 63 130 --- --- 669
West Virginia --- 517 55 --- --- --- --- --- --- 117 689
TOTAL 412 6,773 428 1,315 77 812 331 156 1 1,759 12,064

Source: PJM Generator Attributes Tracking System (GATS), December 2015

Note: The capacity values are based the nameplate capacity of each facility, which does not necessarily equal the renewable energy capacity.

As depicted in Figure 5-2, black liquor is the leading fuel source for compliance with the Maryland RPS, followed by wind, hydro, and municipal solid waste. Wood waste, solar, landfill gas, and other biomass gas make up the remaining fuels.

Figure 5-2 Tier 1 and Tier 2 Retired RECs by Fuel Source, 2014

Pie chart of tier 1 and tier 2 retired RECs by fuel source, 2014

Source: Maryland Public Service Commission, Renewable Energy Portfolio Standard Report With Data for Calendar Year 2014, January 2016, http://www.psc.state.md.us/wp-content/uploads/2016-Renewable-Energy-Portfolio-Report.pdf (Download Adobe Acrobat Reader)

Click to OpenFederal Production Tax Credit and Investment Tax Credit

The PSC is charged with ensuring compliance with the RPS and certifying eligible facilities. Eligible facilities must operate within the PJM footprint or a PJM-adjacent control area if the electricity is delivered into PJM, and must be classified as either a Tier 1 or Tier 2 facility. Retail electricity suppliers are required to submit annual compliance reports by April of the following year. Table 5-2 shows the aggregate supplier obligation, the RECs retired, and the ACPs submitted from 2006-2014. Each retired REC represents one MWh of renewable energy generated from a Tier 1 or Tier 2 facility.

In 2014, Maryland generated nearly 1.5 million MWh of renewable electricity from in-State Tier 1 resources and over 1.6 million MWh of renewable electricity from in-State Tier 2 resources, with a grand total of 3.1 million RECs produced within the State in 2014. About 25 percent of the RECs retired in Maryland in 2014 were from generating facilities located in-State. Overall, the cost of compliance with the 2014 RPS requirement was nearly $104 million, with ACPs accounting for approximately $66,000 (0.6 percent of the total).

Table 5-2 Maryland RPS Compliance, 2006-2014

RPS Compliance Year Tier 1 Solar Tier 1 Tier 2 Total
(non-solar)
2006 RPS Obligation (MWh) ––– 520,073 1,300,201 1,820,274
Retired RECs (MWh) ––– 552,874 1,322,069 1,874,943
ACP Required ––– $13,293 $24,917 $38,209
2007 RPS Obligation (MWh) ––– 553,612 1,384,029 1,937,641
Retired RECs (MWh) ––– 553,374 1,382,874 1,936,248
ACP Required ––– $12,623 $23,751 $36,374
2008 RPS Obligation (MWh) 2,934 1,183,439 1,479,305 2,665,678
Retired RECs (MWh) 227 1,184,174 1,500,414 2,684,815
ACP Required $1,218,739 $9,020 $8,175 $1,235,934
2009 RPS Obligation (MWh) 6,125 1,228,521 1,535,655 2,770,301
Retired RECs (MWh) 3,260 1,280,946 1,509,270 2,793,475
ACP Required $1,147,600 $395 $270 $1,148,265
2010 RPS Obligation (MWh) 15,985 1,920,070 1,601,723 3,539,778
Retired RECs (MWh) 15,451 1,931,367 1,622,751 3,569,569
ACP Required $217,600 $20 $0 $217,620
2011 RPS Obligation (MWh) 28,037 3,079,851 1,553,942 4,661,830
Retired RECs (MWh) 27,972 3,083,141 1,565,945 4,677,058
ACP Required $41,200 $48,200 $9,120 $98,520
2012 RPS Obligation (MWh) 56,130 3,901,558 1,522,179 5,479,867
Retired RECs (MWh) 56,194 3,902,221 1,522,297 5,480,712
ACP Required $4,400 $0 $1,050 $5,450
2013 RPS Obligation (MWh) 133,713 4,858,404 1,521,981 6,514,098
Retired RECs (MWh) 134,124 4,871,586 1,526,789 6,532,499
ACP Required $2,440 $40 $0 $2,440
2014 RPS Obligation (MWh) 203,827 6,062,635 1,520,966 7,787,428
Retired RECs (MWh) 203,884 6,062,135 1,521,022 7,787,041
ACP Required $15,600 $46,600 $3,765 $65,965

Source:  Maryland Public Service Commission, Renewable Energy Portfolio Standard Report With Data for Calendar Year 2014, January 2016, http://www.psc.state.md.us/wp-content/uploads/2016-Renewable-Energy-Portfolio-Report.pdf (Download Adobe Acrobat Reader).

 

Maryland General Assembly, Maryland Public Utility Companies Code §7-701 et seq., http://mgaleg.maryland.gov/webmga/frmStatutesText.aspx?article.
Maryland Public Service Commission, “Renewable Energy Portfolio Standard Report With Data for Calendar Year 2014,” January 2016, http://mgaleg.maryland.gov/webmga/frmStatutesText.aspx?article.
Black liquor is a thick, dark liquid that is a byproduct of the process that transforms wood into pulp, which is then dried to make paper. One of the main ingredients in black liquor is lignin, which is the material in trees that binds wood fibers together and makes them rigid, and which must be removed from wood fibers to create paper.

Federal Production Tax Credit and Investment Tax Credit

The federal renewable electricity production tax credit (PTC) is a per-kWh tax credit for electricity generated by qualified energy resources and sold by the taxpayer to an unrelated person during the taxable year. Originally enacted in 1992, the PTC has been renewed and expanded numerous times. The current credit amount is 2.3¢/kWh for wind, closed-loop biomass, and geothermal resources; and 1.1¢/kWh for open-loop biomass, landfill gas, municipal solid waste, qualified hydroelectric, and ocean energy resources.  In December 2015, Congress extended the PTC for five years for wind power and one year for the other eligible technologies.  Specifically for wind, the PTC is reduced by 20 percent in 2017; 40 percent in 2018 and 60 percent in 2019.  Congress previously adopted language that allows an additional two years for projects that began construction or incurred five percent or more of project investment costs.  Geothermal, biomass, landfill gas, municipal solid waste, qualified hydroelectric, and ocean energy projects that are under construction by December 31, 2018, will qualify for 10 years of production tax credits on electrical output.  Wind will also have an additional two years to utilize the PTC from the time construction began or project investment costs were incurred, up until the end of 2021.

The Investment Tax Credit (ITC) provides a federal tax credit of 30 percent for investments in solar electric; heating and lighting technologies; fuel cells; and small wind and large wind plants, and a 10 percent federal tax credit for investments in geothermal heat pumps and electric systems; microturbines and combined heat and power systems.  In December 2015, Congress extended the ITC, but at different tax credit rates and for different lengths of time by technology.  Electric and non-electric solar systems are eligible for the 30 percent tax credit until the end of 2019.  After that, the tax credit drops to 26 percent at the end of 2020, 22 percent in 2021, and 10 percent from 2022 onwards.  The ITC for large wind systems also declines over time, beginning at 30 percent in 2016, 24 percent in 2017, 18 percent in 2018 and 12 percent in 2019 before expiring altogether.  Geothermal heat pumps, microturbines, and combined heat and power systems can receive the 10 percent tax credit but only through 2016.  Geothermal electric systems can receive the 10 percent tax credit without an expiration date.  Finally, Congress adopted the two-year extension for utility-scale and commercial solar systems if they began construction or incurred project investment costs, but not for residential solar systems.

Source: U.S. Congress, Consolidated Appropriations Act of 2016, December 2015, https://www.gpo.gov/fdsys/pkg/BILLS-114hr2029enr/pdf/BILLS-114hr2029enr.pdf (Download Adobe Acrobat Reader)