Interaction of Compliance and Voluntary Renewable Energy Markets

Abstract

In recent years, both compliance and voluntary markets have emerged to help support the development of renewable energy resources. Both of these markets are growing rapidly and today about half of U.S. states have RPS policies in place, with a number of these policies adopted in the last several years. In addition, many states have recently increased the stringency of their RPS policies. This paper examines key market interaction issues between compliance and voluntary renewable energy markets. It provides an overview of both the compliance and voluntary markets, addressing each market's history, purpose, size, scope, and benefits while addressing issues, including double counting.

Market and welfare effects of renewable portfolio standards in United States electricity markets

“…Explicitly accounting for the links and interactions between these markets is particularly important due to the coexistence of mandate-driven compliance markets (where regular power 2 containing a portion of renewables is sold to the end users) with voluntary markets (where consumers purchase green power from their electric suppliers on a voluntary basis) 3 . While the presence of these voluntary green markets demonstrates a consumer support for renewables and can contribute to the passage of RPS, stringent RPS requirements can increase competition for renewable energy generation between the two markets (Bird and Lokey, 2007). In this context, explicitly considering the links and interactions of these markets is crucial in better understanding the system-wide effects of RPS.…”

2010 Solar Technologies Market Report (Book)

“…While an RPS is typically a mandate, it can also be a non-binding goal; it is almost always stated as a percentage of the total electricity provided to be reached by a predetermined future date (Bird and Lockey 2008). As indicated in Figure 4.6, 29 states plus the District of Columbia have renewable portfolio standards in place, and an additional 6 states have nonbinding renewable energy production goals.…”

Green Power Marketing in the United States: A Status Report (Tenth Edition)

“…A recent NREL analysis (Bird and Lokey 2007) found that there is little evidence to date to suggest that the adoption of an RPS will negatively affect voluntary market sales. Figure 7 shows the historic and current sales of renewable energy through green pricing programs in four states with an RPS in place.…”