Rules, Regulations and Policies
RENEWABLE PORTFOLIO STANDARD (RPS)
The majority of states in the U.S. have established a Renewable Portfolio Standard (RPS) that requires utilities to supply a specified percentage of electricity used from renewable resources. An RPS represents an important tool to expand state solar markets if designed with differential support for solar technologies. However, a traditional RPS – where all eligible renewable resources compete – supports least-cost projects such as wind and landfill gas, and is unlikely to provide adequate support for smaller-scale solar distributed energy due to cost and solicitation barriers.
In recent years, states increasingly are providing differential support for solar with an RPS in two ways. First, eleven states now have established a solar share or set-aside – a requirement that some portion of the RPS come from solar resources specifically, or distributed generation more broadly. Second, several states use a solar “multiplier”, giving more credit to solar electricity than other forms of generation toward meeting RPS targets. These mechanisms attempt to strengthen solar markets by allowing solar technologies to compete against less costly renewable technologies, and are becoming more popular and increasingly driving solar development.
According to analysis by Berkeley Lab[1], states are moving toward set-asides and away from multipliers due the greater success with the former approach. RPS policies that only have credit multipliers for solar have not yet seen significant solar additions.
Berkeley Labs reports that the impact of state RPS set-asides on solar PV already has been substantial. Excluding
Recommendation: Create a solar set-aside in the RPS program
For an RPS to significantly benefit solar technology and markets, a solar set-aside requirement appears to be necessary. States with an RPS should consider requiring a specific solar share percentage in recognition of the special benefits of solar installations (e.g. local job creation, ease of siting, used primarily at the point of generation, no adverse environmental impacts). However, according to Berkeley Lab, contracting and incentive policies are critical to the success of a solar set-aside. Reliance on short-term Renewable Energy Credits (REC)[2] purchases to meet a solar RPS is likely to be costly and ineffective. States therefore should encourage or require long-term REC contracting and/or provide up-front payments for small PV systems.
Both
[1] Analysis by Ryan Wiser,
[2] To comply with an RPS, suppliers often are allowed to obtain and use a renewable energy certificate, which represents the environmental benefits or attributes of one megawatt-hour of renewable electric generation.