Renewable Portfolio Standards

Abstract

State-level renewable portfolio standards (RPSs) aim to encourage renewable energy and discourage greenhouse gas (GHG) emissions from the electric power sector in the United States. Do they work? Some prominent government agencies and advocacy groups assert that U.S. renewables growth has been largely due to RPSs. That seems unlikely, given that in most regions, renewables exceed RPS requirements. But it is not an easy question to answer, thanks to interstate trading and the possibility that states with abundant renewable resources might set the most ambitious RPS goals. We combine the best features of four recent academic studies, using ordinary least-squares and instrumental variables approaches. In some specifications, RPSs do appear to reduce the use of natural gas to generate electricity and decrease GHG emissions, while boosting the use of wind and solar power. But the effects are small—consistent with the academic findings and in contrast to the public claims and policy goals.

The spillover effect of mandatory renewable portfolio standards

“…Our findings also contribute to the debate surrounding the nonadditionality of RPS, in which many argue that RE deployment would have occurred irrespective of RPS implementation, particularly in regions with abundant and cost-effective RE resources ( 70 ). This argument posits that the effectiveness and necessity for state RPS policy are diminished.…”

Effect of Natural Gas Prices on Renewable Portfolio Standard Impacts

“…It is possible that such studies find such a strong substitution between renewables and gas for marginal generation because they ignore the role played by gas (but not coal) generation as a "peaker" complement to intermittent renewables. However, in a recent empirical analysis Feldman and Levinson (2023) find that renewable portfolio standards have led to decreased gas use and carbon emissions, but that their overall role in increasing renewable generation is less than commonly advertised. Stricter RPS standards, requiring greater than 15% or 20% renewables overall are estimated to incur higher costs as intermittency/variability costs rise (Carley et al 2018).…”

Farm size, spatial externalities, and wind energy development

“…Hitaj (2013) conducts a county‐level empirical analysis and finds that transmission infrastructure and state and federal policies, particularly tax credits and production incentives, encourage wind energy growth. Other studies have also estimated the response of wind uptake to federal and state policies, such as production tax credits (Metcalf, 2009), Renewable Portfolio Standards (Feldman & Levinson, 2023; Menz & Vachon, 2016; Yin & Powers, 2010), the 2009 American Reinvestment and Recovery Act (Mullen & Dong, 2022), investment and production subsidies (Aldy et al, 2018), and cost‐based grants (Johnston, 2019). In general, these findings confirm that policies creating economic incentives have been important catalysts for onshore wind development on private lands.…”

“…We test for the effects of ownership fragmentation on U.S. wind energy development by conducting empirical analyses at three different spatial scales. First, we run a national analysis at the county level and find that counties with larger average and median agricultural holdings—which is our best nationally available measure of rural land ownership concentration—have accumulated more installed wind energy capacity when controlling for other determinants of wind farming emphasized in previous literature (Aldy et al, 2018; Feldman & Levinson, 2023; Hitaj, 2013; Johnston, 2019; Menz & Vachon, 2016; Mullen & Dong, 2022; Yin & Powers, 2010; Zhou & Solomon, 2020). For example, a doubling of the average farm size is associated with a 72% increase in MW of wind capacity.…”