NREL is a national laboratory of the U. S. Department of Energy, Office of Energy Efficiency

and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.

Renewable Portfolio Standards: 

Costs and Benefits

Presenter Lori Bird

Co Authors: J. Heeter (NREL), G. Barbose (LBNL), S. Weaver (LBNL), 

F. Flores (NREL), K.Kuskova-Burns (NREL), R. Wiser (LBNL) 

October 22, 2014

2014 Solar Power International

October 20 -23, 2014 • Las Vegas, Nevada

NREL/PO-6A20-62751

ABSTRACT

This report summarizes state-level RPS costs to date, and 

considers how those costs may evolve going forward given 

scheduled increases in RPS targets and cost containment 

mechanisms. The report also summarizes RPS benefits 

estimates, based on published studies for individual states and 

discusses key methodological considerations.

STUDY METHODOLOGY

Historical Cost Data Analysis: Basic 

Approach

• Our analysis focuses specifically on the incremental cost of 

meeting RPS targets.

• The report relies largely upon data or results reported 

directly by electric utilities and state regulators. 

• Key metrics include $/MWh of renewable energy procured 

and % of average retail rates. 

Basic Methodology

• Restructured Markets: Calculated costs based on 

renewable energy certificate (REC) and alternative 

compliance payment (ACP) prices and volumes for each 

resource tier.

• Regulated States: Synthesized cost estimates published by 

utilities and PUCs, based on the varying methods.

RPS BENEFITS

We identified studies for eight states that assessed the societal 

benefits or broader impacts of RPS policies.

ESTIMATED RPS COSTS RESEARCH SUMMARY AND KEY FINDINGS

-20%

-10%

0%

10%

20%

30%

40%

-4%

-2%

0%

2%

4%

6%

8%

CT

DC

DE

IL

MA

MD

ME

NH

NJ

NY

OH

PA

RI

TXAZ

CA

CO

MI

MN

MO

NC

NM

OR

WA

WI

Restructured Regulated

Estimated Incremental RPS Costs (Most-Recent Year)

RPS Target (Most-Recent Year)

RPS Target (Final Year)

Estimated RPS Cost 

(% of Average Retail Rates)

RPS Target 

(% of Retail Sales)

Estimated Incremental RPS Costs (% of Retail Rates)

Costs were generally <2% of retail 

rates (10 out of 14 states in 2012), 

with an average of 1.4% in 2012, 

but also varied significantly among 

states. Trends reflect REC pricing 

and mix of resource tiers along with 

differences in RPS target level, 

which explains the rising cost in 

most states, parallel to rising RPS 

targets.

-1%

0%

1%

2%

3%

4%

5%

6%

AZ

CO

MI

MN

MO

NC

NM

OR

WA

WI

2010 2011 2012

Estimated Incremental Cost of RPS* 

(Percent of Average Statewide Retail Electricity Rate)

0%

1%

2%

3%

4%

5%

6%

2010 2011 2012 2010 2011 2012 2011 2012

AZ CO NM

DG and/or Solar Set-Aside

General RPS Obligations Higher costs in Arizona, Colorado, 

and New Mexico due partly to 

solar/DG set-aside costs (right-hand 

chart) with front-loaded costs 

associated with rebates and 

performance based incentives.

Regulated States: % of Retail Rates

0%

1%

2%

3%

4%

5%

CT

DC

DE

IL

MA

MD

ME

NH

NJ

NY

OH

PA

RI

TX

Solar/DG Set-Aside

Main Tier

Secondary Tier(s)

Estimated Incremental Cost of RPS (2010-2012 Avg.)*

(Percent of Average Statewide Retail Electricity Rate) • Main tier requirements are the 

bulk of RPS compliance costs in 

most states.

• Exceptions in D.C. and New 

Jersey (high solar requirements 

and SREC prices) and 

Massachusetts and New 

Hampshire (high secondary tier 

REC prices).

• ACP costs generally minimal 

(reflecting adequate REC 

supply).

Solar Set-Aside Contribution to Costs Type of Benefit Estimated Values Estimation Method

Range

Estimate

$/MWh of

RE

States

with

Estimates

Emissions &

Human Health

• Avoided

emissions

• Human health

impact of

improved air

quality

• Electric sector

modeling (CT, OH,

DE, IL, NY)

• Displaced marginal

generator emissions

(ME)

$4‐23

CT, OH,

ME, DE,

IL, NY

Economic

Development

Benefits

• Job creation

• Direct facility

Investment

• Tax revenues

• Induced

spending

• Input‐output

models and  case

studies (IL, ME, MI,

OR)

• Economic modeling

(CT, NY)

$22‐30

CT, IL, ME,

MI, NY,

OR

Wholesale

Market Price

Suppression

• Depressed

wholesale

market prices

from displaced

dispatch stack

generators

• Dispatch modeling

scenarios with and

without Renewable

Energy

$2‐50

ME, MA,

IL, MI, NY,

OH

• A relatively small number of RPS benefits estimates have 

been developed and methodologies vary considerably.

• Comparing costs and benefits is challenging, given costs 

may already include specific benefits, analysis time periods 

may differ, benefits assessments may address only particular 

types of benefits are assessed.

• Incremental RPS compliance costs (‘10-12) average 1% 

retail electricity rates; Restructured markets estimates 

were $10 to $60/MWh and regulated markets estimates 

were ~$20/MWh or less.

• States commonly estimated RPS benefits associated with 

avoided emissions ($3-22/MWh renewable generation), 

economic development ($4-24/MWh), and wholesale 

electricity price suppression ($2-50/MWh).

• States with ongoing RPS cost assessment and 

standardization efforts might also be useful to other states 

(CA, DE, MN, OR, WA). 

CONCLUSIONS REPORT BY NREL & LBNL

Download report: 

http://www.nrel.gov/docs/fy14o

sti/61042.pdf

Support was provided by the 

U.S. DOE Office of Energy 

Efficiency and Renewable 

Energy’s (EERE) Strategic 

Programs Office, EERE’s 

Solar Energy Technologies 

Office, and the National 

Electricity Delivery Division of 

the DOE’s Office of Electricity 

Delivery and Energy 

Reliability.

Support was provided by the U.S. DOE Office of Energy Efficiency and Renewable Energy’s Solar Energy Technologies.

This presentation does not contain any proprietary, confidential, or otherwise restricted information.