Nevada's experience with the Renewable Portfolio Standard

Energy Policy 129 (2019) 279–291

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Nevada's experience with the Renewable Portfolio Standard 1

Valerie Rountree

T

School of Natural Resources and the Environment, University of Arizona, Environment and Natural Resources 2, 1064 East Lowell Street, Tucson, AZ 85721, United States

ARTICLE INFO

ABSTRACT

Keywords: Renewable Portfolio Standard Renewable energy policy

The Renewable Portfolio Standard (RPS) is widely considered the most important state-level renewable energy policy in the U.S. RPS policies are designed to move the state's electric sector toward renewables while minimizing electricity cost increases for customers but the specific design elements vary widely from state to state. And yet, the impacts of specific policy design features on outcomes has received relatively little attention in scholarly research. This study employs an in-depth case study approach to examine stakeholder perceptions of how and why particular policy design features of Nevada's RPS have changed as the result of social and political dynamics of Nevada's electric sector and the perceived impacts of these changes on policy outcomes. Although most expert stakeholders perceived Nevada's early RPS as critical to spurring growth in renewables, addition of a credit multiplier and allowance of existing and out-of-state resources, the long-term banking of RECs, credits for energy used to operate geothermal facilities, and energy efficiency measures were viewed as undermining policy objectives and delocalizing important economic and environmental benefits. Stakeholders perceived these changes as the result of an electric-sector culture that is resistant to change and a single, powerful electric utility that has significant sway over its regulator.

1. Introduction Despite the social and environmental benefits associated with renewables, renewably-generated electricity has historically not been competitive with fossil fuel-based electricity generation in the open market because: 1) fossil fuels often receive subsidies and their full costs of pollution are not accounted for in the open market (Berry and Jaccard, 2001; Painuly, 2001; Badcock and Lenzen, 2010); and 2) renewable energy technologies tend to have higher up-front costs, which has limited their uptake (Kung, 2012). Environmental externalities of energy production and consumption can have local, regional, and global impacts including cost of damage to human health and the environment and costs resulting from the impacts of climate change attributable to greenhouse gas emissions (Owen, 2006). Thus, renewable energy policies—in particular state-level policies—have been used to remove financial impediments to renewable energy deployment to allow these technologies to mature and become cost-competitive, ultimately leading to a more diverse portfolio of electricity generation resources. The Renewable Portfolio Standard (RPS)—a policy requiring a deadline-enforced percentage of electricity sales or generation capacity come from renewable energy resources—is widely considered the most

important state-level renewable energy policy (Rabe, 2008). Twentynine states, Washington D.C., and three U.S. territories currently have RPSs each with a unique policy design specifying the amount of energy from renewables required, type of renewables allowed, deadline to achieve the target, and consequences—if any—for non-compliance. Renewable energy scholars and practitioners tend to agree that RPSs have played a critical role in driving renewable energy markets and increasing renewable energy deployment and have generated other positive outcomes, such as reduced electricity prices (Lin and Fan, 2015),2 job growth in the renewable energy sector, and environmental benefits (Wiser et al., 2016). Even as the costs of renewables continues to decline, some clean energy advocates argue that mandates like the RPS are still critical drivers of growth in the sector, particularly in states that have kept the monopolistic utility model (Akers, 2018). Evaluating policy success presents a number of challenges in part because policy goals and obstacles to goal achievement vary widely from state to state and over time. Studies of RPSs have increasingly looked beyond “policy compliance” as a measure of success and to other outcomes, such as the impacts of the policy on carbon dioxide emissions and the environment (Barbose, 2016; Yi, 2015), job growth (Bowen et al., 2013; Yi, 2013), electricity prices (e.g. Barbose et al., 2015), and impacts on the renewable energy market (Yin and Powers, 2010;

E-mail addresses: [email protected], [email protected]. Department of Environmental Studies, University of Redlands, 1200 E Colton Ave. Redlands, CA 92373, United States. 2 Kung (2012) find that electricity prices increased in the short-term due to high capital costs. 1

https://doi.org/10.1016/j.enpol.2019.02.010 Received 14 May 2018; Received in revised form 16 December 2018; Accepted 2 February 2019 0301-4215/ © 2019 Elsevier Ltd. All rights reserved.

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Delmas and Montes-Sancho, 2011; Dong, 2012; Fischlein and Smith, 2013; Carley et al., 2017). Rather than attempting to label RPSs as effective or not, Carley et al. (2018) suggest greater attention should be directed to understanding how and why RPSs have changed over time and how these changes shape outcomes, particularly in-state renewable energy deployment. This case study examines stakeholder perceptions of how and why particular policy design features of Nevada's RPS have changed as the result of primarily the social and political dynamics of Nevada's electric sector and the impacts of these changes on policy outcomes. Nevada's RPS—adopted in 1997—is one of the oldest in the U.S. At a glance, Nevada appears to have made great strides towards advancing renewables: the RPS target has been consistently raised and is now set at 25% by 2025 with potential for doubling this standard to 50% by 2030 if approved by voters in 2020; the interim targets have been met every year except 2009; Nevada leads the nation in per capita solar and geothermal energy production (Berger, 2017); and the state has been boasted as a hub for clean energy jobs (e.g. Ball, 2014). However, the electric sector in Nevada has been particularly rife with conflict in recent years, making national headlines that reveal the state as a battleground for the broader political debate over renewable energy versus fossil fuels. In many respects, Nevada's experience with the RPS is typical of other U.S. states. The initial target set by the policy was very modest, requiring just 1.2% of electricity in the state be derived from renewable energy resources by 2010. Carley et al. (2018) points out that his practice of setting a low initial target is common and that states often begin with easily achievable targets, which they later increase when there is sufficient political support. Also like most other states (Berry et al., 2015), Nevada's RPS has undergone a number of other major and minor revisions over the past 20 years. However, Nevada differs from many states on a number of other characteristics. The state leads the nation in per capita solar and geothermal energy production (Berger, 2017). It is one of the most urbanized states in the U.S., with nearly 95% of its population living in urban areas as of 2010 (U.S. Census Bureau, 2012), which has likely played a role in the design and development electricity infrastructure in the state. Nevada is also one of the few states with a single Investor-Owned Utility servicing the majority of the state's customers.3 Although using a “representative” case is typically perceived as leading to more generalizable findings, given the large number of factors thought to influence RPS policy design and outcomes and the relatively small number of cases (i.e. U.S. states) to draw from, there is no state that is perfectly representative. Additionally, as Fllvbjerg (2006) points out, typical or average cases are often not the richest in information. The study uses an in-depth case study approach, drawing on data from expert interviews, policy documents, recent news pieces, peerreviewed journal articles, and agency reports, to explore how and why Nevada's RPS has changed over time. In doing so, it demonstrates that policy outcomes are impacted not just by policy design, but also by political, economic, and cultural factors that affect the way the policy is carried out. Thus, the case of Nevada is a useful complement to the quantitative studies that dominate the literature on RPSs. The paper begins with a brief overview of RPSs in the U.S., followed by a review of the relevant RPS literature, highlighting the gaps this study seeks to fill. It then delves into the history and evolution of Nevada's RPS, highlighting the economic, social, and political conditions as well as individual actors that have shaped the policy itself and the impact on the state's renewable energy landscape.

2. The Renewable Portfolio Standard in the U.S RPS policies are intended to create long-term, stable markets for renewable energy technology investments (Lyon and Yin, 2010), develop a sustained level of demand to support increased supplies and decreased costs (Rouhani et al., 2016), and create market mechanisms to allow the most cost-effective resources to meet electricity demands (Cory and Swezey, 2007). The first RPS was adopted by Iowa in 19834 at a time when high energy demand forced the construction of new, expensive-to-build-and-operate fossil-fuel generated power plants (Carley and Miller, 2012). Although economic drivers have consistently played an important role in RPS policy adoption, many adopters have also been motivated by the environmental and energy security benefits associated with the policy; for example, states often seek to improve air quality, reduce greenhouse gas emissions, attract renewable energy industries and jobs to the state, promote the use of in-state resources for electricity generation, make electricity generation costs more predictable, and diversify their energy portfolio to ensure reliable electricity for customers (Rabe, 2006; Lyon and Yin, 2010). In the U.S., most RPS policies have been passed by state legislatures (Cory and Swezey, 2007). Following adoption, the electric utilities identified in the policy—most often Investor-Owned Utilities—implement the policy by developing concrete, measurable actions to achieve at least the minimum required renewable energy electricity generation. Utilities can do this by: 1) generating electricity measured in kW h from eligible resources and selling it to retail customers; 2) purchasing kW h from other generators and using their own distribution infrastructure to sell the electricity to customers; or 3) if the policy allows, purchasing tradable credits from an electricity generator who transmits and sells the electricity to customers independent of the utility (Berry, 2002). A utility's plans are subject to approval by electricity regulators, the state Public Utilities Commission (PUCs), who also decide what to do—if anything—if utilities do not meet RPS goals (Berry and Jaccard, 2001). Utilities and PUCs thus shape whether, when, and how RPSs are implemented, and to a large degree the extent to which RPS goals are achieved. Recent studies suggest the RPS has produced numerous positive benefits in states with the policy. A report from the Department of Energy and the Lawrence Berkeley National Laboratory (Barbose, 2016) found RPSs across the country saved customers up to $1.2 billion from reduced wholesale electric prices and $1.3 to $3.7 billion from lower natural gas prices, resulting from decreased demand for natural gas across the electric sector. The report also estimates that RPSs nationwide support nearly 200,000 renewable energy jobs, have thus far created $5.2 billion worth of health benefits through improved air quality, and contributed toward $2.2 billion in global climate benefits. These findings were supported in a recent study by Wiser et al. (2016), which also found that in 2013, U.S. RPSs reduced total fossil fuel generation by 3.6%, which led to reduced greenhouse gas emission and air pollution and a 2% reduction in water used by the power sector. 2.1. RPS policy design and potential impacts on policy outcomes RPS policies are all designed to move the state's electric sector toward renewables while minimizing electricity cost increases for customers (Berry and Jaccard, 2001). The specific design elements, however, vary widely from state to state to achieve additional objectives (Wiser et al., 2005). Table 1 summarizes the key elements of RPS policy design, including the target, resource requirements, eligibility of generation facilities, flexibility mechanisms, and compliance, as well as the variations and associated trade-offs of each. Policy design elements are

3 To the author's knowledge, only two other states have a single InvestorOwned Utility that services the majority of the state's population—Utah, which has a voluntary Renewable Energy Goal, and Georgia, which does not have an RPS.

4 The Alternative Energy Law as it is called in Iowa initially required the state's two largest utilities to own or contract 105 MW of renewable generating capacity (DSIRE, 2018).

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Table 1 Variations and trade-offs associated with RPS policy design elements. RPS design element

Definition

Policy variations

Trade-offs

Target

Percent of electricity that must be generated from qualifying renewable resources by a specified date.

RPS targets among U.S. states range from: 2% (SC) to 40% (ME and HI), with deadlines from 2015 to 2030.

Target may include “carve-outs,” which specify different targets for different RE resources

Carve-outs included or not; size of carve-outs vary

Too low: may not spur RE growth Too high: may cause electricity price increases and leave insufficient time to build new RE generation (Berry and Jaccard, 2001) Carve outs included: Promotes the use of emerging technologies May increase the cost of compliance (Buckman, 2011) Narrower definition: greater environmental benefits (Wiser and Barbose, 2008) Broader definition: more diverse energy portfolio; policy may be more achievable (Wiser and Barbose, 2008) Multiplier: promotes the use of certain (often emerging and more expensive) technologies

Resource requirements

Eligibility of generation facilities

Types of resources that can be counted toward the RPS target

Policy may specify credit multipliers, which increase the “credit” given to certain resources When projects must be constructed

Where power may be generated

clean renewable resources; • Only renewable resources; or • All • Fossil fuel-based cogeneration Credit multipliers may be included those constructed after the policy • Only adoption date are counted; or projects that meet resource • All requirements are counted within the state; or • Only Within and outside of the state • Credit multipliers may be included a

trading and banking, and/or energy • REC efficiency measures included; or • No flexibility mechanisms included

Flexibility mechanisms

Mechanisms to make compliance easier and cheaper for utilities; common mechanism include trading of Renewable Energy Credits (RECs)b and energy efficiency measures

Compliance

Who is required to comply with the RPS;

Typically required of electric utilities; InvestorOwned Utilities often held to higher targets than municipal and cooperative utilities (Lyon and Yin, 2010)

How compliance is enforced

Enforcement ranges from: Strict mandates with financial penalties; to Voluntary compliance with no penalty

• •

• •

After adoption: ensures RE generation is additional to what would otherwise occur (Fischlein and Smith, 2013) Any time: compliance may be easier Within: localizes environmental and economic benefits (Dincer et al., 2014) Outside: compliance may be easier and cheaper (Cory and Swezey, 2007) Multiplier: promotes in-state generation Included: compliance may be easier and cheaper (Langniss and Wiser, 2003; Cory and Swezey, 2007) Not included: may create a more stable market for RE (Wiser and Barbose, 2008), increase new RE generation (Cory and Swezey, 2007; Heeter and Bird, 2013), and strengthen policy outcomes (Yin and Powers, 2010) All utilities: increases policy impact Only Investor-Owned Utilities: may make compliance easier and cheaper while often still covering the majority of utility customers in the state Strict mandates: increases compliance Voluntary: limits electricity cost increasesc

a The geographic eligibility of resources is complicated by the Dormant Commerce Clause, which restricts states from discriminating against interstate commerce such as by favoring in-state over out of state power generation, and calls into question the legality of RPS policies that limit eligibility or add multipliers to in-state RE generation. b A system for tracking the amount of electricity generated from eligible facilities. c Compliance among all states has been estimated at more than 90% (Wiser and Barbose, 2008). Although nearly a dozen states allow regulators to fine utilities for non-compliance (Fischlein and Smith, 2013), in practice this is rarely done (Wiser and Barbose, 2008).

primarily chosen to: 1) make compliance more achievable or reduce the cost of compliance such as by setting a low overall target (Berry and Jaccard, 2001), allowing a wider range of renewable energy resources, out-of-state generation (Wiser and Barbose, 2008), and projects constructed pre-policy adoption (Fischlein and Smith, 2013), including flexibility mechanisms, such as REC trading and energy efficiency allowances (Langniss and Wiser, 2003; Cory and Swezey, 2007), and requiring only Investor-Owned Utilities to comply with the policy; 2) diversify the state's energy portfolio by allowing a wider range of renewable energy resources (Wiser and Barbose, 2008); 3) localize environmental and economic benefits by restricting out-of-state generation (Cory and Swezey, 2007; Dincer et al., 2014); 4) promote the use of emerging technologies by including credit multipliers and/or carveouts; and 5) maximize the positive impacts (for example, environmental benefits of reducing greenhouse gas emissions) of the policy by setting a higher target, restricting allowable resources to carbon-neutral technologies (Wiser and Barbose, 2008), limiting flexibility mechanisms (Wiser and Barbose, 2008; Cory and Swezey, 2007; Heeter and Bird, 2013; Yin and Powers, 2010), or requiring all utilities in the state to comply with the policy. RPSs are also often designed to work alongside other state or federal energy policies. For example, rebates, tax

incentives, public benefit funding, and net metering can all work to support RPS policy goals and are often used to encourage in-state renewable generation (Hurlbut, 2008). Net metering—a billing mechanism for utility customers with rooftop solar to earn credits for electricity generated to offset the cost of their own electricity usage or generate income—has been especially important for promoting distributed solar photovoltaics (PV) (rooftop solar) and has become increasingly controversial in many states (White, 2015).5 Research on RPSs tends to focus in three areas: 1) reasons for policy adoption (e.g. Huang et al., 2007; Matisoff, 2008; Lyon and Yin, 2010; Carley and Miller, 2012; Upton and Snyder, 2015); 2) reasons for policy design (e.g. Carley and Miller, 2012; Dincer et al., 2014; Berry et al., 5 While some argue that net metering creates a system where regular utility customers pay higher rates to cover the cost of electricity infrastructure that rooftop customers do not pay, proponents contend that this is outweighed by the benefits of distributed solar, including increasing the reliability of existing energy infrastructure, decreasing the need for transmission lines to load centers, reducing peak energy demands during the day, and reducing the amount of energy lost to the grid during transmission (Jo et al., 2014), which has been estimated at about 7% (EIA, 2010).

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2015); and 3) impacts of the presence of an RPS (e.g. Langniss and Wiser, 2003; Dong, 2012) and specific RPS policy design features on outcomes, namely in-state renewable power generation or deployment (e.g. Shrimali et al., 2015; Carley et al., 2018). The motivations for RPS policy adoption and choosing a particular design are often viewed as precursors to policy effectiveness (Carley and Miller, 2012). However, looking critically at specific elements of policy design is important to understanding how and why policies succeed or fail in achieving their goals and preventing undesirable outcomes. For example, poor policy design may inadvertently lead to challenges to interstate collaboration (Rabe, 2006) and “carbon leakage”—the shift of business production to areas with less stringent energy policies—across state borders (Rabe, 2008; Carley, 2011). Research on the effects of RPSs on in-state renewable power generation has yielded mixed results. While some studies have found that the presence of an RPS policy leads to increased renewable energy capacity (Yi, 2010)—particularly in wind energy development (Langniss and Wiser, 2003; Dong, 2012) —and to increased total renewable energy output (Carley, 2009; Fischer and Newell, 2004; Palmer and Burtraw, 2005; Yin and Powers, 2010), others have found that states with RPSs do not have statistically higher percentages of electricity from renewable energy resources than states without RPSs (Carley, 2009) or have a significant but negative impact on in-state generation (Shrimali and Kniefel, 2011). Only a small—but growing—body of literature addresses the impacts of specific RPS policy designs (rather than simply the presence of an RPS) on outcomes, particularly at increasing in-state renewable power generation. For example, Fremeth (2009) combines renewable energy generation and purchases as the outcome variable, whereas Carley (2009) and Yin and Powers (2010) measure outcomes as a percentage of renewable energy generation in the state. In an early effort to understand this relationship, Yin and Powers (2010) find that, in particular, the free trading of RECs negatively affects RPS outcomes. Shrimali et al. (2015) include additional policy design features in their analysis and find that the inclusion of a mandatory green power option and unbundled RECs positively impact in-state generation, while the presence of net metering policies, a maximum rate increase, REC trading system, and an out-of-state allowance all negatively impact instate generation. Carley et al. (2018) develop a measure of policy stringency and find that more stringent policies lead to increased levels of in-state renewable capacity and in-state solar generation; further, they illustrate the stringency scores for states in the year each policy was adopted and in the year of their analysis, 2014, and find an overall trend towards more stringent RPSs over time. Not all of these studies, however, have drawn the same conclusions. With regards to carve-outs, which require a certain percentage of the RPS mandate to come from a particular type of renewable energy, and credit multipliers, which provide incentive for developing a specific resource by offering extra credits for these, Buckman (2011) finds a positive and significant relationship with in-state solar generation, while Li and Yi (2014) find an insignificant relationship. Although limited in scope, this area of scholarship demonstrates that it's not the mere presence of an RPS but rather its specific design features that matter (Carley et al., 2018). More broadly, stable policy design, compliance enforcement, and consistent political support are all thought to contribute toward positive policy outcomes as these factors create confidence in the renewables market for developers and investors (Langniss and Wiser, 2003; Cory and Swezey, 2007; Rabe, 2008; Carley, 2011). On the other hand, vaguely defined policies that are frequently modified and poorly enforced with no non-compliance penalties tend to yield poor or undesirable outcomes (Costello, 2005; Hurlbut, 2008). And yet, nearly two thirds of states with RPSs have revised their policies—typically also through legislative action—at least once (Berry et al., 2015), and some many times (e.g CT, MN, NJ, NV). While most states have increased the stringency of their RPSs over time (typically by increasing the target), a few states have weakened or dismantled their policy, and others have yet to adopt an RPS (Dincer et al., 2014). However, while Berry et al.

(2015) finds that legislative partisanship influences whether and how an RPS is modified, Stokes (2015) contends that partisanship insufficiently explains policy modifications—particularly weakening of RPSs—and suggests that interest groups instead play a larger role. Moreover, she draws from theories of policy expansion and retrenchment to explain how policy change occurs over time and is the result of dynamic interactions between the policy itself and its implementation. This indicates a need to look more closely at the roles of state context and RPS implementers, namely electricity utilities and regulators, in the policy change process. The question of RPS policy “effectiveness” is one that needs to be continuously addressed. In particular, it is important to understand the evolution and influence of RPS policy design because design matters, RPSs are increasingly varied and complex, and state-level policies are important mechanisms for addressing climate change, particularly as the U.S. federal government has become less inclined toward climate mitigation policy (Carley et al., 2018). The existing body of literature indicates the importance of specific policy design features in driving instate renewable energy deployment, but these features alone do not fully explain the wide range in policy outcomes observed. Other factors that are more difficult to quantify, such as relationships among stakeholders, also play a role in determining policy outcomes as these shape both the design of the policy and the way it is carried out. This case study examines stakeholder perceptions of how and why particular policy design features of Nevada's RPS have changed as the result of social and political dynamics of Nevada's electric sector and the impacts of these changes on policy outcomes. In doing so, it builds towards a more granular understanding of the processes through which RPSs evolve and interact with dynamic energy landscapes. Although several studies have characterized early experiences with RPSs (e.g. Golden, 2003; Langniss and Wiser, 2003; Horiuchi, 2007; Rabe, 2006; Hurlbut, 2008; Kup et al., 2009), these were conducted before the policy had time to mature enough for accurate assessment in many states (Carley and Miller, 2012). More recent studies explore the complexities of RPS design (e.g. Buckman, 2011; Davies, 2011; Yin and Powers, 2010; Gaul and Carley, 2012) though they tend to ignore the broader context in which RPSs are implemented (Fischlein and Smith, 2013). Quantitative research, which makes up the majority of literature on RPSs, helps to demonstrate the degree to which certain factors are present in a given case and how such factors vary across cases and in correlation to other factors. In this sense, Flyvberg (2006) argues that “the advantage of large samples is breadth, while their problem is one of depth” (pp 26). Case studies, he contends, provide depth rather than breadth. As such, “[b]oth are necessary for sound development of social science” (Flyvbjerg, 2006, pp 26). Thus, the causal relationship between policy design features and outcomes would be more convincing with a more thorough investigation of individual cases. 3. Research methods This study employs an in-depth case study approach—a detailed examination of a single case (Gillham, 2008)—to explore how Nevada's RPS has changed over time and stakeholder perceptions of why these changes have occurred and the extent to which they have supported or undermined policy goals. As with quantitative research, case studies have the potential to be both rigorous and systematic (Flyvbjerg, 2006) and involve the triangulation on important details of a case through the use of multiple types and sources of information. In this sense, even single-case studies “are multiple in most research efforts because ideas and evidence may be linked in many different ways” (Ragin et al., 1992, pp 225). This study specifically draws on data from expert interviews, policy documents, recent news articles published in Nevada, peer-reviewed journal articles, and agency reports, such as those by NV Energy, the Nevada Energy Office, the Public Utilities Commission of Nevada (PUCN), and other research-based organizations. Semi-structured interviews were conducted with expert 282

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Utility—NV Energy6—services about 90% of the state's population (approximately 1.25 million customers as of 2017) (Lateef and Reyes, 2017), while eight cooperative utilities, four municipal utilities, and three general improvement districts together service the remaining 10% (Governor's Office of Energy, 2016). Electricity demand has steadily increased in Nevada in recent decades as the population and tourism economy have grown (Hurlbut et al., 2013). Historically, most of Nevada's electricity has been generated by coal, oil, and natural gas—none of which were derived from in-state resources. In recent decades, natural gas has increasingly dominated this portfolio, replacing many coalpowered generation facilities. Whereas a decade ago more than 40% of the energy resources owned by the state's Investor-Owned Utility came from coal, coal-fueled generating stations have been rapidly closing7 as part of SB123, which aims to eliminate coal entirely by 2019 in southern and 2025 in northern Nevada (EIA, 2010). Now, natural gas generates more than 70% of Nevada's electricity, while coal contributes to just 6% (EIA, 2017). Renewables in Nevada have expanded rapidly over the past 25 years, particularly geothermal and solar (Keefe et al., 2015). As of 2016, Nevada had in operation 19 geothermal plants, 14 solar fields, 6 hydroelectric plants, 5 biomass or methane plants, and one windfarm. In 2017, 18.3% of electricity generated in Nevada came from renewables (Governor's Office of Energy, 2018), up from just over 10% in 2012 (Governor's Office of Energy, 2012). Recent analyses indicate that Nevada has more untapped renewable energy resources than would be needed to meet the RPS target for 2025—geothermal and solar could provide as much as three times the amount needed8 (Hurlbut et al., 2013). But despite this abundance of renewable energy resource potential, until 2014 the northern and southern grids in the state were isolated from one another. Recent development of transmission lines has connected the areas for the first time, facilitating the transfer of electricity and promoting the development of new renewable energy projects in remote areas that can now be linked to the major population centers in the state (EIA, 2017). The development of energy corridors in the western U.S. have improved Nevada's access to low cost wind energy from Wyoming and Montana and increased its export of geothermal power (I1-NP).

stakeholders in June 2016, with one follow-up interview in December 2017. Interviewees were considered “expert” based on their level of knowledge of and involvement in renewable energy and electricity matters in Nevada. Appendix A provides details of each interviewee, including the approximate number of years they’ve been involved in energy issues in Nevada, the number of years they’ve worked with their current organization (at the time of the interview), and the sector of this organization. A broad range of stakeholders were invited to participate in interviews, including those working for Investor-Owned Utilities, regulatory agencies, environmental organizations, consumer advocacy groups, other government agencies, community groups, and individuals representing various public interests. For the purposes of citing and maintaining anonymity, interviews are cited in subsequent sections according to the interview number (I1–9) and categorization into the following groups, the first three of which represent the major sectors involved in renewable energy and electricity matters in Nevada: utility and industry (UI); government organizations (G); nonprofits (NP); and other (O). A total of nine stakeholders were interviewed. Expert stakeholders were identified through 1) a review of regulatory and renewable energy policy websites that identified stakeholder groups involved in policy development and implementation, 2) a review of recent legal proceedings related to renewable energy to identify intervening parties, 3) and snowball sampling (Biernacki and Waldorf, 1981). Although this is a relatively small sample, most interviewees were named by multiple other interviewees as being regularly involved and especially knowledgeable about energy issues—and the Renewable Portfolio Standard in particular. Further, a number of interviewees noted the small size of the “energy community” in Nevada: there is one major investor-owned utility, one regulatory agency, and a couple of government agencies and environmental non-profits regularly involved in energy issues in the state. The semi-structured interview protocol included questions about participant: experiences working on renewable energy issues in Nevada; understanding of and involvement in the history of Nevada's RPS adoption and revisions; perceptions of Nevada's RPS policy design, effectiveness, achievements, and weaknesses; perceptions of relationships among stakeholders of renewable energy; perceptions of other potential drivers of renewable energy deployment in the state; perceptions of other stakeholder perspectives (that is, what are the different perspectives and conflicts among renewable energy stakeholders in Nevada). Responses to the last question served to identify additional perspectives—or specific groups or individuals—that should be included in the study to ensure sufficient saturation of data (Seale, 1999). Length of interviews ranged from 30 to 220 min, depending on the availability of each interviewee. All data—including interview transcripts—were qualitatively analyzed using NVivo, a qualitative data analysis software, according to the following themes: history of Nevada's RPS policy adoption; RPS policy modifications; perceptions of stakeholder relationships; impacts of other energy policies in the state, such as net metering, on renewable energy deployment; perceptions of Nevada's RPS policy design features as they affect policy outcomes and achievements; perceptions of weaknesses and limitations of the RPS; Nevada's energy resources; perceptions of economic, social, and political factors influencing RPS outcomes; and perceptions of Nevada's electric sector. The vast majority of factual information provided by interviewees was supported by other interviewees and other data sources, suggesting a high level of knowledge among participants.

4.2. RPS adoption In 1997, Nevada became the third state to adopt an RPS as part of their Electric Restructuring Legislation (AB 366). Then Governor Miller, a Democrat, signed the bill to create the RPS and allow utility customers to choose the electricity suppliers for certain services, thus introducing competition to the state's electric sector.9 At the time, there were two Investor-Owned Utilities in Nevada, Sierra Pacific Power based in Reno, and Nevada Power based in Las Vegas, as well as a handful of other much smaller cooperative and municipal utilities. Economic development was the primary motive for Nevada's RPS adoption (I1-NP; I5-NP). Nevada had a small population, no industrial or agricultural base, and 6

NV Energy has two subsidiaries, Nevada Power Company and Sierra Pacific Power, which merged in 1998 but have continued to operate as separate balancing authorities. Electricity transfer between the two was limited until 2014 when transmission ties were created. 7 Most recently closed was the Reid Gardner Generating Station, located in southern Nevada and the oldest coal-fired power plant in the state. 8 Although abundant wind resource potential is also often cited, the majority of the state's wind resources are located in high elevations, protected areas, and far from population centers, making them largely inaccessible and infeasible to develop (I4-G). 9 Under the law, which was scheduled to take effect in December 1999, electric transmission and distribution would remain controlled by Sierra Pacific Power. Existing utilities (including IOUs, cooperative and municipal utilities) would also continue to provide electricity to customers who could not or chose not to select an alternative supplier.

4. Case study: Nevada 4.1. Nevada's energy landscape Although the energy mix of Nevada has changed substantially in the last 20 years, the electric sector has undergone relatively little change. Nevada's electric sector is regulated and a single Investor-Owned 283

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no in-state fossil fuel energy resources. Though mining and gaming were important industries in the state, they were viewed as volatile, with uncertain potential for growth (I5-NP). In expanding the state's renewable energy market, the legislature hoped to attract new industries, bring skilled jobs to the state, and become a leader in the renewable energy field (I5-NP). Environmental concerns associated with fossil fuel and nuclear power, namely air quality and nuclear waste storage, were of secondary interest (Rabe, 2006). The RPS target under AB 366 was modest and required that at least 0.2% of power generated for the state's electricity customers come from renewable energy resources, with annual increases of 0.1% beginning in 2001 until a final target of 1.2% would be reached by 2010. Half of this target each year was to come from solar power produced in-state mandated (i.e. a solar carve-out). At the time of adoption, Sierra Pacific Power was already in compliance with all but the solar carve-out, as 9% of its energy resources came from local geothermal power (I1-NP).

created by a renewable system used for the system's basic operations (and thus not delivered to the grid) could not be used in calculating RECs. A key exception was made for geothermal facilities, which were allowed to count electricity used to extract, transport, or pump brine for facility operation towards REC calculation. A timeline of these major policy changes is shown in Fig. 1, and key details of Nevada's current RPS policy are summarized in Table 2. Table 3 compares Nevada's RPS policy to the design features previously found to contribute to greater deployment of in-state renewables. Based on the higher frequency of “No's” than “Yes's” in the second column, it would appear that prior research might predict low in-state deployment of renewables in Nevada. Indeed, although Nevada's RPS in 2017 required 20% of electricity to come from allowed renewables, only 18.3% of electricity was renewably-generated, nearly a third of which was sold out-of-state (Governor's Office of Energy, 2018). Thus, to comply with the RPS, NV Energy has relied on credits for energy efficiency measures and carry-forward credits (Governor's Office of Energy, 2018), some of which, according to interview participants, were purchased from neighboring states that do not have RPSs, such as Idaho and Wyoming (I6-G, I7-NP). Importantly, the relative importance of each design feature in Nevada is unknown, and, as previously discussed, “in-state deployment” is not the only potential positive outcome of the RPS. Moreover, several of the policy design features, such as policy clarity and stringency, are somewhat subjective and not easily determined by looking at the policy. Carley et al. (2018) find that states, on average, tend to increase the stringency of their RPSs over time. Although the specific score is less important than the overall trend, it is interesting to note that Nevada's score in 1997 was −160 and up to 30 in 2014, which is still on the low end compared to most other states. Thus, while the literature offers some insight into how RPS policy design might impact outcomes in Nevada, stakeholder perspectives provide additional clarification (Table 4).

4.3. RPS modifications Soon after AB366 was signed, Nevada's PUC (PUCN) opened a docket to investigate how restructuring the electricity market would affect electricity prices in the state, and soon after delayed deregulation citing “unresolved issues.” In 2001, Governor Guinn, a Republican, indefinitely delayed restructuring citing high electricity demand, low supply, and unstable prices, though the collapse of neighboring California's electricity market in 1999 following electricity restructuring likely also played a role in this decision (Joskow, 2001). The RPS remained in place but has since undergone five major revisions. In 2001, in response to California's electricity crisis that led to an electricity shortage, the Nevada legislature passed SB 374 to increase and expand the RPS to 15% by 2013 (Energy Portfolio Standard, 2016). In doing so, they hoped to speed up renewable energy deployment and increase electricity export to California (Rabe, 2006). The solar PV carve-out was also increased to 5% of the total target (1% of all electricity sales). Two years later, the RPS was revised again. Most notably, a credit multiplier of 2.4 credits/kW h for solar PV was added to help facilitate the development of a large solar facility near the Nevada Test Site.10 In 2005, the target was again raised to 20% by 2015 (AB 03) and added energy efficiency credits to the portfolio mix, allowing utilities to receive credits for certain energy efficiency measures implemented after 2005 to count toward a maximum of 25% of the total target for any given year.11 Measures in residential homes were required to comprise at least 50% of the credits used toward RPS compliance (Energy Portfolio Standard, 2016). In 2009, the target increased to 25% by 2025, and the solar carve-out to 6% of the target (1.5% of all electricity sales) beginning in 2016 (SB 353). In 2013, SB 252 removed the energy efficiency carve-out via a gradual phasing out by 2025 and ended the credit multiplier for solar PV systems installed after 2015. A number of stakeholder groups were involved in the development of SB 252, many of which sought to eliminate the energy efficiency carve-out immediately and increase the target (I7-NP). Although SB 252 was viewed as a compromise, it did little to appease either side. The utilities wanted to keep both the carveout and the credit multiplier, while many other stakeholder groups, namely environmental advocacy groups, didn’t want the carve-out in the first place. The credit multiplier, they argued, was being abused by utilities who sought to dismantle net metering policies while constructing their own utility-scale solar facilities to meet RPS goals. Also in 2013, AB 388 provided policy clarification and stated that energy

4.4. Recent energy conflicts in Nevada In recent years, the electric sector in Nevada has become increasingly rife with conflict and uncertainty, particularly with regards to net metering12 and electricity regulation. As a result, stakeholder relationships have weakened and trust in the PUCN has declined (I5-NP). For nearly a decade, net metering in Nevada allowed customers with rooftop solar to sell excess energy back to the utilities at the retail rate of about 12.5 cents per kW h.13 In December 2015, however, the PUCN changed the net metering rate to 2.5 cents per kW h (SB 374). The PUCN's decision to effectively end net metering was highly controversial and particularly outraged existing rooftop solar customers, who were not grandfathered into the new policy, a decision even the utilities came to oppose (I4-G; I3-UI). The decision also frustrated the renewable energy industry, which was “essentially killed overnight” (I1-NP) as solar installations halted and many solar companies soon left the state (e.g., SolarCity, Vivint) (I2; Field, 2017). Governor Sandoval, who had been a strong proponent of clean energy (Keefe et al., 2015), also expressed concern over the PUCN's decision. In response, he reinstated the New Energy Industries Taskforce to advise him on policies regarding net metering and renewable energy in the state more broadly. In response to public criticism, the Nevada Legislature passed a measure in 2017 to restore net metering to 95% of the retail rate for electricity with a schedule to phase down this rate to 75% as more rooftop solar 12 Although net metering is separate from the RPS, it has been viewed as complementary as it incentivizes utility customers to install rooftop solar that can be used to satisfy the distributed generation requirements of the RPS. 13 The stimulus provided by the Recovery Investment Act following the 2008 economic recession created a wave of solar installations in Nevada and the rooftop solar industry grew rapidly (I1-NP).

10

The solar facility never came to fruition for financial reasons. 11 To qualify for credits, efficiency measures were required to be implemented after January 1, 2005, sited or implemented at a retail customer's location, and partially or fully subsidized by the electric utility; it must also reduce the customers’ energy demand (as opposed to shifting demand to off-peak hours). 284

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Fig. 1. Timeline of major changes to Nevada's RPS policy from adoption in 1997 to 2018. Table 2 Nevada's RPS policy details. Policy design feature

Current policy

Target size Deadline One or multiple targets depending on resource type/ carve-outs Cost cap Allowed technologies/resources Existing vs. new investments Grid connectivity Geographic coverage Market participants (to whom it applies) Energy production vs. installed capacity Trading mechanisms Complementary policies Monitoring and enforcement Multipliers Energy efficiency allowances

25% 2025 6% of annual target (1.5% of total sales by 2025) None Biogas, Biomass, Geothermal, Existing Hydroelectric, Landfill Gas, Solar PV, Solar Thermal Some existing resources eligible Required State generation or delivery to Nevada Investor-Owned Utilities (IOUs) Production Only bundled RECs can be traded Net Metering, Green Tariff Program Regulators may impose a penalty for non-compliance but the amount is unspecified 1 MW h solar PV = 2.4 PECs installed by 2015 Up to 25% of RECs can be met through certain energy efficiency measures; phasing out by 2025.

conflict in 2016, the legislature voted to increase the RPS to 40% by 2030 and add a storage target,15 while voters approved the Energy Choice Initiative (informally known as Question 3) to deregulate the state's electric sector and allow electricity users to choose a retail electricity supplier, effectively ending the monopoly held by NV Energy. Governor Sandoval responded by vetoing the RPS modifications16 explaining that “although the increase in the RPS proposed at this time in AB 206 is one that I would otherwise support, the consequences of approving this bill must be considered through the lens of recent changes to Nevada energy policy and those likely to be adopted in the near future” (Letter from the Office of the Governor, 2017). However, voter-approved amendments to the constitution, such as the Energy Choice Initiative, require approval in two even-numbered and consecutive election years (Legislative Council Bureau, 2016); although voters overwhelmingly supported the measure to deregulate in 2016 with 72% of the vote, in November 2018, the measure failed. Key

Table 3 Presence of RPS policy design features previously found to increase in-state renewable capacity and/or generation in Nevada's RPS. Conditions and policy design features that may lead to more in-state renewables

Presence in Nevada/ Nevada's RPS

Stable policy design Compliance strictly enforced Consistent political support Clear policy rules Carve-outs included Credit multiplier(s) included More “stringent” policy No out of state allowances No REC trading No maximum rate increase No net metering policy Mandatory green power option Unbundled RECs

No Yes Somewhat Somewhat Yes Yes Somewhat No No No No No No

systems come online.14 As Davies and Carley (2017) point out, the lack of stability in Nevada's net metering policy is significant given that a critical factor for promoting renewables is stable policies. More recent attempts to raise the RPS target and change the structure of the electric sector have been mixed. Soon after the net metering

15 Specifically, it would have created a multiplier of 2.0 for discharging stored RE during peak load or assisting with the integration of RE generation into the grid through ancillary grid services (“under new legislation, storage dispatched at peak times…”); it would have also added a multiplier of 1.5 to new geothermal resources (“Nevada legislature boosts renewables target to 40% by 2030, overcoming casino opposition”). 16 A second vetoed measure (SB 392) would have created a 200 MW community solar garden by 2023, which would have increased access to solar PV ownership and been the first of its kind in the state. Sandoval argued that such a measure would conflict with the newly reinstated net metering policy and undermine rooftop solar (“Sandoval vetoes community solar, higher clean-energy standard”).

14 Soon after, Tesla announced it will be scaling operations back up, bringing more jobs back to the state, and offering residential solar and storage products in the Reno and Las Vegas areas through purchase, loan, and lease programs (Field, 2017).

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Table 4 Perceived RPS design problems hindering policy effectiveness. Issues with RPS initial and revised policy design Frequent revisions to the RPS that undermined its original intent

Allowance of existing resources (initial design) REC trading system allowing long-term banking of credits from other states (including those without RPSs) (revision)

2.4 Credit Multiplier for solar PV installed before 2015

Reasoning

• Reduced stakeholder confidence in the policy • Makes compliance too easy to achieve the development of new in-state RE • Slowed generation (I4-G) RECs don’t contribute toward • Out-of-state economic goals (I6-G) purchased from states without RPSs • RECs don’t reduce emissions (I6-G) compliance too easy to achieve • Makes solar technology improvements • Utility-scale reduced utility support for rooftop (I5-NP)

Stakeholder quotes/evidence

policy was revised “nearly every legislative session” • The (I7-NP) original RPS was good, but the modifications have • “The distorted it and not kept with its original intent” (I7-NP) RPS is broken and dysfunctional” (I6-G) • “The utilities “had already achieved 9% renewable • The generation when the RPS initially went into effect” (I7-NP) Energy] gamed the system” (I7-NP) • “[NV additional RECs needed to meet RPS targets by Nevada • No Power Company until 2025 and Sierra Pacific Power until 2021(I7-NP)

multiplier “artificially inflates the appearance of RE • The generation from the RPS” (I1-NP) NV Energy complied with 20% standard with only • In13%2015, generation from renewables (Keefe et al., 2015)

being implemented by NV Energy and the PUCN. These stakeholders were primarily from the non-profit (I1-NP, I5-NP, I7-NP) and government sectors (I2-G, I6-G) and advocated for a more stringent RPS policy design, but generally agreed that this was unlikely given current conditions in the utility and regulatory sectors (e.g. I7-NP, I6-G). Following is a summary of stakeholder perceptions of 1) the key policy design features contributing to and undermining policy goals, and 2) the ways in which industry culture and politics have led to these design features in the first place and to ineffective implementation practices.

supporters of the policy were large-scale electricity users (namely casinos), the solar industry, and environmental advocacy groups (I2-G). The Coalition to Defeat Question 3 raised $63.6 million to oppose the measure, with $62.8 million coming from NV Energy who argued that such an increase would substantially increase electricity rates for customers; in contrast, only $33.4 million was raised to support the measure, with $21.9 million coming from the Las Vegas Sands casino (Akers, 2018). In the same November 2018 election, however, voters approved a measure (often referred to as Question 6) to increase the RPS to 50% by 2030. For this to take effect, it must be passed again by voters in 2020. If 2018 is any indicator of what's to come, Question 6 is likely to encounter strong opposition by the utility over the next two years.

5.1. The role of policy design A number of interview participants perceived Nevada's early RPS as a “well-intentioned” (I7-NP) policy and critical to spurring early growth in renewables, but, over time, changes to certain design elements were perceived as largely undermining policy objectives and not keeping with its original spirit. The overall target, currently set at 25% by 2025, was perceived by many interview participants as not aggressive enough and compliance with this target was not perceived as an indicator of policy “success.” For participants, the most concerning among the design elements were: i) frequent modifications to the policy; ii) the allowance of existing resources to count towards targets; iii) the addition of a credit multiplier of 2.4 per kW h for solar PV installed before 2015; iv) increases to flexibility mechanisms, namely revisions to the REC trading system allowing the purchase and long-term banking of RECs from out-of-state; v) allowance of credits for energy used to operate geothermal facilities; and vi) allowance of energy efficiency measures to count towards the target. Despite the many design features perceived as negatively impacting Nevada's RPS policy outcomes, the solar carveout was perceived by some as the one positive design feature and crucial to increasing distributed solar in the state. As one stakeholder said, “the utility provided major incentives for solar PV because they were desperate to meet the RPS early on, and a lot of businesses and individuals used the incentives to install rooftop systems” (I5-NP). Another stakeholder who had been involved with the RPS since it was first designed and adopted, recalled that NV Energy had fought against the solar carve-out from the beginning and each time it was increased (I7-NP). Many of these results are not surprising. Solar carve-outs have been found to increase in-state deployment of renewables, particularly rooftop solar. Electricity generated from Solar PV increased from about 1.4% in 2012 (Governor's Office of Energy, 2012) to nearly 6.7% in 2017 (Governor's Office of Energy, 2012) though it is not clear from this data whether these include out-of-state generation. The negative design features discussed by participants have collectively been described in the literature as reducing the stringency of an RPS policy, which is

5. Successes and limitations of Nevada's RPS Interview participants had mixed opinions about the overall impact of Nevada's RPS on renewable energy development in the state. Stakeholders from the non-profit sector tended to say the RPS had been a critical early driver of renewable energy development (e.g. I1-NP, I5NP, I7-NP). On the other hand, stakeholders from the utility-industry, government, and “other” sectors said that increases in renewable energy deployment in Nevada would have occurred without the RPS because nationwide prices have declined irrespective of Nevada's practices, corporate desires for clean energy have increased (I3-UI), and because of other programs, such as the Green Tariff and Tax Abatement programs (I4-G). However, these perceptions were contradicted by other statements made regarding public concern over renewables. For example, one participant from the utility-industry sector noted that when the RPS was first proposed in the mid-1990s, there was concern among the public and within the electric sector about the reliability of renewables (I3-UI). Another stakeholder from the non-profit sector recalled a shift in public perceptions once renewable energy generation began to increase, and subsequently renewables became more widely trusted and accepted (I5-NP). Several participants from the non-profit and government sectors perceived that the RPS had specifically created a market for geothermal and solar PV electricity generation where these did not previously exist (I5-NP; I6-G), which led to growth in local renewable energy jobs, helped garner support for renewable energy and the RPS (I6-G), and increased the reliability of the electric sector (I5NP). Perhaps more important than stakeholders’ overall assessments of the RPS was the insight they provided as to why Nevada's policy was or was not contributing to new growth of in-state renewables. A number of stakeholders perceived that, while the initial RPS was well-intentioned, it had been undermined by changes to its design and the way it was 286

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correlated with reduced in-state renewables deployment (e.g. Fischlein and Smith, 2013; Carley et al., 2018). Unstable policy design fosters uncertainty in the renewables market and reduce investment, particularly in emerging technologies (Cory and Swezey, 2007). Fischlein and Smith (2013) find that the ability to count existing generation capacity weakens new renewable energy deployment and specifically point out that in Nevada, nearly 25% of the initial target was met by utilities when the RPS went into effect. The presence of a REC trading system and an out-of-state allowance also negatively impact in-state generation (Shrimali et al., 2015). Flexibility mechanisms are sometimes viewed as essential to fostering innovation (Majumdar and Marcus, 2001) and allowing utilities to meet targets through lowest-cost options, such as by permitting utilities to purchase and sell to their customers renewably-generated electricity from neighboring states (e.g. Langniss and Wiser, 2003; Carley, 2011). However, in the case of Nevada, much of the electricity used to meet RPS targets has come from Idaho and Wyoming, neither of which has an RPS policy. For this reason, the credits purchased are not considered by some of the interview participants to be driving additional installed capacity above what would occur without the RPS. Importantly, Hollingsworth and Rudik (2018) find that when one state passes an RPS, interstate trade of RECs leads to increased demand for credits sold by firms in other (potentially nonRPS) states thereby decreasing coal generation and increasing wind generation in neighboring states. This suggests that, when RPS goals include global rather than local environmental objectives, interstate REC trading contributes toward this end. However, delocalizing such benefits potentially reduces support for the RPS, thus threatening its longevity (Yin and Powers, 2010; Shrimali et al., 2015). The last two policy design elements discussed by interviewees have received somewhat less attention in the literature, though Fischlein and Smith (2013) include energy efficiency measures in their analysis and find it contributes to reduced policy stringency and outcomes. Stakeholders in Nevada were concerned that the energy efficiency allowance has made the RPS “too easy to achieve” (I5-NP). Although it is in the process of being phased out, stakeholders from the non-profit and government sectors tended to say the energy efficiency should have been ended immediately (I4-G; I5-NP; I6-G) while others in the government and utility-industry sectors perceived this is as a positive aspect of the policy (I3-UI; I4-G). Finally, the allowance of credits for energy used to operate geothermal facilities—which can be as much as 25% of the energy produced—was perceived as undermining the policy by non-profit stakeholders as “this energy never hits the grid” (I5-NP).

increases to the RPS despite touting himself as “pro-renewables.” One piece of evidence provided to support this claim is that the Governor's chief campaign manager is NV Energy's chief lobbyist (I2-G). And fourth, a number of stakeholders expressed concern that NV Energy and the PUCN had a “cozy” relationship. Several interview participants specifically focused on the PUCN's decision in 2009—when NV Energy was not in compliance with the RPS—to allow the utility to purchase and bank out-of-state RECs. Stakeholders said that this was not in the original policy design, but, because the rules were vague, the regulator was allowed to make this interpretation and effectively change the policy design. The reasons behind particular RPS design has not, to the author's knowledge, explored the roles of powerful utilities or electricity regulators. Hurlbut (2008) suggests that a PUC may positively impact the success of an RPS, for example, by viewing the RPS as the minimum requirement, not the limit; this would suggest that a regulator can similarly undermine an RPS by taking the opposite approach. Relationships between stakeholder groups were reported as being “not at their best” (I4-G), which likely contributed toward suspicion about close ties between the PUCN and NV Energy in particular, and the PUCN doing an inadequate job at protecting public interests. Although these relationships do not necessarily create a conflict of interest for decision makers, they seeded suspicion in the minds of some stakeholders and undermined support for renewable energy-related decisions by these actors. Table 5 summarizes these key factors and provides examples of reasons given and related stakeholder quotes. Also mentioned were loss of legislative leadership and institutional knowledge on renewable energy issues (I6-G; I7-NP), uncertainties in future electricity regulation (I3-UI), the public being “uninformed about renewable energy” (I9-NP), and—importantly—a relatively small and weak environmental advocacy community in Nevada compared to other states (I7-NP), 5.3. Policy retrenchment and the role of powerful interests Although Nevada's RPS target has been raised a number of times since 1997, a number of changes to the policy are widely perceived as undermining its effectiveness. This apparent policy retrenchment, defined as changes to a policy that repeal or modify it in ways that reduce its effectiveness, supports findings by Stokes (2015) that the more powerful the opponents and the weaker the proponents—in this case the utility and environmental community, respectively—the more likely the policy will be retrenched over time. The role of regulatory capture, also discussed by Stokes (2015), is further illustrated by the case of Nevada: although powerful interest groups may succeed in swaying politicians, politicians are at times be sidelined entirely when a regulator is influenced by a utility and the policy is open to interpretation. This might also be explained by agency theory, which says that insufficient monitoring by the principal (the regulator) of the agent (the utility) can lead to drift in implementation (Bendor and Moe, 1985), which can profoundly impact policy outcomes (Cerna, 2013). Further, this case illustrates that policy retrenchment is not always obvious. Stokes and Breetz (2018) find that, once enacted, renewable energy policies tend to be extended incrementally. This is certainly the case for Nevada where the overall target has been steadily raised, and yet additional changes to the RPS have negated the highly visible target increases. Scholarship on RPSs could be enhanced by exploring the successes and failures of RPS policy implementation through the lens of agency theory, and the roles of incrementalism (Lindblom, 1959) versus punctuated equilibrium (Baumgartner and Jones, 2010). Although it is clear that there were incremental changes to Nevada's RPS made to appease various stakeholder groups, there have also been sudden shifts in the economy and public interest that might better support a theory of punctuated equilibrium. If this were the case, it would suggest the RPS needs to change more rapidly than the literature suggests if it is to keep up with technological advances and changing political, economic, and

5.2. The role of electric-sector culture and politics A number of factors related to the culture within Nevada's electric sector were perceived by stakeholders as creating an unfavorable climate for the RPS. First, the PUCN was perceived as being resistant to outside input and change in the electric sectors, particularly with regards to renewable energy. Interview participants reported that, because there is a low staff turnover rate within the PUCN, the conservative culture of the agency has persisted over time (e.g. I6-G, I7NP). For example, one stakeholder said that the PUCN is more interested in “maintaining the status quo rather than supporting innovation and change” (I7-NP). Second, NV Energy was perceived by many stakeholders as being resistant to renewable energy, particularly distributed generation. Because there is only a single Investor-Owned Utility in the state, there was widespread suspicion among some interview participants and their organizations of NV Energy and, for example, their strong opposition to net metering. However, not everyone agreed with this assessment; one stakeholder from the utility-industry sector noted that NV Energy was the only utility in the country to have signed the Paris Agreement (I3-UI). Third, many stakeholders outside of the utility-industry sector—including those opposed to the RPS—perceived close ties between NV Energy and Governor Sandoval, which they felt had influenced the Governor's decision not to support 287

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Table 5 Factors related to the electric-sector culture perceived as negatively impacting RPS outcomes in Nevada. Factors perceived as undermining RPS goals PUCN resistant to outside input and change on renewable energy issues

NV Energy resistant to renewable energy Close ties between NV Energy and Governor Sandoval “Cozy” relationships between NV Energy and PUCN

Reasons given

Stakeholder quotes

are conservative • PUCs PUCN Staff turnover rate • Low trains incoming commissioners, so little • Staff cultural change over time ending net metering • Supported suspicion regarding utility actions • General chief campaigner is NV Energy's chief • Governor's lobbyist did not penalize NV Energy for non• PUCN compliance in 2009 allowed NV Energy to purchase and bank • PUCN out-of-state RECs in 2009, which went against the a

RPS

PUCN thinks that they’re the experts, and the Staff is not concerned • “The about climate change” (I6-G) PUCN is more interested in “maintaining the status quo rather than • The supporting innovation and change” (I7-NP) PUCN is running behind the populous…it's even behind the utility” • “The (I7-NP) NV Energy merged, they got more power. The gaming industry is • “When the only one that competes with the utility” (I5-NP) Governor is “tied in with NV Energy” (I7-NP) • The Sandoval has a close relationship with NV Energy, and even • “[Governor] though he's pro-renewables, he hasn’t done anything to save rooftop solar” (I1-NP)

utility is the wolf, the public is the sheep, and it's supposed to be that • “The the regulator is the sheepdog that protects the sheep from the wolf” (indicated this is not the case) (I7-NP)

are “rumors that the head of NV Energy meets regularly with the • There PUCN for lunch,” despite laws against closed-door communications during legal proceedings (I2-G)

a 2009 was an “economically unique year,” which affected NV Energy’s ability to comply with the RPS (I3). The PUCN chose not to issue a fine for non-compliance, and instead approved NV Energy’s purchase of RECs from out of state while the utility developed new renewable generation capacity (I7). Although this did not align with the spirit of the policy, the PUCN and Bureau of Consumer Protection were satisfied by NV Energy’s actions because it resulted in policy compliance at a low cost (I7).

social conditions and remain a relevant policy.

new 50 MW solar facility to Apple at a lower than retail rate. While NV Energy receives income from the electricity sales, Apple is able to retain the RECs, thus making the generation additional to what would be required by the RPS (“Solar Power Purchase Agreements”, 2017; Snyder, 2017). In this way, customer choice appears to be working alongside—rather than against—the RPS. And second, although not discussed during 2016 interviews, the 2018 voter-approved measure to raise the RPS (following Sandoval's veto of the legislatively-passed increase) further supports claims that “customers” are leading the march toward a greater share of renewables, despite opposition by NV Energy in particular. However, without a change to the policy design requiring instate renewable power generation, according to some expert stakeholders in Nevada, it may not lead to substantial growth in the local renewable energy economy.

5.4. Other drivers of renewable energy deployment in Nevada The two main drivers of renewable energy according to interview participants were 1) compliance with SB 123, a measure that will phase out coal in the state, and 2) customer choice.17 SB 123, which was signed by Sandoval in June 2013 and unanimously supported by Nevada's 11 Democratic and 10 Republican Senators, requires the phasing out of at least 800 MW of coal-fired generating capacity, by 2019, as a means of contributing to solutions for climate change and creating jobs to benefit Nevada's economy. This capacity is to be replaced by 550 MW of constructed or acquired generating capacity from an unspecified fuel source owned by Nevada Power, plus an additional 350 MW constructed, acquired, or contracted for renewable energy resources. However, given that natural gas has comprised an increasing portion of Nevada's energy portfolio in recent years (Governor's Office of Energy, 2017), it is reasonable to assume that it will make up most or all of the 550 MW of unspecified generation. Customer support for renewables appears to be driving the market in two key ways. First, a number of large companies with existing or planned offices in Nevada, such Apple and Switch, have voluntarily adopted net zero energy policies. A long-standing policy in Nevada statute allows large companies—with approval from the PUCN—to exit the grid and purchase electricity from independent power producers. To incentivize these companies to stay, NV Energy has expanded its Green Energy Choice program in 2016 to include large customers with 1 MW electricity demand or greater (Trabish, 2016a, 2016b).18 In the case of Apple, whose goal is to displace fossil fuels through new renewable energy generation, a long-term power purchase agreement was signed with NV Energy in 2017 that allows the utility to sell electricity from a

6. Conclusions and policy implications The RPS has played a critical role in driving growth in renewable energy markets in the U.S. and worldwide, which has led to job growth in the renewable energy sector, improved energy security for individual states and countries, generated localized and global environmental benefits (Wiser et al., 2016), and in many cases reduced electricity prices (Lin and Fan, 2015). Only recently, however, have scholars begun to look closely at the impacts of specific RPS policy design features on policy outcomes, particularly on increasing in-state power generation from renewables. This body of research has tended towards quantitative analyses, but, as Hurlbut (2008, pp 129) points out, “the numbers do not tell the whole story” when it comes to the impacts and effectiveness of the RPS policy. Further, results have been at times contradictory (e.g. Buckman, 2011; Li and Yi, 2014), indicating a closer look at the dynamic conditions of state electric sectors is warranted. To this end, this in-depth case study draws from expert interviews and document analysis to examine the unique context in which Nevada's RPS has been revised and implemented over the past twenty years. There was general agreement—particularly among interview participants from the non-profit and government sectors who viewed the RPS as a valuable policy that should be strengthened rather than dismantled—that a number of revisions had weakened the policy over time. Consistent with prior recent literature, the solar carve-out was viewed as one positive aspect of the policy, while the credit multiplier

17 Other revolving loan programs and tax abatement programs, such as the Large Scale Renewable Energy Tax Abatement Program (Governor's Office of Energy, 2016), are aimed at complementing the RPS but were not discussed by interviewees. 18 NV Energy's Green Energy Choice program allows utility customers to voluntarily pay a higher rate for electricity for 50% or 100% of their monthly electricity consumption to come from RE resources. The program was approved in 2013 and originally intended for residential and other small electricity customers.).

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for solar PV and allowances of existing and out-of-state resources, longterm banking of credits, energy efficiency measures, and energy used to operate geothermal facilities were viewed as detracting from policy goals. These findings demonstrate that it's not the mere presence of an RPS but rather its specific design features that matter in generating desired outcomes (Carley et al., 2018). These policy changes, according to expert stakeholders, are broadly attributable to the presence of a single, powerful Investor-Owned Utility in Nevada that has strong influence over its regulator. Thus, because the RPS policy design left room for interpretation, the political process was at times sidelined entirely resulting in an increasingly stringent policy design. Given prior research that frequent policy modification can send mixed signals to renewable energy investors, utilities, and the public, and that inconsistent political support and enforcement undermines policy effectiveness (Langniss and Wiser, 2003; Cory and Swezey, 2007), it is not surprising that Nevada's RPS has struggled—according to expert stakeholders—to fulfill its original objectives. However, stakeholders perceived the cultural and political dynamics of the electric sectors as equally damaging to the long-term viability of the RPS and likely the root cause of policy revisions that have made the RPS an ineffective driver of renewable energy in the state. While Hurlbut (2008) finds that actions of utility regulators can improve policy outcomes, particularly the bringing together of stakeholder groups and treatment of the RPS as a minimum rather than a limit, this study confirms that the opposite is also true. Although not discussed directly by interview participants, Shrimali et al. (2015) and Yin and Powers (2010) have suggested that when the benefits of RPSs are not realized within the state, the policy is less likely to be supported going forward. This may also help to explain recent failures to strengthen the RPS in Nevada through legislative action. The current drivers of renewable energy in Nevada were perceived by nearly all stakeholders to be customer choice—namely the voluntary adoption of net zero energy policies by large companies—and, to a lesser extent, compliance with a separate policy to phase out coal-fired generation. This is further reflected in the recent voter-approved mea-

sure to increase the RPS to 50% by 2030 (i.e. Question 6) but also suggests a disconnect between public desires for renewables and action by the utility and state government. Before becoming law, the measure must be passed again in 2020; however, the failure of the Energy Choice Initiative in 2018 NV Energy's historic opposition to RPS increases suggest proponents of Question 6 may face a steep climb in 2020. Given the importance of stable, state-level policies—especially as the federal government has become less supportive of climate mitigation policy (Carley et al., 2018)—and the significant resources dedicated to the RPS in particular, it is important that RPS “effectiveness” be continuously evaluated. But this is not easily done as desired outcomes, available resources, and political, social, and economic conditions vary widely from state to state and over time. Thus, additional case studies might yield new insights into how and why RPSs have changed over time and thus complement quantitative studies that seek to generalize across cases about the present of policy design features that predict “success.” Further, future quantitative studies should explore the role of a single-utility model in strengthening or weakening policy design and outcomes. Acknowledgments Thank you to Elizabeth Baldwin at the University of Arizona for assisting with the conduction of expert interviews and to Elizabeth Baldwin, Gregg Garfin, Jim Buizer, Larry Fisher, and Connie Woodhouse at the University of Arizona and the Energy Policy reviewers for providing feedback that has helped to improve this manuscript. Funding disclosure Funding for this study was provided by the University of Arizona: Institute of the Environment; Office of Research, Discovery, and Innovation; Social and Behavioral Sciences 898 Research Institute; and Graduate Interdisciplinary Program.

Appendix A See Appendix Table A1. Table A1 Details of each interview and basic demographics of each expert interviewee. Interview number

Date conducted

Sector

Duration (min)

Yrs. in industrya

Yrs. with current org.b

01 02 03 04 05 06 07

6-03-16 6-23-16 6-24-16 6-27-16 6-27-16 6-28-16 6–29–16 Follow-up: 12-18-17

NP G UI G NP G NP

60 60 60 60 60 140 105 30

5 > 30 > 15 5 > 30 25 > 30

2 5 10 1 15 5 2

08 09

6-29-16 07-01-16

O NP

90 30

3 5

3 5

a b

Estimates given to protect anonymity. At the time of the first interview.

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