A Renewable Portfolio Standard (RPS) is a rule that requires more electricity to be made from renewable energy sources, such as wind, solar, biomass, and geothermal. This rule is also called the Renewable Electricity Standard (RES) in the United States and the Renewables Obligation in the United Kingdom.
The RPS rule requires electricity companies to produce a certain amount of their electricity from renewable energy. Companies that make renewable energy receive certificates for each unit of electricity they produce. These certificates can be sold along with the electricity to supply companies. Supply companies then send these certificates to a regulatory body to show they meet their legal requirements. RPS rules can be carried out through the private market. In places like California, the minimum RPS requirements are set by law. California Senate Bill 350, passed in October 2015, requires retail electricity sellers and publicly owned utilities to get 50% of their electricity from eligible renewable energy sources by 2030. RPS programs often allow competition among different types of renewable energy, but competition may be limited by rules about which energy sources qualify and how much they count toward goals. Supporters of RPS say that using the market to meet these goals can lead to competition, efficiency, and innovation, helping renewable energy become cheaper than fossil fuels. Since 2013, the cost of electricity from wind energy has become lower than that from all fossil fuels, and by 2015, the same was true for solar energy.
RPS-style rules have been adopted in several countries, including the United Kingdom, Italy, Poland, Sweden, Belgium, and Chile, as well as in 29 of the 50 U.S. states and the District of Columbia.
Policy by country
The Renewable Energy (Electricity) Act 2000 (Cth)
China set a renewable energy goal in 2006 and changed it in 2009 to the following targets:
- Renewable electricity: 500 gigawatts by 2020 (300 from hydro, 150 from wind, 30 from biomass, and 20 from solar panels)
- Renewable energy: 15% by 2020 (15% non-fossil fuel, which includes nuclear)
The European Union created a rule about electricity from renewable energy sources in 2001 and updated it in 2007 to the following goals for all EU countries (although individual countries can set higher goals):
- Renewable electricity: 33% by 2020
- Renewable energy: 20% by 2020
Germany’s Renewable Energy Act, passed in 2000, has helped increase renewable power capacity by offering guaranteed prices for electricity from renewable sources to private investors. Germany set more ambitious goals than the EU required in September 2010:
- 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, a goal of 118 million kilowatt-hours was set for 2012 (METI).
The Republic of Korea passed the Act on the Promotion of the Development, Use, and Diffusion of New and Renewable Energy since 2012.
The Renewables Obligation (RO) is a rule in the United Kingdom that requires electricity suppliers to use increasing amounts of electricity from renewable sources, similar to a renewable portfolio standard. It was introduced in England and Wales, and in Scotland and Northern Ireland in 2002 and 2005, replacing an earlier rule called the Non-Fossil Fuel Obligation.
The RO requires electricity suppliers in the United Kingdom to source an increasing share of electricity from renewable sources. In 2010/11, the target was 11.1% (4.0% in Northern Ireland). This 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 has increased eligible renewable electricity generation in the UK from 1.8% of total supply in 2002 to 7.0% in 2010.
The Public Utility Regulatory Policies Act (PURPA) is a law passed in 1978 by the United States Congress as part of the National Energy Act. It aimed to increase the use of renewable energy, mainly through guaranteed prices for electricity from renewable sources, but did not set specific renewable energy goals or quotas.
In 2009, the US Congress considered federal-level renewable energy goals. A bill called the American Clean Energy and Security Act proposed a Renewable Electricity Standard requiring 3% of U.S. electricity to come from non-hydro renewables by 2013, but the bill was not passed by the full Senate.
State-level renewable energy programs in the United States give different numbers of Renewable Energy Credits based on the type of energy produced. For example, solar energy is counted as twice as much as other renewable sources in Michigan and Virginia.
The Lawrence Berkeley National Laboratory reported that renewable energy requirements were responsible for 60% of the increase in American renewable electricity generation since 2000. However, the laboratory also noted that the role of these requirements has decreased in recent years, from 71% of annual renewable energy growth in 2013 to 46% in 2015.