In last week’s issue of Energy Update, we wrote about recent and current legislative efforts to ensure America's clean energy future. These efforts include legislation at both the federal and state levels. In at least one of the laws we highlighted, the Clean Energy DC Omnibus Amendment Act of 2018, the legislation includes a requirement relating to a Renewable Portfolio Standard (or RPS).
What exactly is an RPS?
An RPS is a state-level policy that requires electric utility companies and retail energy suppliers to source a specified amount of the energy they sell or generate from renewable sources. An RPS may also be called a Renewable Energy Standard (RES).
While there is currently not a federal RPS policy in place, the Solar Energy Industries Association (SEIA) reports that 38 states and the District of Columbia currently have an RPS. The requirements of an RPS can vary by state, with respect to clean energy standards (e.g., which, in some states, will allow nuclear and low-emissions non-renewable energy sources like natural gas) and renewable goals (e.g., the percentage of energy to be sourced from renewables like wind and solar).
An RPS typically establishes incremental compliance targets that increase over time. For example, in Maryland, the current RPS target requires electricity providers to obtain at least 50% of their electricity from renewable sources by 2030, and to create a plan for achieving 100% renewable electricity by 2040. In another example, pending legislation in Pennsylvania seeks to amend the state’s RPS to include nuclear energy.
It’s also common for an RPS to include a carve-out, which is a more specific requirement designed to incentivize the deployment of particular market segments or renewable energy technologies like solar. The Clean Energy DC Omnibus Amendment Act of 2018, as an example, includes a requirement that at least 5% of a utility’s or supplier’s electricity originate from long-term solar Power Purchase Agreements, or PPAs, by 2032.
What are the benefits of an RPS?
An RPS typically encourages the growth and development of all renewables, by incentivizing cost reductions and efficiency gains.
While the benefits may vary by state, territory or the District, RPS policies generally encourage the growth of domestic energy consumption, economic development, energy portfolio diversification, energy independence, job growth and a reduction in greenhouse gas emissions.
Legislators Look to a Clean Energy Future. (2019, June 11). Retrieved June 13, 2019, from http://energyupdate.wglenergy.com/wges/issues/2019-06-10/
Magazine, P. (2018, April 04). Does an aggressive Renewable Portfolio Standard increase utility rates? Retrieved June 13, 2019, from https://pv-magazine-usa.com/2018/04/03/does-an-aggressive-renewable-portfolio-standard-increase-utility-rates/
Renewable Energy Standards. (n.d.). Retrieved June 13, 2019, from https://www.seia.org/initiatives/renewable-energy-standards
Stern, A., & Stern, A. (2019, April 23). Fact Check: New Report on Renewable Portfolio Standards Misses the Mark. Retrieved June 13, 2019, from https://www.aweablog.org/new-report-renewable-portfolio-standards-misses-mark/