Procurement Options for New Renewable Electricity Supply

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Tool Overview

"State renewable portfolio standard (RPS) policies require utilities and load-serving entities (LSEs) to procure renewable energy generation. Utility procurement options may be a function of state policy and regulatory preferences, and in some cases, may be dictated by legislative authority. Utilities and LSEs commonly use competitive solicitations or bilateral contracting to procure renewable energy supply to meet RPS mandates. However, policymakers and regulators in several states are beginning to explore the use of alternatives, namely feed-in tariffs (FITs) and auctions to procure renewable energy supply. This report evaluates four procurement strategies (competitive solicitations, bilateral contracting, FITs, and auctions) against four main criteria: (1) pricing; (2) complexity and efficiency of the procurement process; (3) impacts on developers' access to markets; and (4) ability to complement utility decision-making processes. These criteria were chosen because they take into account the perspective of each group of stakeholders: ratepayers, regulators, utilities, investors, and developers."

"This report explores utility-driven procurement options for incremental supply of renewable generation. It attempts to provide U.S. policymakers and regulators with information, analysis, and special considerations about policy options for renewable electricity procurement. The report compares four contrasting mechanisms for contracting with independent power producers (IPPs):

  1. Competitive solicitations
  2. Bilateral contracting
  3. Feed-in tariffs (FITs)
  4. Auctions."


References