Technical Report NREL/TP-6A20-65507

January 2016

Sadie Cox and Sean Esterly

National Renewable Energy Laboratory

Renewable 

Electricity 

Standards:

Good Practices and 

Design Considerations

A CLEAN ENERGY REGULATORS INITIATIVE REPORT
Renewable Electricity 

Standards:

Good Practices and Design 

Considerations

Sadie Cox and Sean Esterly

National Renewable Energy Laboratory

Technical Report NREL/TP-6A20-65507

January 2016
NOTICE

This manuscript has been authored by employees of the Alliance for Sustainable Energy, LLC 

(“Alliance”) under Contract No. DE-AC36-08GO28308 with the U.S. Department of Energy (“DOE”).

This report was prepared as an account of work sponsored by an agency of the United States 

government. Neither the United States government nor any agency thereof, nor any of their employees, 

makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, 

completeness, or usefulness of any information, apparatus, product, or process disclosed, or 

represents that its use would not infringe privately owned rights. Reference herein to any specific

commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does 

not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States 

government or any agency thereof. The views and opinions of authors expressed herein do not 

necessarily state or reflect those of the United States government or any agency thereof.
iii

Acknowledgments

The authors would like to thank Ron Benioff, Jenny Heeter, Victoria Healey, Jaquelin Cochran, 

Jeffrey Logan, David Mooney, and Terri Walters of the National Renewable Energy Laboratory, and 

Ian Lloyd of the U.S. Department of Energy for their review and insights. All information and any 

omissions are the responsibility of the authors, not the reviewers.
iv

Table of Contents

Introduction................................................................................................................................................... 1

Policy Design and Good Practices................................................................................................................... 2

Conducting Technical and Economic Analysis to Inform Policy Design .............................................. 2

Identifying Eligible Resources and Technologies.................................................................................. 2

Setting RES Requirements..................................................................................................................... 2

Clearly Defining the Standard................................................................................................................ 3

Establishing a Compliance Mechanism and Cost Control Provision..................................................... 3

Designing a Tradable Renewable Energy Credits (RECs) System........................................................ 4

Combining RESs with Other Actions to Ensure a Robust and Effective Policy Environment.............. 5

Conclusion ..................................................................................................................................................... 6

References...................................................................................................................................................... 7

Appendix. Additional Support and Resources................................................................................................ 9

List of Text Boxes

Text Box 1. RESs in Place ..................................................................................................................... 1

Text Box 2. Chile: Increasing Targets over Time to Support a Long-term Vision for Solar 

Deployment...................................................................................................................................... 2

Text Box 3. South Korea: Assessing Policy to Support Cost-effective Outcomes................................ 3

Text Box 4. United States: Designing an RES to Meet Specific Subnational Needs and Goals............ 4
1

Introduction

In widespread use globally, renewable electricity standards are one of the most widely adopted 

renewable energy policies and a critical regulatory vehicle to accelerate renewable energy 

deployment (REN21 2015). As of 2014, 98 national and subnational governments had adopted RESs 

or similar renewable energy quota policies, a nearly ninefold increase from 2004 (REN21 2015). 

Also, several countries revised their standards in 2013 to align with evolving economic and market 

conditions. Clear, ambitious, and achievable RESs have been critical in driving global renewable 

energy market growth and investment (Brown and Muller 2011). This policy brief provides an 

introduction to key RES design elements, lessons from 

country experience, and support resources to enable more 

detailed and country-specific RES policy design.

Renewable electricity standards are regulatory mandates that 

require a specified amount of electricity that is sold or 

generated within a given area to come from eligible 

renewable resources. Renewable electricity standards can be 

established at the national or subnational level (For example, 

India—see ireeed.gov.in.), and can be designed as a part of 

broader annual or multi-year plans, or as stand-alone 

mandates. In many cases, RESs are ramped up over time, 

allowing for steady progression to a final goal. Electricity 

suppliers can typically comply with an RES by:

• Owning a renewable energy facility and its output 

generation

• Purchasing renewable energy certificates (a REC is a tradable right to claim the 

environmental and other attributes associated with one megawatt-hour of renewable 

electricity from a specific generation facility) or guarantees of origin

• Purchasing electricity from a renewable facility inclusive of all renewable attributes 

(sometimes called bundled renewable electricity) (EPA 2015).

Legislative mandates for RESs often include defined penalties for non-complying entities. This 

process places the burden of procuring renewable power on the electric buyers, often utilities, and it 

may define a process through which funds to procure renewable electricity are recovered (NREL 

2015). Given these enforcement mechanisms, RESs are often more effective at driving deployment 

than voluntary renewable energy targets or goals (WRI/WWF 2013).

Building on government experience developing and implementing RESs, several key policy design 

elements and good practices have emerged. Each of these design elements, described below, should 

be considered as flexible and within the context of specific needs of a country or jurisdiction.

Text Box 1. RESs in Place

California, United States

33% by 2020

50% by 2030

India

17% by 2017

Nova Scotia, Canada

25% by 2015

Republic of Korea

10% by 2020

Romania

20% by 2020

Source: IEA 2015a and DSIRE
2

Policy Design and Good Practices

Conducting Technical and Economic Analysis to Inform Policy Design

Setting specific RES requirements involves complex consideration of resource availability and 

technology market conditions within the context of broader economic, social, and environmental 

development goals. To set an appropriate RES and ensure achievability, it is important to assess:

• Availability of supply using geospatial and 

resource assessments

• Cost estimates

• Siting considerations

• Transmission and distribution requirements and 

renewable energy access provisions

• Other policies at the national and subnational 

level.

Analysis can also support consideration of the relative 

contributions of central and distributed generation and 

various geographic areas in relation to meeting the RES. 

Assessing possible social, economic, and environmental 

impacts of various RES options is also critical to ensuring 

broader development goals are achieved (WRI/WWF 

2013).

Identifying Eligible Resources and 

Technologies

In the absence of specific provisions, RESs will typically support the development of renewable 

energy technologies with the lowest project development costs. Policymakers can, therefore, identify 

technologies that may require targeted support to align with certain policy goals (EPA 2015). Based 

on this assessment, “set-asides” or “carve-outs” can be used to provide specific mandates for certain 

technologies or resources such as solar. On the other hand, policymakers may also choose to exclude 

certain well-established renewable energy technologies, such as large-scale hydropower. Based on 

these considerations, eligibility of technologies and resources can be well defined within an RES 

(NREL 2015; Leon 2012).

Setting RES Requirements

Using the technical and economic analysis described above, policymakers can set specific RES 

targets appropriate for their circumstances, balancing the economic costs of increasing renewable 

energy use against the societal benefits, such as supporting local economic development and 

reducing greenhouse gas emissions. Renewable electricity standard are normally defined as a 

percentage of generation, a specified installed capacity or a combination of each, and they can be 

ramped up over time to allow the market to expand gradually yet ensure entities are meeting interim 

steps towards compliance. Effective RES targets send a stable policy signal, avoiding unpredictable 

shifts, and support long-term finance through contractual agreements rather than relying solely on 

shorter-term REC markets described below. However, length of program does not ensure that 

procurement will not occur on a short-term basis (NREL 2015).

Text Box 2. Chile: Increasing 

Targets over Time to Support 

a Long-term Vision for Solar 

Deployment

In 2008, Chile enacted the NonConventional Renewable Energy 

Law requiring electricity providers to 

use renewable energy, including PV 

and CSP, for 5% of total generation 

from 2010 to 2014. Beginning in 

2015, the requirement will increase 

by 0.5% each year through 2024, 

with monthly fees levied for noncompliance. These targets support 

Chile’s overall vision for solar 

deployment and send a consistent 

and long-term policy signal (IEA 

2015b). 
3

Stakeholder engagement processes can be used 

to bring together government, industry and 

communities to discuss critical issues and 

opportunities that can inform goal setting. 

Effective processes are inclusive of diverse 

perspectives and include regular opportunities 

for provision of feedback to support policy 

refinement and achievement of goals over the 

long term (WRI/WWF 2013).

Clearly Defining the Standard

Renewable electricity standards vary in 

definition, often linked to either installed 

power plant capacity or total electricity 

generated (or sold). These definitions greatly 

impact policy outcomes. For example, an RES 

requiring 20% of installed power plant capacity 

to come from renewables can have much 

different outcomes than an RES requiring 20% 

of total electricity generation (or sales) to be 

met with renewables. The latter will result in 

greater support for renewables. This is true 

because solar and wind technologies depend on variable resources, and while their “rated” power 

plant capacity (in megawatts) may be the same as a conventional power plant, the overall power 

output (in kilowatt-hours) will be much lower on an annual basis. Therefore, defining the standard in 

relation to total renewable energy generated (or sold) will lead to greater renewable energy 

deployment.

Establishing a Compliance Mechanism and Cost Control Provision

Effectively designed RES also include compliance mechanisms and ensure that compliance costs are 

fairly allocated across electricity customers (NREL 2015). Entities can comply with the RES by 

purchasing electricity generation through long-term contracts or on the spot market (Philibert 2011), 

buying renewable energy certificates (described below), or paying a fine called an alternative 

compliance payment (ACP) (Brown and Muller 2011); Typically levied based on shortage of 

megawatt-hours in meeting the RES requirement or specific solar set aside (Hurlbut 2008). 

Alternative compliance payments may also differ by technology and generation start date. For 

instance, in Massachusetts, the broadest ACP for various renewable energy sources is 67 USD per 

megawatt-hour (MWh). However, to incentivize certain technologies and generation facilities, 

Massachusetts also designed tailored ACPs for solar PV installations, under the solar set-aside 

program, set at 375 USD per MWh, and for generation sources that began operation before 1998 set 

at 27 USD per MWh (Commonwealth of Massachusetts 2015).

An ACP also serves as a cost control mechanism (Brown and Muller 2011), as entities can choose 

not to meet the RES if the cost of doing so is higher than the cost of the ACP. Proper design can 

minimize costs and ratepayer impacts if the availability of affordable renewable energy becomes 

restricted. Policymakers can set the ACP at a level sufficiently above the expected compliance costs 

to motivate entities to comply rather than simply pay the ACP. However, the ACP should not be set 

at a level that could have significant economic impacts if compliance costs become higher than 

Text Box 3. South Korea: Assessing Policy 

to Support Cost-effective Outcomes

The Republic of South Korea adopted an RES to 

support 10% renewable energy generation by 2020. 

In partnership with the Clean Energy Solutions 

Center, the Korea Electric Power Corporation 

(KEPCO) assessed actions to successfully meet and 

exceed the renewable energy requirements 

associated with the country’s recently implemented 

national RES. Key design elements of the RES 

include differentiation of targets by technology, 

including a solar set-aside, and establishment of a 

robust REC system and non-compliance mechanism. 

The assessment focused on actions to meet the 

standard’s percentage requirements overall (10% 

renewable electricity by 2020), as well as a mandate 

to produce a set percentage of renewable electricity 

within the country. Ultimately, the partnership and 

assessment sought to support cost-effective 

achievement of the RES for both the utility and its 

customers. For more information, see Clean Energy 

Solutions Center (2015).
4

anticipated. Policymakers can balance cost of compliance against the overall benefit of compliance 

(e.g., local economic growth) (Hurlbut 2008). ACP levels can also be varied over time in relation to 

decreasing technology costs (Hamrin 2014). Costs and benefits associated with ACPs will be unique 

to various national and subnational circumstances. 

Finally, it is important to establish and provide clear, well-defined guidance on compliance to 

participating entities, design a robust accounting and monitoring system, and develop a plan for 

redistributing compliance payments, such as a renewable energy fund to support other renewable 

energy initiatives (WRI 2013; Wiser et al. 2010). 

Designing a Tradable 

Renewable Energy Credits 

(RECs) System

Renewable Energy Credit (REC): The 

environmental attributes associated 

with one megawatt-hour MWh of 

electricity production. RECs can be 

traded, bought and sold separately from 

commodity electricity.

Policymakers can consider developing a 

REC system to support a market-based 

and flexible approach for RES 

compliance. RECs are typically defined 

as the environmental attributes of one 

MWh of renewable energy generation 

(RECs can be bundled with the 

electricity generation itself or 

unbundled and sold separately, with one 

entity purchasing the electricity 

generation itself and the other 

purchasing the renewable characteristic 

of the generation [Brown and Muller 

2011]). And, in many cases, RES 

compliance is demonstrated by the use 

of RECs. RECs can be bundled with the electricity generation itself or unbundled and sold 

separately, with one entity purchasing the electricity generation itself and the other purchasing the 

renewable characteristic of the generation (Brown and Muller 2011). Using unbundled RECs can 

reduce costs associated with RES compliance, as renewable resources can be sited in areas with the 

highest resource. Using RECs as a way to prove compliance may also lower administration and 

verification costs (Hurlbut 2008; Leon 2012; Heeter et al. 2014). Effectively designed REC systems 

support robust, accurate, and efficient tracking and accounting of renewable energy generation 

(NREL 2015).

Text Box 4. United States: Designing an RES 

to Meet Specific Subnational Needs and 

Goals

As of March 2015, 29 U.S. states and Washington, 

DC had adopted an RES (DSIRE 2015). Specific 

state-level goals and needs provide the foundation 

for RES design and inform procurement targets, 

timetables, and renewable sources targeted for 

incentives. For example, New Jersey established a 

goal to support solar deployment, and thus designed 

a solar set-aside requiring 4.1 percent of generation 

from solar technologies. The state also established a 

solar REC trading program, and it enforces a specific 

solar alternative compliance payment. In alignment 

with the state’s broader policy goal to develop a 

“model” program and become a leader in integrated 

solar development, these policy design elements 

have driven substantial solar deployment in New 

Jersey. This case highlights the need to tailor 

policies in relation to specific contextual goals and 

circumstances. For more information, see NREL 

(2015) and New Jersey Clean Energy Program 

(2015).
5

Combining RESs with Other Actions to Ensure a Robust and Effective 

Policy Environment

Renewable electricity standards are often developed as one element of broader renewable energy 

policy packages that can include other critical elements such as provisions to ensure renewable 

energy grid access, establishment of project finance support mechanisms (e.g., power purchase 

agreements), and the design of complementary policies (e.g., feed-in-tariffs, tax incentives, and net 

metering). Renewable electricity standards can also work in conjunction with climate policies, such 

as carbon cap and trade systems (Bird et al. 2010). Evaluating interactions across policies is also 

critical and can be supported by some resources highlighted below. Developing robust renewable 

energy support packages can help both ensure long-term sustainable outcomes and achieve broader 

policy goals. For instance, in the United States, combining RESs with federal production tax credits 

has supported a broader enabling environment for renewable energy in several states (NREL 2015).
6

Conclusion

Renewable electricity standards continue to be a crucial policy instrument to support scaled-up 

renewable energy deployment and broader development goals. Ultimately, policy development will 

unfold differently in each national or subnational context, but policymakers can draw from key 

policy design elements, international lessons, and good practices highlighted in this brief to develop 

policies unique to their national and subnational circumstances.
7

References

Bird, Lori, Caroline Chapman, Jeff Logan, Jenny Sumner, and Walter Short. 2010. Evaluating 

Renewable Portfolio Standards and Carbon Cap Scenarios in the U.S. Electric Sector. Golden, 

CO: National Renewable Energy Laboratory. http://www.nrel.gov/docs/fy10osti/48258.pdf.

Brown, Adam, and Simon Muller. 2011. Deploying Renewables 2011: Best and Future Policy 

Best Practice. Paris, France: International Energy Agency. 

http://www.iea.org/publications/freepublications/publication/Deploying_Renewables2011.pdf. 

Clean Energy Solutions Center. 2015. “Assistance Focus: Asia/Pacific Region.” 

http://www.nrel.gov/docs/fy15osti/64261.pdf. 

Commonwealth of Massachusetts. 2015. “Alternative Compliance Payment Rates.” Accessed 

June 15. http://www.mass.gov/eea/energy-utilities-clean-tech/renewable-energy/rps-aps/retailelectric-supplier-compliance/alternative-compliance-payment-rates.html.

DSIRE (Database of State Incentives for Renewables & Efficiency). 2015. “Database of State 

Incentives for Renewables & Efficiency.” http://www.dsireusa.org/. 

EPA (U.S. Environmental Protection Agency). 2015. “AgSTAR: Biogas Recovery in the 

Agriculture Sector.” Last modified October 1. http://www2.epa.gov/agstar. 

Hamrin, Jan. 2014. REC Definitions and Tracking Mechanisms Used by State RPS Programs. 

Montpelier, VT: Clean Energy States Alliance. http://www.cesa.org/assets/2014-Files/RECsAttribute-Definitions-Hamrin-June-2014.pdf.

Heeter, Jenny. Kathy Belyeu, and Ksenia Kuskova-Burns. 2014. Status and Trends in the U.S. 

Voluntary Green Power Market (2013 Data). Golden, CO: National Renewable Energy 

Laboratory. http://www.nrel.gov/docs/fy15osti/63052.pdf.

Hurlbut, David. 2008. State Clean Energy Practices: Renewable Portfolio Standards. Golden, 

CO: National Renewable Energy Laboratory. 

http://www.nrel.gov/tech_deployment/state_local_governments/pdfs/43512.pdf.

IEA (International Energy Agency). 2015a. “Policies and Measures Database.” Accessed May 

15. http://www.iea.org/policiesandmeasures/. 

———. 2015b. “Non-conventional renewable energy law (Law 20.257).” Last modified January 

15. http://www.iea.org/policiesandmeasures/pams/chile/name-24577-en.php. 

Leon, Warren. 2012. Designing the Right RPS: A Guide to Selecting Goals and Program 

Options for a Renewable Portfolio Standard. Clean States Energy Alliance and National 

Association of Regulatory Utility Commissioners. http://www.cesa.org/assets/2012-

Files/RPS/CESA-RPS-Goals-and-Program-Design-Report-March-2012.pdf.
8

New Jersey’s Clean Energy Program. 2015. “Solar Market FAQs.” Accessed November 30. 

http://www.njcleanenergy.com/renewable-energy/program-updates-and-backgroundinformation/solar-transition/solar-market-faqs/. 

NREL (National Renewable Energy Laboratory). 2015. “Renewable Portfolio Standards.” Last 

modified July 7. http://www.nrel.gov/tech_deployment/state_

local_governments/basics_portfolio_standards.html. 

Philibert, Cédric. 2011. Solar Energy Perspectives. Paris: International Energy Agency. 

http://www.iea.org/publications/freepublications/publication/

Solar_Energy_Perspectives2011.pdf. 

REN 21 (Renewable Energy Policy Network for the 21st Century). 2015. Renewables 2014: 

Global Status Report. Paris: REN 21. http://www.ren21.net/status-of-renewables/global-statusreport/. 

Wiser, Ryan, Galen Barbose, and Edward Holt. 2010. Supporting Solar Power in Renewables 

Portfolio Standards: Experience from the United States. Berkeley, CA: Lawrence Berkeley 

National Laboratory. 

http://www.scstatehouse.gov/committeeinfo/EnergyAdvisoryCouncil/AdditionalComments/Solar

RPSBNL.102510.AndrewStreit.pdf.

WRI (World Resources Institute) and WWF (World Wildlife Fund). 2013. Meeting Renewable 

Energy Targets: Global Lessons from the Road to Implementation. Gland, Switzerland: WWF 

International. http://awsassets.panda.org/downloads/meeting

_renewable_energy_targets__low_res_.pdf. 
9

Appendix. Additional Support and Resources

Targeted technical assistance regarding the design and implementation of renewable energy 

policies is provided by: 

• Clean Energy Solutions Center Ask an Expert—The Solutions Center Ask an Expert service 

is available at no cost to government agency representatives from any country and the 

technical institutes assisting them. If your request qualifies for assistance, you will be 

matched with the Solutions Center expert who is most qualified to help you, for up to 40 

hours of assistance. For more information, see cleanenergysolutions.org/expert.

• Climate Technology Center & Network (CTCN)—Climate Technology Center & Network 

(CTCN)—The CTCN provides technical assistance in response to requests submitted by 

developing countries via their National Designated Entities (NDEs). Upon receipt of such 

requests, the CTC quickly mobilizes its global Network of climate technology experts to 

design and deliver a customized solution tailored to local needs. The CTCN does not provide 

funding directly to countries, but instead supports the provision of technical assistance 

provided by experts on specific climate technology sectors. For more information, see ctcn.org/technical-assistance. 

Additional resources—including good practice resources and publications, policy examples and 

databases, webinars and training resources, and a glossary—are available at 

cleanenergysolutions.org/policy-briefs/res/resources.