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bring down the costs of solar power (DOE, 2019b). In 2017, the DOE announced that utility-scale solar had achieved its cost target of USD 0.06 per kilowatt-hour (kWh), three years sooner than expected. The department set new 2030 targets of USD 0.03/kWh for utility-scale solar (DOE, 2019c). It also halved the 2020 commercial target for 2030 to USD 0.04/kWh and the residential target to USD 0.05/kWh.

Grid Modernization Initiative

The DOE also oversees the Grid Modernization Initiative, which works across the department with public and private partners to develop strategies and technology to improve the reliability and resiliency of the grid, which will further support the grid’s ability to accommodate a higher share of intermittent renewable sources (DOE, 2019d).

The National Renewable Energy Laboratory (NREL) also runs an Energy Systems Integration Facility, which conducts cutting-edge research and simulations to assist the industry in clean energy integration into the grid (NREL, 2019b).

Hydropower Vision

The DOE oversees the Hydropower Vision Initiative, which aims to advance the role of low-cost hydropower in the nation’s energy system, including maximising value from existing facilities. The programme released a Hydropower Vision Report in 2016 that lays out a roadmap that is focused on three pillars of analysis: optimisation, growth and sustainability. The report found that technological advancements could result in hydropower growth from 101 GW in 2015 to nearly 150 GW of capacity (both generating and storage) by 2050.

Offshore wind

Offshore wind is a more recent development in the United States, with the first US offshore wind project, the 30 MW Block Island Wind Farm off Rhode Island, going into service in 2016 (AWEA, 2019c). More recently, policy and regulatory changes indicate that offshore wind is likely to see additional growth in the United States, especially on the East Coast, where sea depths and wind conditions are considered comparable to the North Sea (which is seeing substantial progress in offshore wind) (DOE, 2017).

Currently, there are 15 active offshore wind lease areas in federal waters, one research lease and three leases in state waters. As part of its plans to expand federal offshore leasing for energy development, the Department of the Interior’s Bureau of Ocean Energy Management (BOEM) in April 2018 launched a high-level assessment of all US Atlantic waters for potential offshore wind lease locations (US Department of the Interior, 2018). Since then, BOEM has held a successful auction for three lease areas in Massachusetts, solicited input on potential leases off New York and New Jersey, initiated an environmental review for a project off Rhode Island, and laid the groundwork for the first wind auction off California’s coast (Clean Technica, 2018). The administration has also proposed streamlining the permitting process for offshore wind projects. In fact, Bay State Wind, a project off Massachusetts’ shore, was the first to receive FAST 41 status under Title 41 of the Fixing America’s Surface Transportation Act, meant to expedite federal permitting processes (Wind Power Engineering, 2018).

Though the US offshore wind sector is heavily dependent on imported components – mainly from Europe – as the number of installations grows, a domestic supply chain and manufacturing capacity are also expected to follow.

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The US offshore wind market continues to be driven by state-level offshore wind procurement policies and state-led offshore wind solicitations. Currently, Massachusetts is targeting 3 200 MW of offshore wind capacity by 2035, New York’s goal is 9 000 MW by 2035, New Jersey’s goal is 3 500 MW by 2030, Maryland’s goal is 1 200 MW by 2030, and Virginia’s goal is 2 000 MW by 2028. To date, solicitations have been held in Massachusetts, Rhode Island, Connecticut, New York, New Jersey and Maryland. The first commercial project selected in Massachusetts’s offshore wind solicitation, Vineyard Wind (800 MW), recently had its 20-year power purchase agreement approved by state regulators at a levellised price of USD 65 per megawatt-hour (MWh) (including the federal ITC). The low-cost power prices exhibited by the first few commercial projects continue to provide momentum to a rapidly expanding US offshore wind industry.

Battery storage

In addition to advancing renewables policies, a number of US states are increasingly adopting storage targets as well. As an early mover on storage, to accompany its 2030 target of 50% for renewables, California adopted an ambitious storage mandate in 2013, which required utilities to procure 1 325 MW of energy storage by 2020 (to be online by 2024) (California Energy Commission, 2014). In response to the Aliso Canyon natural gas storage facility leak in 2015, the state in 2016 followed up by legislating that utilities procure an additional 500 MW of storage capacity (Renewable Energy World, 2018). Importantly, California regulators have also modified market rules to ensure that battery storage options are valued more accurately in the wholesale power market. California’s policies have paid off in the form of new investments, including a 30 MW battery storage facility installed in 2018 in San Diego by AES as well as the massive battery storage facility (100 MW/400 MWh) that will be built by AES and Siemens in Long Beach (Utility Dive, 2018d).

California’s efforts have been followed by Massachusetts, which established a more modest target of 200 MWh of storage by January 2020 (Mass.gov, 2019). More recently, New York state regulators in December 2018 approved storage targets of 1.5 GW by 2025 and 3 GW by 2030, as directed by 2017 legislation (Utility Dive, 2018e). Oregon also has a smaller storage target of 5 MWh by January 2020, though it has not mobilised investments in the state.

Other states are also seeing solar-plus-storage installations bid at increasingly competitive rates into power auctions, even without storage mandates. For example, in January 2019 in Minnesota, Xcel Energy launched a tender for a solar-plus-storage facility, which received bids (that reflect subsidies) as low as USD 36/MWh, while a tender for wind plus storage received a median bid of USD 21/MWh (Star Tribune, 2018). Meanwhile in Arizona, NextEra signed a deal with Tucson Electric Power in May 2017 for a solar-plus-storage power purchase agreement at USD 45/MWh, while First Solar’s February 2018 bid for a solar-plus-storage system topped those from gas peakers (PV Magazine, 2018). Markets with traditionally high power prices, such as Hawaii, will also be suitable markets for more battery storage options.

At the federal level, FERC, which overseas power markets, finalised a rule in February 2018 that directs regional grid operators to establish non-discriminatory rules that will allow energy storage to compete with other power sources in wholesale power markets on a level playing field (FERC, 2018). Additional regulatory moves will be needed to boost the role of storage in wholesale power markets, but state policies will push

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regulators further in this direction. Moreover, the federal ITC for solar projects can also be applied to solar-plus-storage installations.

Renewable Fuel Standard

On the transportation sector side, the RFS is the primary federal policy tool to promote additional use of renewables in road transportation. The RFS was originally established under the Energy Policy Act of 2005, and was updated under the Energy Independence and Security Act of 2007 as the RFS2, which is the programme that is currently in effect. The targets established under the programme were defined under statute to gradually increase to 36 billion gallons by 2022, divided between 15 billion gallons of conventional (corn-based) ethanol and 21 billion gallons of advanced biofuels (of which 16 billion is supposed to be cellulosic biofuel) (Congressional Research Service, 2019).

The Environmental Protection Agency (EPA) was designated as the implementing authority over the programme, and was tasked with defining specific blending targets for refiners based on the volumetric targets through annual notice-and-comment rule making. The oil sector has pushed back against the rule as being too costly while biofuel producers and the agricultural sector have insisted on implementation in line with statutory levels. Given pushback from both the oil sector and the biofuels sector, RFS rule making is frequently challenged in the courts, though has not yet resulted in a fundamental overhaul of implementation.

One intent of the policy was to incentivise higher production of advanced – and particularly cellulosic – biofuels over time. However, cellulosic biofuels have not achieved the level of commercial success that the RFS2 law envisioned. As such, in recent years, the EPA has had to cut the overall volumetric requirements under the RFS to adjust for significantly lower volumes of cellulosic ethanol production. Moreover, in 2015, the EPA also revised RFS rule making to account for the so-called “blend wall” (Biofuels Digest, 2015). This refers to the challenge of increasing ethanol consumption beyond 10% (by volume) of gasoline demand. Passing this level requires consumption of higher ethanol blends such as E15 (15% ethanol by volume) and E85 (85% ethanol by volume), which in turn requires certifications for both automobiles and retail fuelling pumps, or flex-fuel vehicles in the case of E85. The administration in June 2019 decided to allow year-round sales of E15, which were previously banned in the summer months (Bloomberg, 2018c).

Most recently, the EPA in November 2018 released its final 2019 rule making for the RFS. The agency raised the overall renewable volume obligation from 19.29 billion gallons in 2018 to 19.92 billion gallons in 2019 by increasing allocations for advanced biofuels from 4.29 billion gallons to 4.92 billion gallons, of which cellulosic biofuels would increase from 288 million gallons to 418 million gallons (EPA, 2018). That effectively preserves the implied volumes for conventional biofuels – or corn ethanol – at 15 billion gallons, the volume laid out by statute. The EPA also raised the volume of biomassbased diesel from 2.1 billion gallons in 2018 and 2019 to 2.43 billion gallons in 2020. The total volumes are still well below overall statutory volumes under the RFS, requiring the EPA to draw upon its waiver authority to reduce volumes in annual rule making. Cellulosic ethanol volumes have failed to keep up with mandated levels mainly due to technological challenges in achieving commercial production.

Given some of the outlined challenges with RFS implementation, there have been ongoing efforts in Congress to reform the programme, though none have earned sufficient support to pass into law. In particular, lawmakers from Midwestern states

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