Renewable Portfolio Standard
From Wikipedia, the free encyclopedia
A Renewable Portfolio Standard (RPS) is a regulatory policy that requires the increased production of renewable energy sources such as wind, solar, biomass, and geothermal energies.
The RPS mechanism generally places an obligation on electricity supply companies to produce a specified fraction of their electricity from renewable energy sources. Certified renewable energy generators earn certificates for every unit of electricity they produce and can sell these along with their electricity to supply companies. Supply companies then pass the certificates to some form of regulatory body to demonstrate their compliance with their regulatory obligations. Because it is a market standard, the RPS relies almost entirely on the private market for its implementation. Those supporting the adoption of RPS mechanisms claim that market implementation will result in competition, efficiency and innovation that will deliver renewable energy at the lowest possible cost, allowing renewable energy to compete with cheaper fossil fuel energy sources.[1] There is evidence that the risk inherent in the mechanism may make it more expensive than other alternatives however.
RPS-type mechanisms have been adopted in a number of US states as well as in the UK, Italy and Belgium. Operational regulations vary from state to state within the US, and there is no national policy. Currently there are 27 states plus the District of Columbia that have RPS policies in place. Four of these states have voluntarily rather than mandatory goals. Together these states account for more than 42% of the electricity sales in the United States.[2]
It is worth noting that RPS mechanisms have tended to be most successful in stimulating new renewable energy capacity in the United States where they have been used in combination with federal Production Tax Credits (PTC). In periods, where PTC have been withdrawn the RPS alone has often proven to be insufficient stimulus to incentivise large volumes of capacity.
The Edison Electric Institute, a trade association for America’s investor-owned utilities, has taken a stand against a nationwide RPS, saying it would “raise consumers’ electricity prices and create inequities among states.”[3]
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[edit] California
The California Renewables Portfolio Standard was created in 2002 under Senate Bill 1078 and further accelerated in 2006 under Senate Bill 107. The bills stipulate that California electricity corporations must expand their renewable portfolio by 1% each year until reaching 20% in 2010. A goal of 33% by 2020 is also pending.[4]
[edit] Texas
The Texas Renewable Portfolio Standard was originally created by Senate Bill 7 in 1999. The Texas RPS mandated that utility companies jointly create 2000 new MWs of renewables by 2009 based on their market share. In 2005, Senate Bill 20, increased the state’s RPS requirement to 5,880 MW by 2015, of which, 500 MW must come from non-wind resources. The bill set a goal of 10,000 MW of renewable energy capacity for 2025.[5]
