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The Role of State Clean Energy Policies

State policy has been a critical driver in the emergence of clean energy. In many respects, states are leading the way for clean energy technologies and policies. They have demonstrated both the viability and the modest costs of specific renewable energy policies.

As states continue to push the boundaries of what clean energy can offer, there are new challenges including transmission development and a desire to maximize policy effectiveness. In addition, states that may not have been as active in the past are now looking to ramp up support for clean energy technologies.

Many lessons can be learned from states' past experiences. However, new contexts and differing priorities may require new analysis and nuance to understand how policies developed in one state may impact clean energy markets and goals in another. As a result, the demand for objective policy analysis at the state level continues to grow. It's expected to continue as long as states adopt clean energy goals and targets.

Impacts of State Policies

State policy has had dramatic impacts on clean energy development and advancement during recent years. As of November 2008, 28 states had implemented a renewable portfolio standard (RPS) with five additional states establishing state goals for renewable energy power generation.

Between 1998 and 2007, approximately 8,900 megawatts (MW) of non-hydro renewable energy was installed in states with RPS policies. If mandates for RPS policies in place at year-end 2007 are reached, the result will be 61 gigawatts (GW) of new renewable power generation capacity by 2025.

State policy also has led the way in establishing markets for solar power systems. For example:

  • New Jersey's Customer On-Site Renewable Energy (CORE) rebate program provided funds for more than 62 MW of on-site solar photovoltaic installations through June 2008.

  • In California, state rebate and incentive programs contributed to the development of 280 MW of grid-tied solar through year-end 2007; and the recently implemented California Solar Initiative added 59.4 MW of solar PV in the first six months of 2008.

In addition, state tax credits, renewable fuels standards, and additional mandates or incentive programs also have contributed to increased demand for renewable energy. These policies also have enabled reductions in technology costs, demonstrated technological viability, and moved renewable energy from an exotic fringe technology to a mainstream energy resource.

Future Role of State Policies

As the nation moves to a new era of federal government involvement, questions about the continued relevance of state policy have emerged. Despite the potential for change at the federal level, state policy is likely to remain a key element in continued clean energy development. In the short term, fiscal and economic challenges may limit the ability of federal government to make changes to clean energy policy. Federal attention also may be directed toward infrastructure that complements rather than supplants state policy.

Finally, environmental legislation has historically allowed states to address environmental problems with their own localized plan as long as the minimum federal standards are met. As a result, the critical nature of state policy is not expected to disappear in the near future. It could become even more important as the country makes increased efforts to move toward a clean energy future.

More Information

For NREL state policy analysis resources, see State Clean Energy Policy Analysis. Other resources include the following:

Database of State Incentives for Renewables & Efficiency

Renewable Portfolio Standards in the United States: A Status Report with Data thru 2007.
By Ryan Wiser and Galen Barbose, Lawrence Berkeley National Laboratory