"Are Renewables Portfolio
Standards Cost-effective Emission Abatement Policy?"
Katerina Dobesova, Jay Apt and Lester B. Lave
Renewables portfolio standards (RPS) could be an important policy
instrument for 3P and 4P control. We examine the costs of renewable
power, accounting for the federal production tax credit, the market
value of a renewable credit, and the value of producing electricity
without emissions of SO2, NOx, mercury, and CO2. We focus on Texas,
which has a large RPS and is the largest electricity producer and one of
the largest emitters of pollutants and CO2. We estimate the private and
social costs of wind generation in an RPS compared with the current cost
of fossil generation, accounting for the pollution and CO2 emissions. We
find that society paid about 5.7 ¢/kWh more for wind power, counting the
additional generation, transmission, intermittency and other costs. The
higher cost includes credits amounting to 1.1 ¢/kWh in reduced SO2, NOx,
and Hg emissions. These pollution reductions and lower CO2 emissions
could be attained at about the same cost using pulverized coal (PC) or
natural gas combined cycle (NGCC) plants with carbon capture and
sequestration (CCS); the reductions could be obtained more cheaply with
an integrated coal gasification combined cycle (IGCC) plant with CCS.
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