Renewable Portfolio Standards

 

A renewable portfolio standard (RPS) is a regulatory mandate to increase production of energy from renewable sources such as wind, solar, biomass and other alternatives to fossil and nuclear electric generation. It's also known as a renewable electricity standard.

Background

An RPS is most successful in driving renewable energy projects when combined with the federal production tax credit. States often design them to drive a particular technology by providing "carve out" provisions that mandate a certain percentage of electricity generated comes from a particular technology (e.g. solar or biomass). States can choose to apply the RPS requirement to all its utilities or only the investor owned utilities. States can also define what technologies are eligible to count towards the RPS requirements.

Implementation Issues

Having adequate transmission capacity to accommodate generation from renewable resources is important for the success of an RPS. States with successful RPSs either have adequate transmission available or plans to build it.

Ratepayer impacts of an RPS can also derail its adoption politically. A counterbalance to the impacts on ratepayers is that RPS mandates usually drive local economic growth. Under a well designed RPS, costs are shared fairly by all ratepayers. Another way to address ratepayer impacts is to include provisions in the RPS to prevent costs from escalating excessively.

Design Best Practices

When designing an RPS, incorporate the following best practices:

• RPS targets should be stable, ramp up steadily over time and not be subject to sudden or uncertain shifts
• An RPS program should be of sufficient duration to allow for long-term contracting and financing
• An RPS program should apply to all load-serving entities: investor owned, municipal, and electric cooperatives, including suppliers of last resort
• The eligibility of specific renewable energy technologies and generators should be well defined
• Use of tradable renewable energy credits for RPS compliance should be considered and adhered to with a robust tracking system
• The cost of RPS compliance should be allocated fairly across all utility customers
• An RPS program should be mandatory and impose non compliance penalties on those entities that fail to meet requirements.

Additional Resources

For more information about renewable portfolio standards, see the following NREL publications:

• International Best Practices for Implementing and Designing Renewable Portfolio Standard Policies
• So you have questions about...Renewable Portfolio Standards: Resources & Technical Assistance
• Survey of State-Level Cost and Benefit Estimates of Renewable Portfolio Standards
• Including Alternative Resources in State Renewable Portfolio Standards Current Design and Implementation Experience
• State of the States 2010: The Role of Policy in Clean Energy Market Transformation
• State Clean Energy Practices: Renewable Portfolio Standards

The following resources may also prove helpful:

• Database of State Incentives for Renewable and Efficiency (DSIRE). A comprehensive source of information on incentives and policies that support renewables and energy efficiency in the United States. Also includes "Solar Carve-outs in Renewable Portfolio Standards," which provides a high level summary of solar carve-outs in RPS policies and a summary of best practices.

• National Conference of State Legislatures' Energy and Environment Legislation Tracking Database Searchable database for information on renewable energy bills that have been introduced in the 50 states and the District of Columbia.

• Recommended Principles and Best Practices for State Renewable Portfolio Standards. State-Federal RPS Collaborative (2009). Identifies principles and best practices emerging from state experiences to assist policymakers.

• Renewables Portfolio Standards in the United States: A Status Update. Lawrence Berkeley National Laboratory (2013). The presentation provides a review of current RPS policies and highlights carve-outs and recent political challenges; shows positive impacts on renewable energy development.

• Renewable Portfolio Standards Resources. Lawrence Berkeley National Laboratory. A resource for data, presentations and LBNL reports on RPS.

• The State of State Renewable Portfolio Standards. Clean Energy States Alliance. Provides an overview of RPS track records, highlights their strengths, and outlines ways of addressing weaknesses.