Empirical evaluation of the stringency and design of renewable portfolio standards

Abstract

In two decades of experience with state renewable portfolio standards (RPSs), the United States has observed immense growth in renewable energy markets, initially in wind energy and more recently in solar power. During this time, RPSs have experienced considerable policy reinvention and increased diversity. Here, we explain how changes in RPS policy design features relate to different market outcomes. We develop a score for measuring RPS stringency and show that a one-point increase in RPS stringency leads to increases of 0.2%, 1% and 0.3% in renewable energy, solar generation and renewable energy capacity, respectively. Other important design features include resource eligibility, planning processes, cost recovery and geographical restrictions. These findings are then reaffirmed through 42 semi-structured phone interviews with experts in the field of RPS implementation from government agencies, including public utility commissions and state energy offices, electric utilities and various renewable energy firms and associations. Renewable policy standards have been instrumental in the growth of renewable energy in US states. Through a ranking of policy stringency and interviews with industry stakeholders, researchers show the significance of stringency and other policy design features towards a standard’s effectiveness.