Renewable Portfolio Standards

NREL provides information and resources on renewable portfolio standards (RPSs)—regulatory mandates to increase energy production from renewable sources other than fossil fuels and nuclear energy.

The standard is also known as a renewable electricity standard, and, more recently, states have also adopted clean energy standards.

Background

An RPS provides a mandate for renewable energy sales within a state. This—in combination with federal tax credits and other federal, state, and local policies—is an important factor driving renewable energy project development. States often design RPSs 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., distributed solar). States can choose to apply the RPS requirement to all utilities or only the investor-owned utilities. States can also define what technologies are eligible to count toward 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 cap the costs.

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 noncompliance penalties on those entities that fail to meet requirements.