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Revisiting renewable portfolio standard effectiveness: policy design and outcome specification matter

Abstract

Renewable portfolio standards (RPS) differ widely across US states. Prior research findings on the effectiveness of these policies to stimulate renewable electricity deployment are equally wide ranging. This study investigates patterns of RPS policy design and analyzes the effects on policy outcomes measured at the level of utility compliance. Measuring organizational outcomes of RPS corrects for the first time the challenges of prior research focused on state-level renewable capacity or generation outcomes. The quantitative analysis also takes into account the complexity of RPS design, by making use of a state-by-state database of RPS design characteristics developed for this study. Patterns of RPS design across states are compared, including the compliance schedule, scope, eligibility of resources, quotas and subsidies, renewable energy credit provisions, as well as enforcement and penalties. Together, the map of state RPS design and the new approach to RPS outcome analysis illuminate the diversity of RPS policy practice across the United States. They suggest the need to both account for the variety of design characteristics and accurately specify the policy outcomes in evaluations of these policies.

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Notes

  1. For example, California produces close to 12 % of its electricity from renewable energy (EIA 2009), making it one of the cleanest states in the country. In reality, CA imports about 18 % of the electricity consumed in the state (Jiusto 2006), and much of this power stems from fossil fuel plants.

  2. Due to the large number of state RPS, a graphic depiction of individual compliance schedules is difficult. A state-by-state listing of RPS schedules (ultimate year and goal) and the average annual percentage point increase is included in the final summary Fig. 3.

  3. This goal only applies to Minnesota’s largest utility, selling two thirds of the state’s electricity.

  4. Although Texas has a capacity goal, compliance is based on renewable energy credits (MWh). Regulators calculate the required credits using a capacity factor.

  5. Arguably, these elements make the standard more flexible, but with regard to the primary policy outcome investigated in this study, their chief impact is on goal stringency.

  6. 2007 is the first year in which more than half of all RPS states have a goal.

  7. Ratings were available for ten out of twelve states (not Hawaii and DC).

  8. Shrimali and Kniefel (2011) find an effect of capacity requirements, but not of generation requirements.

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Fischlein, M., Smith, T.M. Revisiting renewable portfolio standard effectiveness: policy design and outcome specification matter. Policy Sci 46, 277–310 (2013). https://doi.org/10.1007/s11077-013-9175-0

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Keywords

  • Renewable energy
  • Policy design
  • Policy evaluation