What is a Tier 2 Resource?

A Tier 2 renewable resource is another classification used within state Renewable Portfolio Standards (RPS). Compared to Tier 1 resources, Tier 2 often includes:  

• Older renewable energy facilities: These might be facilities that began operating before a certain date. The rationale is sometimes to provide continued support for existing renewable generation.
• Different types of renewable or alternative energy: This can vary significantly by state but might include:
  • Larger or older hydroelectric facilities: Some states differentiate based on size or the date the facility was commissioned.
  • Certain types of biomass: The specific type or efficiency requirements might differ from Tier 1.
  • Municipal solid waste incineration (in some states, though this is becoming less common): This is sometimes included but can be controversial due to emissions concerns.
  • Other less conventional or emerging technologies.

Key characteristics of Tier 2 renewable resources:

• Eligibility for RPS compliance: Electricity generated from Tier 2 resources can also help utilities meet their RPS obligations, but sometimes with different credit values or limitations compared to Tier 1.
• Renewable Energy Certificates (RECs): Generation from Tier 2 resources also creates RECs, which can be traded. However, the market value of Tier 2 RECs might be lower than Tier 1 RECs in some states, reflecting a lower policy preference.  
   
• Policy considerations: Tier 2 resources often receive less emphasis or fewer incentives than Tier 1 resources in state RPS policies. This can be due to factors like environmental impact, technological maturity, or policy goals favoring newer, cleaner technologies.

The distinction between Tier 1 and Tier 2 resources reflects a state's specific policy goals and priorities within its RPS. States might create these tiers to:

• Prioritize newer, cleaner technologies (Tier 1).
• Maintain existing renewable generation (Tier 2).
• Encourage a diverse portfolio of renewable energy sources.
• Manage the cost of RPS compliance.

It is crucial to consult the specific RPS legislation of a given state to understand its definitions and requirements for Tier 1 and Tier 2 renewable resources, as these can vary considerably. Some states might even have additional tiers or classifications.