A Renewable Portfolio Standard (RPS) is a regulation that requires the increased production of energy from renewable energy sources, such as wind, solar, biomass, and geothermal. RPS-type mechanisms have been adopted in several countries, including Britain, Italy, Poland, Sweden, Belgium, and Chile, as well as in 33 of 50 U.S. states, and the District of Columbia.
The RPS mechanism generally places an obligation on electricity supply companies to produce a specified fraction of their electricity from renewable energy sources. Certified renewable energy generators earn certificates for every unit of electricity they produce and can sell these along with their electricity to supply companies. Supply companies then pass the certificates to a regulatory body to demonstrate their compliance with their regulatory obligations.
In 2010, a group of senators introduced a bill to create a national RPS. The proposal would require the states to generate at least 15% of their electricity from renewable sources by 2021. Qualified sources would include wind, solar, ocean, geothermal, landfill gas, and new hydropower at existing dams, just to name a few. Those supporting the adoption of RPS mechanisms claim that market implementation will result in competition, efficiency and innovation that will deliver renewable energy at the lowest possible cost, allowing renewable energy to compete with cheaper fossil fuel energy sources. Additional benefits for the United States would include job creation, consumer savings, and energy independence.
Detractors of the proposal point out that most renewable sources such as wind, solar, and geothermal are located far from population centers, and that to get power where it needs to be would result in costly transmission lines being built. Utilities in areas with insufficient transmission, such as California or Colorado, would be forced to purchase renewable credits generated from a state like North Dakota, with abundant renewable resources but a low population. Also, green energy developers encounter a good deal of resistance from Regional Transmission Organizations and Independent System Operators when it comes to linking their projects into the utility grid. Cost allocation and who pays for the transmission upgrades and / or additions are among the basic concerns of RPS detractors.
Seven states—Hawaii, California, Nevada, Colorado, Minnesota, Connecticut, and Oregon—currently have effective RPS requirements of 25 percent or greater. New wind farms in these states have attracted over $30 billion in private investment, created over 12,000 jobs, and are now paying farmers, ranchers, and other landowners over $45 million a year to lease sites for turbines. Solar industry growth in these seven states has led to more than 72,000 jobs and over $13 billion invested in solar installations in 2014 alone.
Iowa, site of the first RPS in the country, now leads America in renewable energy production by obtaining 28.5 percent of the electricity it generates from wind. The state has seen $10 billion of investment of its own, and 6,000 new full-time jobs. Its farmers and ranchers treat wind as a major – and drought-resistant – cash crop. California’s robust RPS has helped create nearly 55,000 solar jobs — more than all of the state’s investor-owned utilities combined. Utility-scale solar provided more than 5 percent of California’s electricity last year, and was providing more than 10 percent of hourly peak demand by fall 2014. In addition, more than 2 percent of all homes in California are now benefitting from a solar energy system, along with 13,000 businesses. In 2014, $11.8 billion was invested on solar installations in California.
In recent polls, the American public has shown overwhelming support for RPS legislation; such support is not just because it makes energy more affordable. In Florida and North Carolina, it’s about property rights. Solar advocates support a homeowner’s right to install a PV system on your roof, no matter who finances it. That argument has won both Tea Party and Sierra Club backing for an Energy Freedom Act in North Carolina and a constitutional amendment in Florida — all aimed at ensuring that home-solar systems can interconnect with the grid.
In California, the demand for greater access to renewables has been championed by a score of municipalities that are forming their own electric companies. Earlier this year, thirteen California Republican senators crossed the aisle to join 21 Democrat Senate colleagues to approve a bill that will open up the state’s electricity market to business consumers that want to buy 100 percent green power, rather than the 23 percent renewable mix now mandated for the state’s utilities. In North Carolina, major corporations like Apple, Google and Facebook, who have large data centers there, are fighting against proposed state legislation that would freeze the RPS target at six percent, which happens to be the current level, rather than continue to work towards the original goal of 12.5 percent by 2021.
Twenty-nine states, Washington, D.C., and two territories have adopted an RPS, with eight states and two territories setting renewable energy goals, but there has been waning federal support for renewables in the current administration. How this will change in the next presidential election is anyone’s guess. All 2016 presidential candidates have expressed opinions on the matter, so it will undoubtedly be a topic in the upcoming debates. For supporters of a national RPS, hope persists but it remains to be seen whether or not a national RPS will be implemented. There are certainly strong arguments for both sides of the debate.
Hawaii and Vermont Set High Renewable Portfolio Standard Targets (The Energy Collective, Monday, 6 July 2015)
Nation’s renewable energy consumption highest since the 1930s (Deseret News, Monday, 6 July 2015)
National trend on energy freedom to be tested in bellwether state (The Hill, Thursday, 25 June 2015)
On Tenth Anniversary of Montana’s Renewable Portfolio Standard, Invenergy Celebrates Clean Energy Success of Wheatland County’s Judith Gap Wind Farm (Virtual Press Office, Wednesday, 10 June 2015)
Corporate Giants Use their Power to Protect North Carolina’s Renewable Portfolio Standard (Environmental Defense Fund, Monday, 8 June 2015)
2015 RPS state of play (Into the Wind: The AWEA Blog, Tuesday, 5 May 2015)
Student Post: Pros and Cons for a National Renewable Portfolio Standard (UND Energy Law Blog, Thursday, 1 March 2012)
Solving the Transmission Dilemma (Wind Systems, February 2010)
A National Renewable Portfolio Standard? Not Practical (Issues, Volume XXV Issue 1, Fall 2008)