Economists at The Brattle Group have released a study that identifies the factors that impact the desirability of developing 5,000 to 10,000 MW of renewable generation in Nebraska for export purposes. Prepared for the Nebraska Power Review Board (PRB) and submitted to the Nebraska Legislature for consideration, the study also presents options available to policy makers to meet the state's economic development objectives. The PRB is the state agency with primary jurisdiction over the electric industry in Nebraska.
Based upon a review of state, regional, and national renewable energy and transmission policies, the report identifies the following challenges to wind generation developments in Nebraska:
1. Transmission Constraints: Transmission projects currently in development will provide transmission infrastructure sufficient to integrate at least another 2,000 MW of wind projects. However, achieving the considerably higher target of renewable generation in Nebraska would require a substantial expansion of the state, regional, and interregional transmission systems.
2. Limited and Uncertain Demand for Renewable Energy: The regional market for renewable generation is currently saturated. However, demand for additional renewable generation will likely emerge as costs decline relative to conventional resources, wholesale electricity prices increase, coal plants retire, and new environmental policies are implemented. Nebraska will need to better position itself to be prepared to take advantage of emerging new demand for renewable generation.
3. Less Attractive Economics Compared to Neighboring States: Renewable generation developers in Nebraska face competitive disadvantages relative to some other states in the wind-rich Great Plains region, including lower financial incentives and lower wholesale power prices.
4. Greater Perceived Risks: Due to the requirements of the Certified Renewable Export Facility (CREF) process and limited experience in developing renewable generation under that standard, there is a perception among developers that wind projects in the state are more risky and more difficult to pursue than in neighboring states.
The study discusses both the costs and benefits of supporting renewable generation development in Nebraska. If, after considering these tradeoffs, the Nebraska Legislature chooses to promote the development of renewable resources in the state, the authors identify a number of options available to do so:
1. Develop a State-Wide Transmission Strategy: Addressing future transmission constraints within and outside of Nebraska will be an essential component of the state's long-term renewable generation strategy. The most effective strategy will likely be a mix of options that can minimize costs to ratepayers while supporting renewable generation development.
2. Additional Tax Incentives: The economic disadvantage faced by renewable developments in Nebraska compared to neighboring states could be addressed through additional economic development incentives.
3. Simplify the CREF Process: To reduce the perceived and actual challenges faced by wind generation developers in Nebraska, the Legislature may consider limiting the CREF process only to the review of environmental impacts, other permits, and the decommissioning plan.
4. Create a State Function to Promote Nebraska Renewables: Similar to other states, Nebraska could consider setting up a function within the Nebraska Department of Economic Development that, with the active and credible support of state policy makers, would promote the state as an attractive location for renewable generation development and help the state achieve its policy goals.
"Nebraska has some of the best wind in the country but a surprisingly low amount of wind generation installed and under development," said Brattle principal Judy Chang, a co-author of the study. "Nebraska policy makers and legislators have been working to increase the attractiveness of the state to renewable energy developers. They have already reduced some barriers, including those related to limiting public power condemnation rights. We anticipate that Nebraska policy makers will consider the options laid out in our report to make decisions about further improving the economics and regulatory setting for renewable development."
The study, "Nebraska Renewable Energy Exports: Challenges and Opportunities," prepared in response to Nebraska Legislative Bill 1115, was authored by Brattle principals Judy Chang and Johannes Pfeifenberger, associate Michael Hagerty, and research analyst Ann Murray. The study is available for download at www.brattle.com and is posted on the Nebraska Legislature's website at http://www.nebraskalegislature.gov/agencies/view.php.