The Past, Present and Future of Renewable Portfolio Standards

Abstract

We use data from two decades of experience with renewable portfolio standards (RPS) in the United States to identify economic incentives which affect states' decisions to adopt RPS, how renewable goals are set, and how states increase these goals over time. We find that income, economic sensitivity to electricity price, and the prevalence of merchant generators influence RPS policy. We also find that the development of in-state renewable resources is an important objective of RPS policy. These factors have led to a divergence in RPS policy among states, with some states pursuing ambitious goals at increasing marginal cost. This suggests that voluntary state support for renewables is not a sustainable approach to increasing the national production of renewables energy.