Renewable Energy Portfolio Standard (RPS): Background and Debate Over a National Requirement Page: 4 of 15
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Renewable Energy Portfolio Standard (RPS)
Background
The RPS Mechanism
Under a renewable energy portfolio standard (RPS), retail electricity suppliers (electric utilities)
must either provide a minimum amount of electricity from renewable energy resources or
purchase tradable credits that represent an equivalent amount of renewable energy production.
The minimum requirement is often set as a percentage share of retail electricity sales, which is
usually expressed in terms of kilowatt-hours (kwh).' Many RPS programs use tradable credits,
sometimes referred to as renewable energy certificates, to increase flexibility and reduce the cost
of compliance with the purchase mandate, and to facilitate compliance tracking.2
State RPS Action
In the late 1990s, many states began to restructure their electric utility industries to allow for
increased competition. Some of the states with this newly "restructured" system established an
RPS as a way to create a continuing role for renewable energy in power production.3 Some states
without a restructured industry also began to adopt an RPS. The total number of states with an
RPS has grown steadily. In June 2007, the Federal Energy Regulatory Commission (FERC)
reported that 23 states and the District of Columbia had an RPS in place,4 collectively covering
about 40% of the national electric load.5 Mandatory state RPS targets range from a low of 2% to a
high of 25%. However, most targets range from 10% to 20% and are scheduled to be reached
between 2010 and 2025. Although this emerging "tapestry of state programs" continues to spread
to more states, the majority of recent actions have been to increase and accelerate previously
established standards.6 Most states have a similar definition of eligible renewable resources that
covers wind, solar, geothermal, biomass, and several forms of water-based power, including
hydropower, current, wave, tidal, and ocean power.' At least 19 of the 23 states allow some form
1 Most states use the percentage requirement. The only exceptions are Texas and Iowa, which have chosen to specify
the minimum requirement in terms of installed capacity, measured in terms of millions of watts (megawatts).
Department of Energy (DOE). Lawrence Berkeley National Laboratory (Berkeley Lab). Renewables Portfolio
Standards: A Factual Introduction to Experience from the United States. (LBNL-62569) April 2007. p. 3.
2 DOE. Lawrence Berkeley National Laboratory (LBNL). Weighing the Costs and Benefits of State Renewables
Portfolio Standards: A Comparative Analysis of State-Level Policy Impact Projections, March 2007. p. 1.
s Section 210 of the Public Utility Regulatory Policies Act (PURPA) of 1978 had guaranteed a market for the purchase
of electric power produced from small renewable energy facilities. PURPA let states determine the avoided cost pricing
of the electricity production from renewable energy facilities. The effectiveness of this mechanism lessened with the
advent of electric industry restructuring. Provided that certain conditions are met in any given state, Section 1253 of the
Energy Policy Act of 2005 terminates the PURPA requirements.
4 DOE. FERC. Renewable Energy Portfolio Standards (RPS). This is a map showing the status of state action on RPS.
Updated June 7, 2007. http://www.ferc.gov/market-oversight/mkt-electric/overview/2007/elec-ovr-rps.pdf. Also,
DOE's Office of Energy Efficiency and Renewable Energy (EERE) has posted a map showing the status of state RPS
action. EERE notes that four additional states (Illinois, Missouri, Vermont, and Virginia) have enacted non-binding
"goals" for renewable electricity production. http://www.eere.energy.gov/states/maps/renewableportfoliostates.cfm.
s Berkeley Lab, Renewable Portfolio Standards.
6 The Pew Center on Global Climate Change reviewed the status of state RPS policies in 2006. See Race to the Top:
The Expanding Role of U.S. State Renewable Portfolio Standards. 2006. 36 p. http://www.pewclimate.org/global-
warming-in-depth/all_reports/raceto_the_top/index.cfm.
7 Details about eligible resources and other provisions of state RPS programs are available from the online Database of
(continued...)Congressional Research Service
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Sissine, Fred. Renewable Energy Portfolio Standard (RPS): Background and Debate Over a National Requirement, report, December 5, 2007; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc821634/m1/4/: accessed April 19, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.