Renewable Portfolio Standards, Policy Design, and the Remaking of U.S. Renewable Energy Markets

Abstract

Over two decades of experience with state renewable portfolio standards (RPS), the United States has observed immense growth in renewable energy markets, initially in wind energy and more recently in solar power. During this time, RPSs have experienced significant policy reinvention and increased diversity. This study helps explain how changes in RPS policy design features relate to different market outcomes. We develop a score for measuring RPS stringency and show that a 1 point increase in RPS stringency leads to 0.2, 1, and 0.3 percent increases in renewable energy, solar generation, and renewable energy capacity, respectively. These findings are then reaffirmed through 42 semi-structured phone interviews with experts in the field of RPS implementation from government agencies, including public utility commissions and state energy offices, electric utilities, and various renewable energy firms and associations. Through the interviews we identify key factors that affect RPS effectiveness.