Have State Renewable Portfolio Standards Really Worked? Synthesizing Past Policy Assessments to Build an Integrated Econometric Analysis of RPS effectiveness in the U.S.

Abstract

Renewable portfolio standards (RPS) are the most popular U.S. state-level policy tools for promoting deployment of electricity from renewable energy (RES-E). While several econometric studies have estimated the effect of RPS policies on RES-E deployment, results are sometimes contradictory. Thus, there is a need to not only reconcile these studies but also establish a definitive answer to the question whether RPS policies have been effective in increasing RES-E deployment. We use a panel – 50 states over 1990-2010 – of renewable deployment, policy design elements and market dynamics to capture the heterogeneity in state RPS design and state characteristics. We run time series cross sectional regressions with fixed effects, and verify the causal effect implied by our results with a nonparametric matching analysis. We trace discrepancies among past findings to differences in data classification and model specification. We show that the key feature of RPS policies – RPS stringency – has no effect, and in some cases a negative effect, on RES-E deployment. We also investigate the impact of individual RPS features. We show that renewable energy certificate (REC) unbundling as well as the presence of RPS in neighboring states is correlated with greater RES-E deployment locally, while other features – such as allowing greater flexibility to buy renewable energy from out-of-state – slows in-state RES-E deployment. We show that mandatory green power options have a positive effect on RES-E deployment while net metering schemes appear to have a negative impact. However, we were unable to detect any impact of an interaction effect between RPS and these policies. Finally, we investigate the impact of policies on the deployment of individual renewable technologies (biomass, geothermal, solar, and wind) and demonstrate differentiated policy impacts, such as biomass driving the result on RPS stringency.