Note: In May 2015, S.B. 91 was enacted, changing the renewable energy standard to a voluntary goal.
In May 2009, the Kansas Legislature enacted the Renewable Energy Standards Act (H.B. 2369), creating a state renewable portfolio standard (RPS). The Kansas RPS required the state's investor-owned utilities and electric cooperatives to generate or purchase 20% of the affected utility's peak demand from eligible renewable resources for each calendar year beginning in 2020. (According to the American Wind Energy Association, Kansas generated 21.7% of its electricity from wind energy in 2014.)
In May 2015, S.B. 91 was enacted, changing the RPS from a standard to a voluntary goal.
Eligible resources include wind, solar thermal, photovoltaics (PV), dedicated crops grown for energy production, cellulosic agricultural residues, plant residues, methane from landfills or wastewater treatment, clean and untreated wood products such as pallets, existing hydropower, new hydropower that has a nameplate rating of 10 megawatts (MW) or less, fuel cells using hydrogen produced by an eligible renewable resource, and other sources of energy that become available in the future and are certified as renewable by the Kansas Corporation Commission (KCC).
Investor-owned utilities and electric cooperatives have a voluntary target to generate or purchase 10% of the affected utility's peak demand (based on the average demand of the prior 3 years of each year's requirement) from eligible renewable resources in the years 2011-2015, 15% in the years 2016-2019, and 20% for each calendar year beginning in 2020.
While the RPSs of most other states are based on retail electric sales (e.g., in units of kilowatt-hours), Kansas's voluntary standard is based on generation capacity. Generation capacity is generally the gross capacity owned or leased by a utility less the auxiliary power used to operate the facility.
Each MW of eligible capacity installed in Kansas after January 1, 2000, will count as 1.1 MW for the purpose of compliance.
Each utility can meet the RPS requirements by maintaining a portfolio of renewable capacity from generation, purchased energy, renewable energy credits (RECs), or net metering systems. Utilities must file an annual report with the KCC on or before August 1 each year detailing its compliance with the RPS standards.
Renewable Energy Credits
Renewable Energy Credits (RECs) can be used to comply with the requirement by using formulas included in K.A.R. 82-16. Capacity from RECs is based on the affected utility's actual capacity factor of its owned renewable generation of the same resource type from the previous year. For example, if a utility purchases wind RECs in order to meet compliance, it must use the average capacity factor of its own existing wind facilities in order to calculate the capacity from RECs that can be counted towards compliance. If the utility does not have a facility of the same resource as the RECs, then the capacity factor of the utility's overall renewable energy generation shall be used for the REC capacity calculation. If the utility has no renewable energy generation, a default capacity factor of 34% is used.
The KCC established rules and regulations to administer the portfolio standard in October 2010 (K.A.R. 82-16). To assist in verifying compliance, the KCC decided to use the North American Renewables Registry (NAR). Utilities may purchase or sell RECs without KCC approval, but each REC can only be counted once. In order to prevent double counting or misuse, each REC sold or purchased by any Kansas utility must be reported into an approved registry that tracks the creation, sale, and retirement of every REC. For compliance years 2011, 2016, and 2020, RECs can only be used to meet a portion of the utility's requirement.
Any unused RECs remain valid for up to 2 years from the date of generation. After 2 years, the REC is permanently retired.
Utilities may also purchase capacity from other renewable energy producers in order to comply with the RPS. If a utility enters into a purchasing contract of 10 years or more, the amount of capacity counted towards compliance will be the nameplate capacity minus the auxiliary power required to produce the capacity. If the purchase contract is less than 10 years, then the capacity from the purchased power will be calculated using the same formulas used to calculate REC capacity.
Cost Mitigation Measures
Before the RPS was changed from a standard to a voluntary goal, failure to comply with the renewable energy requirements would have resulted in a penalty equal to twice the market value of RECs that would have been required to meet the requirement.
A utility is exempt from administrative penalties related to RPS noncompliance if it demonstrates that compliance causes a retail rate impact of 1% or more.
The KCC was not required to assess penalties for compliance years 2011 and 2012 if the utility demonstrated a good faith effort to comply with the requirement.