A Renewable Portfolio Standard (RPS) is a rule that requires more electricity to be produced from renewable energy sources, such as wind, solar, biomass, and geothermal. This rule is also called a Renewable Electricity Standard (RES) in the United States and a Renewables Obligation in the United Kingdom.
The RPS system requires electricity companies to generate a certain amount of their electricity from renewable energy. Companies that produce renewable energy receive certificates for each unit of electricity they make. These certificates can be sold to electricity companies, which then send them to a government agency to show they are following the rules. RPS programs often use the private market to work. In some places, like California, laws set the minimum amount of renewable energy that must be used. For example, California Senate Bill 350, passed in October 2015, requires electricity sellers and public utilities to get 50% of their electricity from approved renewable sources by 2030. RPS programs usually encourage competition among renewable energy types, but rules about which energy sources qualify and special factors can limit this competition. Supporters of RPS say that using the market will lead to more competition, better efficiency, and new ideas, which can help make renewable energy cheaper than fossil fuels. Since 2013, the cost of electricity from wind energy has become lower than the cost of all fossil fuels, and by 2015, the cost of solar energy also became lower than fossil fuels.
RPS-type rules have been used in many countries, including the United Kingdom, Italy, Poland, Sweden, Belgium, and Chile, as well as in 29 U.S. states and the District of Columbia.
Policy by country
Renewable Energy (Electricity) Act of 2000 (Cth)
China set a goal for renewable energy in 2006 and updated it in 2009. The targets included:
- Renewable electricity: 500 gigawatts by 2020 (300 from hydroelectric power, 150 from wind, 30 from biomass, and 20 from solar power)
- Renewable energy: 15% of total energy by 2020 (15% from non-fossil fuel sources, including nuclear power)
The European Union passed a law in 2001 about renewable energy and updated it in 2007. The law set EU-wide goals (member states could set higher goals):
- Renewable electricity: 33% by 2020
- Renewable energy: 20% by 2020
Germany’s Renewable Energy Act, passed in 2000, helped increase renewable power by offering guaranteed payments to private investors. In 2010, Germany set more ambitious goals than the EU:
- Renewable electricity: 35% by 2020 and 80% by 2050
- Renewable energy: 18% by 2020, 30% by 2030, and 60% by 2050
Based on the 1997 Act on the Promotion of New Energy Usage, 118 million kilowatt-hours was the goal for 2012 (METI).
The Republic of Korea passed the Act on the Promotion of the Development, Use, and Diffusion of New and Renewable Energy in 2012.
The Renewables Obligation (RO) in the United Kingdom requires electricity suppliers to use more renewable energy. It was introduced in England and Wales in 2002, in Scotland in a different form in 2002, and in Northern Ireland in 2005. It replaced an earlier law from 1990.
The RO requires suppliers to source increasing amounts of electricity from renewable sources. In 2010/11, the goal was 11.1% (4.0% in Northern Ireland). The target started at 3% in 2002/03 and was raised to 15.4% (6.3% in Northern Ireland) by 2015/16. The program was extended to 2037 (2033 in Northern Ireland) in 2010. The RO increased renewable electricity generation in the UK from 1.8% of total supply to 7.0% by 2010.
The Public Utility Regulatory Policies Act (PURPA), passed in 1978 by the U.S. Congress as part of the National Energy Act, aimed to promote renewable energy use, mostly through guaranteed payments for renewable energy. However, the law did not set specific renewable energy goals or quotas.
In 2009, the U.S. Congress considered setting national renewable energy goals. A bill proposed in 2009 called for 3% of U.S. electricity to come from non-hydro renewable sources by 2013, but the bill was not passed by the full Senate.
State-level renewable energy programs in the U.S. give different credits for renewable energy based on the type of energy produced. For example, solar energy in Michigan and Virginia counts for twice as much as other renewable sources.
A study by the Lawrence Berkeley National Laboratory found that renewable energy goals in the U.S. contributed to 60% of the increase in renewable electricity generation since 2000. However, the study also noted that the role of these goals has decreased in recent years, from 71% of annual renewable energy growth in 2013 to 46% in 2015.