ARenewable Portfolio Standard (RPS) 

provides states with a mechanism to 

increase renewable energy generation 

using a cost-effective, market-based approach 

that is administratively efficient. An RPS 

requires electric utilities and other retail 

electric providers to supply a specified 

minimum amount of customer load with 

electricity from eligible renewable energy 

sources. The goal of an RPS is to stimulate 

market and technology development so that, 

ultimately, renewable energy will be 

economically competitive with conventional 

forms of electric power. States create RPS 

programs because of the energy, 

environmental, and economic benefits of 

renewable energy and sometimes other clean 

energy approaches, such as energy efficiency 

and combined heat and power (CHP).1 

How Does a Renewable 

Portfolio Standard Encourage 

Clean Energy? 

An RPS creates market demand for renewable 

and clean energy supplies. Currently, states 

with RPS requirements mandate that between 

4 and 30 percent of electricity be generated 

from renewable sources by a specified date. 

While RPS requirements differ across states, 

there are generally three ways that electricity 

suppliers can comply with the RPS: 

Renewable Portfolio Standards 

An Effective Policy to Support Clean Energy Supply 

What Are the Benefits of a Renewable Portfolio Standard? 

The policy benefits of an RPS are the same as those from renewable energy and CHP: 

• Environmental improvement (e.g., avoided air pollution, global climate change mitigation, 

waste reduction, habitat preservation, conservation of valuable natural resources). 

• Increased diversity and security of energy supply. 

• Lower natural gas prices due to displacement of some gas-fired generation or a more 

efficient use of natural gas due to significantly increased fuel conversion efficiencies. 

• Reduced volatility of power prices, given stable or non-existent fuel costs for renewables. 

• Local economic development resulting from new jobs, taxes, and revenue associated 

with new renewable capacity. 

Because it is a market-based program, an RPS also has several operational benefits: 

Draft 

•	 Achieves policy objectives efficiently and at a relatively modest cost (ratepayer impacts 

range from less than 1 percent increases to 0.5 percent savings). 

•	 Spreads compliance costs among all customers. 

•	 Minimizes the need for ongoing government intervention. 

•	 Functions in both regulated and unregulated state electricity markets. 

•	 Provides a clear and long-term target for renewable energy generation that can increase 

investors’ and developers’ confidence in the prospects for renewable energy. 

1 CHP is the simultaneous generation of electric and thermal energy from a single fuel source. 

1 
•	 Owning a renewable energy facility and its output generation. 

•	 Purchasing Renewable Energy Certificates (RECs).2 

•	 Purchasing electricity from a renewable facility inclusive 

of all renewable attributes (sometimes called “bundled 

renewable electricity”). 

Which States Have Established 

Renewable Portfolio Standards? 

As of March 2009, RPS requirements or goals have been 

established in 33 states plus the District of Columbia (see 

Figure 1). Thirteen of these states include CHP or waste heat 

recovery as an eligible resource, and Arizona explicitly includes 

renewable fueled CHP systems. More than 2,300 megawatts 

(MW) of new renewable energy capacity through 2003 was 

attributable to RPS programs.3 As of February 2009, the Union 

of Concerned Scientists projects that state standards will 

provide support for 76,750 megawatts (MW) of new 

renewable power by 2025—an increase of 570 percent over 

total 1997 U.S. levels (excluding hydro).4 

Tremendous diversity exists among these states with 

respect to the minimum requirements of renewable 

energy, implementation timing, and eligible technologies 

and resources (see Figure 2). 

Figure 1. States With RPS Requirements 

States with RPS goals 

Source: Database of State Incentives for Renewable Energy (DSIRE) last accessed 

March 2009, www.dsireusa.org. 

What Are the Key Features of a 

Renewable Portfolio Standard? 

States have tailored their RPS requirements to satisfy 

particular policy objectives, electricity market characteristics, 

and renewable resource potential. Consequently, there is 

wide variation in RPS rules from state to state with regard 

to the minimum requirement of renewable energy, 

implementation timing, eligible technologies and resources, 

and other policy design details. The key features of effective 

RPS requirements are outlined in the following sections. 

Figure 2. State RPS Requirements
 

State 

Target 

(% of electric sales) 

Specific Provisions 

(% of electric sales) 

AZ 15% by 2025 4.5% by 2012 from distributed 

energy resources 

CA 20% by 2010 

CO 

IOUs 20% by 2020; electric 

cooperatives and municipal utilities 

10% by 2020 

IOUs: 0.4% solar by 2020 

CT 27% by 2020 4% Energy Efficiency and CHP 

by 2010 

DC 20% by 2020 0.4% solar by 2022 

DE 20% by 2019 2.005% solar by 2019 

HI 20% by 2020 

IA 105 MW by 2025 

IL 25% by 2025 18.75% wind by 2013 

MA 

Class I: 4% by 2009 (+1%/year after); 

Class II: 3.6% renewable, 3.5% waste 

energy by 2009; APS: 5% by 2020 

increasing by 0.25% each year after. 

Class II: 3.6% renewable, 3.5% 

waste energy by 2009 

MD 20% by 2022 2% solar by 2022 

ME 30% by 2000; 10% new by 2017 

MI 10% by 2015 

MN Xcel Energy (utility) 30% by 2020; 

other utilities 25% by 2025 Xcel Energy: 25% wind 

MO 15% by 2021 0.3% solar retail sales by 2021 

MT 15% by 2015 

ND ✰ 10% by 2015 

NH 23.8% by 2025 (16.3% new) 0.3% solar by 2025 

NJ 22.5% by 2021 2.12% from solar by 2021 

NM IOUs: 20% by 2020; rural electric 

cooperatives 10% by 2020 

Wind: 4%; solar: 4%; biomass 

and geothermal: 2%; 

distributed renewables: 3% by 

2020 (IOU only) 

NV 20% by 2015 1% solar by 2015 

NY 24% by 2013 0.154% customer-sited by 2013 

OH 25% by 2025 (12.5% renewable energy) 1% solar by 2025 

OR Large utilities (>3% state’s total 

electricity sales) 25% by 2025 

Smaller utilities 5-10% by 2025 

(depending on size) 

PA 18% by May 31, 2021 (8% renewable 

energy) 0.5% solar by 2025 

RI 16% by 2020 

SD ✰ 10% by 2015 

TX 5,880 MW by 2015 At least 500 MW from 

renewables other than wind 

UT ✰ 20% by 2025 

VA ✰ 12% of 2007 sales by 2022 

VT ✰ 

20% by 2017; Total incremental energy 

growth between 2005-2012 to be met 

with new renewables (10% cap) 

WA 15% by 2020 

WI 10% by December, 31 2015 

✰States with RPS goals, not mandatory requirements. 

Source: Database of State Incentives for Renewable Energy (DSIRE), accessed 

March 2009. 

2 A REC is a tradable right to claim the environmental and other attributes associated with 1 megawatt-hour of renewable electricity from a specific generation facility. 

3 Petersick, T. State Renewable Energy Requirements and Goals (2004), Status through 2003. U.S. EIA, www.eia.doe.gov/oiaf/analysispaper/rps/index.html. 

4 UCS. Renewable Electricity Standards at Work in the States (February 2009). http://www.ucsusa.org/assets/documents/clean_energy/RES_in_the_States_Update.pdf 

2 
Figure 3. Eligible Technologies Under 

State RPS Requirements Biofuels Biomass CHP/Waste Heat Energy Efficiency Fuel Cells‡ Geothermal Hydro Landfill Gas Municipal Waste Ocean Thermal

PhotovoltaicsSolar ThermalElectricTidalWaste TireWaveWind 

AZ ● ● ●* ● ● ● ● ● ●

CA ● ● ● ● ● ● ● ● ● ● ● ●

CO ● ● ● ● ● ● ● ●

CT ● ● ● ● ● ● ● ● ● ● ● ● ● ●

DE ● ● ● ● ● ● ● ● ● ● ●

DC ● ● ● ● ● ● ● ● ● ● ● ●

HI ● ● ● ● ● ● ● ● ● ● ● ● ● ●

IA ● ● ● ● ● ● ●

IL ● ● ● ● ● ● ● ●

MA ● ● ● ● ● ● ● ● ● ● ● ● ●

MD ● ● ● ● ● ● ● ● ● ● ● ●

ME ● ● ● ● ● ● ● ● ● ● ●

MI ● ● ● ● ● ● ● ● ● ● ● ● ●

MN ● ● ●** ● ● ● ● ● ●

MO ● ● ● ● ● ● ● ● ●

MT ● ● ● ● ● ● ● ●

NC ● ● ● ● ● ● ● ● ● ● ● ●

ND✰ ● ● ● ● ● ● ● ● ●

NH ● ● ● ● ● ● ● ● ● ● ● ● ●

NJ ● ● ● ● ● ● ● ● ● ● ● ●

NM ● ● ● ● ● ● ● ●

NV ● ● ● ● ● ● ● ● ● ● ● ●

NY ● ● ● ● ● ● ● ● ● ●

OH ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●

OR ● ● ● ● ● ● ● ● ● ● ● ● ●

PA ● ● ● ● ● ● ● ● ● ● ● ●

RI ● ● ● ● ● ● ● ● ● ● ●

SD✰ ● ● ● ● ● ● ● ● ● ● ● ● ●

TX ● ● ● ● ● ● ● ● ● ● ●

UT✰ ● ● ● ● ● ● ● ● ● ● ● ●

VA✰ ● ● ● ● ● ● ● ● ● ● ●

VT✰ ● ● ● ● ● ● ● ●

WA ● ● ● ● ● ● ● ● ● ● ● ● ●

WI ● ● ● ● ● ● ● ● ● ●

Goals and Objectives. To produce the best RPS design for the 

state, it is important to articulate goals and objectives early in the 

process. Clear goals serve as a guide for design choices and avoid 

protracted rule implementation debate. There can be multiple goals 

for an RPS, and some states aim for a broader set of objectives 

than others. Examples of broader goals and objectives include local, 

regional, or global environmental benefits; local economic 

development goals; hedging fossil fuel price risks; and advancing 

specific technologies. 

Applicability. RPS requirements are most commonly applied to 

investor-owned utilities and electric service providers. It is unusual for 

mandatory RPS requirements to extend to municipal utilities and 

cooperatives, as these entities are predominately self-regulated. 

However, some states have included provisions for municipal utilities 

and cooperatives to voluntarily join the RPS program or to “self 

certify.” 

Eligibility. States are finding that defining which energy resources 

and technologies qualify as eligible under RPS requirements (see 

Figure 3) can be a complex process. Eligibility usually depends on 

whether or not an energy resource or technology supports the goals 

and objectives established for the RPS. Issues that states typically 

have considered include: 

•	 What fuel sources and technologies are eligible? 

•	 Do existing renewable sources count toward compliance? 

•	 What geographic areas are eligible (e.g., generation within the 

state boundary or within a regional power pool)? 

• Are central and customer-sited systems treated differently? 

Structure. The structure of an RPS can influence investor 

confidence, the ability of markets to develop, and opportunities for 

project developers and investors to recover capital investments. 

The critical structural elements include: 

•	 Method of accounting for renewable energy (e.g., energy production 

versus installed capacity requirements; RECs or bundled energy 

only). 

•	 Time horizons for compliance periods. 

•	 Mandatory or voluntary participation. 

•	 Flexible compliance mechanisms to guard against high prices 

or the lack of supply of renewable energy (e.g., credit for early 

compliance, forward compliance banking, deficit banking, 

establishment of true-up periods, alternative compliance 

payments). 

•	 Coordination with other energy policies at the federal level (e.g., 

Federal Production Tax Credit) and state level (e.g., system benefit 

charges, interconnection standards). 

✰States with RPS goals not mandatory requirements.
 

*Renewable CHP systems are eligible; fossil-fueled CHP systems are not eligible.
 

‡Includes only those states that allow fuel cells using nonrenewable energy sources of
 

hydrogen. Some states allow only renewable fuel cells (Arizona, California, Colorado,
 

Delaware, Massachusetts, Maryland, Missouri, New Mexico, New York, Rhode Island,
 

South Dakota, Utah, Wisconsin) as eligible technologies. 


Source: Database of State Incentives for Renewable Energy (DSIRE), accessed March
 

2009.
 

3 
•	 Cost recovery mechanisms for utilities. 

•	 Enforcement mechanisms for noncompliance. 

•	 The incorporation of “technology tiers” and/or “credit 

multipliers” to encourage particular technologies (e.g., 

solar photovoltaic). 

Elements of a Successful Policy 

Based on the experiences of states that have instituted an 

RPS, a number of best practices have emerged for 

designing and implementing an effective RPS. These best 

practices include: 

•	 Develop broad support for an RPS, including top-level 

support of the governor and/or legislature. 

•	 Hold facilitated discussions among key stakeholders 

regarding appropriate RPS design. Key stakeholders include: 

•	 State legislatures. 

•	 Public utility commissions. 

•	 Electric utilities and competitive electric service providers. 

•	 Developers of CHP and renewable energy systems. 

•	 Other stakeholders such as state and local 

government officials, environmental organizations, 

ratepayer advocates, and labor unions. 

•	 Clearly articulate all RPS goals and objectives because 

these will drive RPS rules and structure. 

•	 Specify which renewable energy technologies and 

resources will be eligible, driven by the stated goals and 

objectives. Also, consider state and regional resource 

availability if a goal is to encourage resource diversity 

through a technology tier. 

•	 Determine the mix and amount of renewable energy desired. 

Careful analysis and modeling of the expected impacts prior 

to establishing the targets are the keys to success. 

•	 Consider using energy generation (not installed 

capacity) as a target; establish a long timeline to 

encourage private investment; make compliance 

mandatory for all retail sellers; allow utility cost 

recovery; and establish cost caps. 

•	 Consider adopting (or improving) net metering and 

interconnection standards to facilitate customer-sited 

clean DG projects that might be eligible technologies 

under an RPS. 

•	 Establish a transparent and easy-to-use accounting 

system for compliance. 

•	 Make sure a credible noncompliance mechanism is in 

place in the form of penalties, but provide retail 

suppliers with some flexibility in their compliance. 

•	 Select the most appropriate lead agency or organization 

to implement the RPS. 

•	 Conduct a mid-course performance review, identify the 

reasons for any delay in meeting targets, and enact 

program modifications as needed to meet the original 

intent of the RPS. 

EPA Assistance Available 

The U.S. Environmental Protection Agency (EPA) CHP 

Partnership is a voluntary program that seeks to reduce the 

environmental impact of power generation by promoting 

the use of cost-effective CHP. The partnership helps states 

identify opportunities for policy developments (energy, 

environmental, economic) to encourage energy efficiency 

through CHP. The partnership can provide information and 

assistance to states considering including CHP or waste heat 

recovery in their RPS requirements. See www.epa.gov/chp. 

The EPA Green Power Partnership provides assistance to 

renewable generators in marketing RECs and helps educate 

potential REC buyers about resources. The partnership may 

be of assistance to states that employ RECs as a 

compliance measure for their RPS requirements but also 

allow for purchase and retirement of RECs for organizational 

“green power” designation. See www.epa.gov/greenpower. 

Additional Resources 

EPA has created The Clean Energy-Environment Guide to 

Action. The guide provides an overview of clean energy 

supply technology options and, in addition to RPSs, 

presents a range of policies that states have adopted to 

encourage continued growth of clean energy technologies 

and energy efficiency. The guide is available at 

www.epa.gov/cleanenergy/documents/gta/guide_action_full.pdf 

The Database of State Incentives for Renewable Energy 

(DSIRE) is a comprehensive source of information on 

state, local, utility, and selected federal incentives that 

promote renewable energy. See www.dsireusa.org. The 

National Association of Regulatory Utility Commissioners’ 

report, The Renewable Portfolio Standard: A Practical 

Guide, provides detailed guidance on designing and 

implementing an RPS. See www.naruc.org. 

For more information, contact: 

Claudia Tighe

U.S. Environmental Protection Agency 

Phone: (202) 343-9920

e-mail: tighe.claudia@epa.gov 

Last updated April 2009 4