A national laboratory of the U.S. Department of Energy

Office of Energy Efficiency & Renewable Energy

National Renewable Energy Laboratory 

Innovation for Our Energy Future 

State Clean Energy Practices: 

Renewable Portfolio Standards 

David Hurlbut 

Technical Report 

NREL/TP-670-43512 

July 2008 

NREL is operated by Midwest Research Institute ● Battelle Contract No. DE-AC36-99-GO10337 
State Clean Energy Practices: 

Renewable Portfolio Standards 

David Hurlbut 

Prepared under Task No. IGST.8300 

Technical Report 

NREL/TP-670-43512 

July 2008 

National Renewable Energy Laboratory

1617 Cole Boulevard, Golden, Colorado 80401-3393 

303-275-3000 • www.nrel.gov 

Operated for the U.S. Department of Energy 

Office of Energy Efficiency and Renewable Energy 

by Midwest Research Institute • Battelle 

Contract No. DE-AC36-99-GO10337
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Table of Contents 

SCEPA Project Background ....................................................................................................................... 1 

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

Effects on Policy Drivers ............................................................................................................................ 2

Current Status and State Experience ........................................................................................................ 3

Ideal Applications for an RPS....................................................................................................3 

Key Elements of a Successful RPS ............................................................................................4 

Complementary Policies to an RPS ...........................................................................................5 

Alternatives to an RPS: State Transmission Authorities ...........................................................6 

Quantitative Metrics of RPS Impacts ......................................................................................................... 6

Trends in Selected RPS States ...................................................................................................9 

Regional Outcomes ..................................................................................................................11 

Other Early RPS States ............................................................................................................12 

Conclusions ............................................................................................................................................... 14

References ................................................................................................................................................. 15 

 i
 1

SCEPA Project Background 

The State Clean Energy Policies Analysis (SCEPA) project is supported by the Weatherization 

and Intergovernmental Program within the Department of Energy’s Office of Energy Efficiency 

and Renewable Energy. This project seeks to quantify the impacts of existing state policies, and 

to identify crucial policy attributes and their potential applicability to other states. The goal is to 

assist states in determining which clean energy policies or policy portfolios will best accomplish 

their environmental, economic, and security goals. Experts from the National Renewable Energy 

Laboratory (NREL) and Interenergy Solutions are implementing this work, with state officials 

and policy experts providing extensive input and review. This report focuses on renewable 

portfolio standard (RPS) policies, which are being analyzed as part of this project. For more 

information on the SCEPA project, access NREL’s Applying Technologies Web site at 

http://www.nrel.gov/applying_technologies/scepa.html. 

Introduction 

A renewable portfolio standard (RPS) is a mandate to increase the use of wind, solar, biomass, 

and other alternatives to fossil and nuclear electric generation. This paper provides a summary of 

the policy objectives that commonly drive the establishment of an RPS, the key issues that states 

have encountered in implementing an RPS, and the strategies that some of the leading states have 

followed to address implementation challenges. The factors that help an RPS function best 

generally have been explored in other analyses (for example, Cory and Swezey 2007; Wiser and 

Barbose 2008). This study complements others by comparing empirical outcomes (i.e., which 

RPS programs appear to correlate with the greatest renewable capacity growth), and identifying 

the policies that appear to have the greatest impact on results. 

An important overall insight suggested by initial outcomes is that an RPS is not a stand-alone 

policy. State experience indicates that results depend on complementary policies, especially 

those relating to transmission. States with an RPS that have significantly increased use of 

renewable resources either have available transmission, or have developed strategies to build it. 

Similarly, some states that have not significantly increased renewable capacity despite having an 

RPS for several years have identified inadequate transmission as one of the main contributing 

factors. 

The following sections summarize issues common to many RPS programs. Because state 

circumstances vary, the relative importance of each factor differs among states; but certain key 

issues tend to be consistently present in some form. After the general overview, the analysis 

looks at selected metrics for electric generation from 2001 to 2007, identifying RPS states where 

use of renewable energy resources has increased significantly, and groups of states where RPS 

outcomes suggest significant regional dynamics. 

The paper then examines the key factors that seem to affect outcomes for states that have had an 

RPS long enough for results to be evident. The aim is not to review all aspects of RPS design in 

these states, nor to identify a universal recipe for a successful program. Instead, the focus is on 

the most critical issues faced by pioneer states and what these states did to address those issues. 

The intent is to extract practical lessons that may assist other states that are considering, or are in 

the midst of implementing, RPS programs of their own. 
Effects on Policy Drivers 

The main policy drivers behind an RPS include environmental enhancement, economic 

development, and greater energy security (by way of reduced reliance on price-volatile electricgeneration fuels such as natural gas). Program design—particularly the eligibility of out-of-state 

resources, and policies to expand voluntary green power offerings—can affect the relative 

importance of some of these drivers. Table 1 summarizes the theoretical effect of an RPS on 

various energy-related policy drivers. 

Table 1. RPS Effects on State Policy Drivers 

Economic Environmental 

Energy 

Security and 

Fuel Diversity

Value of 

Industry 

Net 

Job 

Gain 

GSP 

Growth 

Purchase Power Local Air 

Quality 

Global 

Air 

Quality 

Water 

Quality 

Land Use 

Impacts 

Imports 

Offset 

Fuel 

Diversity 

High 

(if out-of-state RE not 

eligible) 

Medium 

(if out-of-state RE 

eligible)

Medium 

Low (if least-cost 

resources are out of 

state and out-ofstate RE not eligible)

High 

(with green power)

Medium (without 

green power) 

Higher if coal, oil 

have large share of

fuel mix

Medium Medium Low High 

Reliably quantifying how much an RPS affects these drivers is problematic, however. Progress is 

not simply a function of implementing an RPS; ultimately, it’s measured by whether the policy 

puts more renewable energy capacity on the grid. Even when a state’s renewable energy capacity 

base increases, it may be incorrect to attribute all of a state’s renewable energy growth solely to 

the existence of an RPS without accounting for interactions with other policies. Indeed, a number 

of states without an RPS have added considerable amounts of renewable capacity, outpacing 

some states that have had an RPS for years. 

Assuming that an RPS works as intended, the economic development benefits can vary by state 

depending on how property taxes, income taxes, and excise taxes figure into the state’s fiscal 

mix.1

 The U.S. Department of Energy and NREL, through the Wind Powering America program, 

have published economic development studies for 12 states, examining the potential local 

benefits of renewable energy development (Wind Powering America 2008). A study of 

 

1

 A comprehensive assessment was beyond the scope of this analysis, but anecdotal results are indicative of what 

can happen. The West Texas community of McCamey, where Texas’ first wind boom took place in 2001 and 2002, 

is one example. In 2000, the local property tax base funding the McCamey Independent School District was just 

more than $328 million in total assessed valuation. By 2006, with 760 MW of new wind power in operation on 

nearby mesas, the tax base had increased by more than $1 billion. In addition, taxable sales receipts in the area 

doubled from 2002 to 2005. See School and Appraisal Districts’ Property Value Study, various years (available at 

http://www.cpa.state.tx.us/taxinfo/proptax/). 

 2
Pennsylvania, for example, found that if an RPS succeeded in increasing renewable energy use to 

10% of total electricity demand by 2025, the impact on jobs, income, and economic output 

would be significantly larger than what would be expected if load growth and unit retirements 

during that same time were met by fossil fuel expansion.2

State policy makers may need to prioritize between local economic growth and minimizing 

ratepayer impacts if the most cost-effective renewable resources are in a neighboring state. 

Extending RPS eligibility to out-of-state resources can reduce ratepayer impacts, but it involves 

letting another state realize the local economic development benefits. 

If environmental improvement is a particularly strong driver, policy makers may consider 

integrating an RPS mandate with policies to promote voluntary green power purchases. Such a 

strategy can augment the overall demand for renewable energy, which (in a normal commodity 

market) increases investment. 

Current Status and State Experience 

By 2004, 12 states had an RPS requirement, although the structure of these requirements varied 

widely. Some represented aggressive growth, while others constituted little change from the 

status quo. Some states placed the requirement only on specific utilities; some established 

minimum quotas for all providers in a competitive market. By early 2008, 25 states and 

Washington, D.C., had an RPS (listed in Table 2, at the end of the report), and many of the early 

RPS states had increased their goals. 

Ideal Applications for an RPS 

An RPS is best suited to states that know where their most cost-effective renewable resources 

are, and have a strategy for getting those resources to market. 

Natural-resource endowments differ, and various renewable energy technologies differ in cost; 

these factors affect what an RPS design needs in order to achieve the best possible outcome at 

the least cost. 

Consequently, an RPS can work in any regulatory structure, from traditional cost-of-service 

regulation to competitive restructuring. The regulatory environment affects how an RPS is 

implemented, but need not constrain what it can accomplish. 

If a state does not have its own abundant, accessible, low-cost resources, achieving the ideal will 

involve policies to ensure that the regional transmission system is sufficiently robust to move 

renewable power from resource-rich areas to the state’s load centers. This also may depend on 

the existence—or the creation—of multistate institutions to coordinate transmission planning and 

expansion. 

Key Elements of a Successful RPS 

Outcomes for the RPS mandates that have been around the longest suggest that two external 

factors have the most impact on what an RPS can accomplish on a large scale: available 

 

2

 NREL’s Job and Economic Development Impact (JEDI) tool provides state and local officials with a user-friendly 

tool to estimate potential benefits particular to their areas. See http://www.nrel.gov/analysis/jedi/. 

 3
resources (e.g., wind, solar radiation, geothermal potential, or biomass stocks); and available 

transmission capacity. 

Both factors have a bearing on the cost-effectiveness of in-state resources relative to regional 

resources, which also can affect program design and implementation. If a state has sufficient 

developable resources within its own jurisdiction, then attainment of its RPS requirement 

primarily is a matter of procurement, resource planning, and transmission decisions under the 

guidance of the state’s utility regulators. 

If neighboring states have more cost-effective resources, however, maximizing RPS results may 

depend on regional coordination. This is especially important for states that are part of the same 

regional transmission organization (RTO), where generation resources are dispatched on a leastcost basis without regard to state boundaries. RPS coordination can create a larger seamless 

demand for renewable energy, and larger markets tend to be more competitive. Lack of 

coordination, on the other hand, can fragment demand and place one or more states at a 

competitive disadvantage. 

The following program elements take on greater importance if renewable resources are 

regionally dispersed and the state shares a transmission system with its neighbors. 

• Qualifying out-of-state resources. If neighboring states share a transmission system, a 

substantial amount of power will cross state borders as part of normal grid operations. 

This aspect presents policy makers with a threshold decision about RPS design: How 

closely should the program follow the way power flows on the grid physically? 

Expanding RPS eligibility to include resources that are likely to contribute to power 

flows into the state can ensure that the program accounts for normal cross-border power 

flows. Regional resource qualification allows a broader geographic space for load-serving 

entities to find the least-cost options for meeting an RPS requirement.3

• A renewable energy credit (REC) tracking system. Tracking power flows in real time 

from a given generator to a given demand point is extremely complicated, data-intensive, 

and inconsistent with how the grid actually works. Power is managed as a regional pool 

of generation, with units ramped up or down minute-by-minute so that the sum of 

generation always matches the sum of regional demand. A REC tracking system can 

simplify the energy accounting required for an RPS, significantly reducing the 

administrative burden of coordinating different state requirements, and significantly 

reducing transaction costs for sellers and buyers of renewable power. Monitoring RPS 

compliance also is less burdensome with a REC tracking system. An RPS requirement 

that is met by qualified RECs can be verified electronically by regulators in a matter of 

seconds, and can avoid the need for lengthy compliance dockets. 

Regardless of whether the program focus is regional or limited to in-state resources, costmitigation measures and compliance enforcement can have a bearing on success. 

• Cost-control provisions. A no-fault alternative compliance payment (ACP), price cap, or 

cost benchmark can affect the ability of an RPS to attract investment in renewable energy 

 

3

 Some legal scholars have suggested a possible constitutional prohibition against excluding out-of-state resources 

from RPS eligibility, but to date the argument has not been tested in court (see Eisen 2005). 

 4
resources. The threshold decision for policy makers is how to balance two competing 

objectives: minimizing ratepayer impact, and maximizing the state’s ability to attract 

investment in renewable energy capacity. A cap that is benchmarked close to the cost of 

conventional power often risks limiting project revenues constantly and predictably, 

which may cause developers and investors to avoid that state in favor of other places that 

pose less of an economic risk. On the other hand, a cap that does not take effect except 

under extraordinary circumstances is not an investment barrier. Many RPS states—

including Texas, which leads the nation in renewable energy capacity growth—have 

balanced price protection and investment stimulation by setting their various cost-limiting 

safeguards to about $50 per megawatt hour (MWh). However, set-aside requirements for 

specific technologies such as photovoltaic solar often have separate and higher caps. 

• Enforcement. Penalties for noncompliance can affect RPS success where electricity 

markets have been restructured and entities with an RPS obligation set their own prices 

and manage their own costs. Under cost-of-service regulation, however, the ability of a 

regulated entity to comply is often linked to state decisions affecting transmission 

approval and cost recovery, making “compliance” a matter managed by the regulatory 

agency across various related proceedings. 

Complementary Policies to an RPS 

As mentioned previously, an RPS can achieve its goal easier and at less cost if it is consistent 

with other supporting policies, such as the following. 

• Resource assessment. Mapping out where the best resources are located can improve both 

the effectiveness of an RPS and the ability to develop its renewable energy resources at 

the least cost to ratepayers. Texas, Colorado, Arizona, and California have initiated 

detailed assessments based on geographic information system (GIS) analysis, and other 

states are considering similar measures. A state-initiated assessment may not be 

necessary if developers and policy makers already know where the best resources are, if 

transmission access is already available, and if development is already occurring. Even if 

resource areas are generally known, however, a more precise measure of their 

development potential can help regulators form more cost-effective infrastructure 

strategies. 

• Transmission access. If sufficient transmission capability does not exist between load 

centers and places where renewable resources exist, infrastructure expansion policies 

need to accompany an RPS if the latter is to be successful. The leading example is Texas, 

which passed legislation waiving certain “used and useful” criteria for transmission 

serving Competitive Renewable Energy Zones designated by the Texas Public Utilities 

Commission (PUC). In contrast, the lack of available transmission capability has 

compromised Nevada’s ability to use its abundant geothermal resources in achieving its 

RPS goals. 

• Voluntary green power. An RPS requirement can be designed so that it stimulates surplus 

supply, which will be available to meet additional, voluntary demand for renewable 

power. In fact, a 2007 NREL report showed that customer participation rates in 2006 

utility green power programs were statistically higher on average in states with an RPS 

than those without (Cory and Swezey 2007). For this to happen, the state must coordinate 

 5
consumer protection rules and RPS design to prevent “double counting,” i.e., crediting 

the same quantity of renewable power toward both a mandated RPS requirement and to 

green power purchased voluntarily by a customer. This model, which has been used by a 

number of states that have seen the greatest increase in renewable resource use, relies on 

an RPS goal that is high enough to convince investors that future demand will never fall 

below a predictable level, yet low enough to permit a surplus to develop. 

• Financing support. Many RPS policies require specific, minimum support to help new 

projects secure financing, which can be critical. For example, 10 states require loadserving entities to sign long-term contracts (usually at least 10 years in length) to reduce 

the financial risk that renewable energy developers face. In New York and Illinois, state 

agencies centrally procure RECs to meet the RPS requirement. Nevada implemented a 

special ratepayer charge to protect payments to generators, while California exempted 

utilities until they had re-established their creditworthiness. All of these mechanisms 

lower investment risk, making it easier for the state to attract investment in resources to 

meet its RPS. 

Alternatives to an RPS: State Transmission Authorities 

If a state has abundant resources, little native load, and sufficient transmission infrastructure, an 

aggressive energy export strategy can attract significant renewable energy investment without an 

RPS. Non-RPS states such as Kansas, South Dakota, and Wyoming have established state 

transmission authorities empowered to build, own, and operate transmission lines on behalf of 

the state. New Mexico and Colorado have both an RPS and a state transmission authority. 

To date, the efficacy of state transmission authorities as an alternative to an RPS appears to be 

limited to states endowed with large amounts of prime wind power resources. In some cases, the 

creation of such an authority has followed (not led) an initial surge of investment interest by 

wind power developers, as demonstrated by a large volume of requests to transmission utilities 

for interconnection studies. 

Quantitative Metrics of RPS Impacts 

The point of an RPS is to replace fossil fuel generation with generation obtained from renewable 

resources. Therefore, most straightforward measures of RPS effectiveness are the degree to 

which renewable energy capacity and generation have grown, and the degree to which fossil 

fuels have declined as a share of the state’s electric-generation fuel mix. The correlation between 

these outcomes and an RPS is impossible to quantify with precision, due to differences in state 

circumstances, the newness of many state requirements, and the significant interaction effects of 

other policies. The approach taken in this analysis, therefore, is to identify states with outcomes 

above the U.S. average, identify which of these states have had an RPS in place long enough to 

have an effect, and examine the role of the RPS in the state’s outcomes. 

It should be noted that measuring outcomes is different from measuring an RPS program’s 

success. For example, if a significant portion of a state’s total RPS requirement is met by way of 

an ACP, the legal requirements may be satisfied even if the statutory goal is not achieved 

physically. Moreover, because the RPS level is determined independently by each state, based on 

its own domestic political and economic calculus, the same outcome may represent technical 

 6
success in one state and technical underachievement in another. In some cases, states have 

revised their goals on the basis of experience with their initial goals. Because of these factors, 

and the need to draw consistent empirical comparisons across all states, this analysis does not 

consider success in relation to a state’s own RPS goal, but instead relies on standard outcome 

metrics as its basis of comparison, without judging whether the outcome constitutes “success.” 

Such evaluation is more properly done by the state itself against its own statutory requirements, 

and is beyond the scope of this study. 

This analysis looked at annual data from 2001 through 2007 for the following outcome metrics:4

• Increase in renewable generating capacity (new megawatts per year); 

• Increase in net generation from renewable energy resources (additional megawatt hours 

per year); 

• Growth in renewable energy’s share of in-state generation capacity (percentage point 

gain per year); 

• Growth in renewable energy’s share of in-state generation mix (percentage point gain per 

year); and 

• Decline in generation from fossil fuel sources (coal, natural gas, and petroleum) as a 

share of the state’s overall generation fuel mix. 

Seven-year trends were calculated for each state to determine which RPS states were above 

the national average with respect to renewable energy use and offsetting generation from 

fossil fuels. Table 3 and Table 4 (at the end of the report) show the state outcomes.5 

Next, states were analyzed together (by reliability region) to assess possible regional factors. 

Figure 1 and Figure 2 highlight the key national and regional trends. Renewable energy is a 

small but growing share of the national generation portfolio, but that trend is small compared 

to the growth in generation from natural gas. Given the volatility of natural gas prices, this 

national trend suggests that energy security (particularly price stability) likely will become an 

important policy driver for an RPS. 

 

4

 Metrics were calculated using annual unit data for electric generation compiled by the Energy Information 

Administration. EIA Form 860 is a report of installed capacity submitted annually by plant owners; Form 861 is a 

report of electricity sales and revenues submitted annually by utilities and other providers; and Form 906/920 is a 

report of net generation and fuel consumption reported monthly by plant owners. For the purposes of this analysis, 

“renewable energy” aggregates the following EIA fuel categories: wind, geothermal, sun, wood and wood waste 

(solid and liquid), agricultural byproducts, other biomass, landfill gas, and new hydropower capacity. 

5

 The trends include net generation data for 2007, which (as of this writing) are preliminary and subject to revision 

by EIA. 

 7
Fuel mix for total U.S. electric generation

0%

100%

Natural gas 17.3% 22.0%

Renewable 1.7% 2.3%

Hydro (old) 5.5% 5.8%

Nuclear 20.6% 19.2%

Oil 3.3% 1.6%

Coal 51.0% 48.5%

2001 2007

Annual change in U.S. fuel mix share

0.1%

-0.5% 0.0% 0.5% 1.0%

Coal

Oil

Nuclear

Hydro

(old)

Renewable

Natural

gas

Annual change in share

Note: Hydroelectric capacity existing prior to 2001 is treated as a separate category. Newer hydro capacity and 

incremental additions to existing capacity are included as renewable. 

Figure 1. National trends in electricity generation (2001-2007) 

0.0% 

Annual percentage point change in 

share of net generation from 

renewable energy sources (U.S. 

plants only, 2001-2007) 

0.1% 

0.5%

0.0%

0.1% 

0.3%

0.0%

0.3% 0.3%

0.0% 

Figure 2. Growth in renewable energy utilization by NERC reliability region 

 8
Fifteen states have exceeded the national average with respect to using more renewable energy 

and using less fossil fuel, as measured by annual changes in the composition of the generation 

fuel mix. Of these 15 states, 11 have an RPS: Colorado, Hawaii, Iowa, Maine, Minnesota, 

Montana, New Mexico, Nevada, Oregon, Texas, and Washington. All five of the states where the 

use of fossil fuels is decreasing—Maine, Washington, Montana, Iowa, and New Mexico—have 

an RPS. 

The regional trends indicate significant renewable energy growth along the Great Plains and in 

Hawaii, little overall growth in the East, and moderate overall growth in the West and 

Northeast.6

 An important factor in the West is the drought-related fluctuation in generation from 

major hydroelectric facilities (which, in this analysis, are treated as a distinct generation category 

apart from other renewable resources). Changes in production from hydropower significantly 

affect all other resource categories’ share of the regional generation fuel mix. 

Trends in Selected RPS States 

Against these national and regional trends, the greatest increases in renewable energy capacity 

expansion and use are found in Iowa, Minnesota, New Mexico, and Texas—states with some of 

the longest-standing RPS requirements. Texas leads the nation in terms of absolute growth. Iowa, 

New Mexico, and Minnesota each added significantly more capacity and generated significantly 

more electricity from renewable sources than did states with significantly larger demand. 

Texas. Texas has added 5.5 gigawatts (GW) of new renewable capacity since its RPS began in 

2002. Net generation from renewable sources is increasing at a rate of more than 1 terawatt hour 

(TWh) per year. Despite the simultaneous addition of a large amount of generation fueled by 

natural gas, Texas has managed to increase renewable energy’s share of the state fuel mix from 

0.6% in 2001 to 2.3% in 2007. 

The state, historically driven by an oil- and gas-development economy, implemented its RPS in 

conjunction with legislation to restructure the electric industry as a competitive market. The 

requirement was set as a capacity goal (2 GW of new capacity by 2009, later increased to 5 GW 

by 2015), and annual requirements were assigned proportionately to retail electric providers and 

the few remaining investor-owned utilities. Wind developers, in particular, have responded to the 

open-access transmission policies that accompanied competitive restructuring. Both the RPS 

requirement and electricity labeling laws were designed to encourage retail green power as an 

additional source of demand for renewable energy (Hurlbut 2008).

Nevertheless, renewable energy outcomes for Texas have been constrained by transmission. In 

the Electric Reliability Council of Texas (ERCOT) RTO, the initial wave of wind power 

development in 2001-2002 was more than existing transmission lines could handle. Curtailments 

ordered by ERCOT to prevent overloading degraded the overall capacity factor of wind 

resources to 27%, compared to a technical potential of about 40%. In addition, the Texas 

Panhandle—where the state’s best wind resources are located—saw limited wind power 

development initially because the states that are part of the Southwest Power Pool (the grid 

serving the Panhandle) had not yet addressed transmission planning questions that were critical 

 

6

 The geography of NERC reliability regions has changed since 2001. For consistency, historical observations for 

individual units were recoded to reflect their 2007 NERC regions. Units operating in 2001 that were retired before 

2007 were assigned to the 2007 region of their operating companies (or successors). 

 9
to wind power. Texas devised its Competitive Renewable Energy Zones (CREZ) policy 

(mentioned in the previous section discussing complementary policies) to respond to the 

transmission challenges. The Texas Public Utility Commission (PUC) approved a CREZ 

transmission development plan in July 2008 that would accommodate up to 18.5 GW of wind 

power. 

Iowa. In Iowa, net generation from renewable resources increased from 567 GWh in 2001 to 2.9 

TWh in 2007. Fossil fuels have been declining as a share of the state’s generation fuel mix at a 

rate of 0.7 percentage points per year. 

Iowa also had a capacity goal; but, unlike Texas, the statute included no fixed timetable. 

Nevertheless, Iowa authorities officially declared the requirement satisfied in November 2007.7

Although the law required only 105 MW, the state had more than 1,270 MW of wind power by 

the beginning of 2008. However, Iowa officials chose not to enact a larger RPS as a next step. 

Noting that the resulting revenues could provide a net benefit to Iowa ratepayers, the state 

utilities board instead laid the groundwork for a strategy to export Iowa wind power to meet 

renewable energy demand in other states that were part of the Midwest Independent System 

Operator (MISO) RTO. First, the board initiated an inquiry into whether the state’s two major 

utilities should participate in the REC tracking system serving the MISO region. Second, the 

board designated specific generating units owned or controlled by the two utilities to be the 

resources satisfying 105 MW RPS requirement. RECs from all other units would be eligible to 

participate in the Midwest Renewable Energy Tracking System (M-RETS), being readily 

available to meet demand anywhere in the MISO region without resulting in double counting.

New Mexico. In New Mexico, net generation from renewable resources increased from zero to 

1.3 TWh between 2001 and 2007. The state is exceeding its overall RPS requirement by a large 

margin: Its three largest utilities generated half again as much electricity from renewable 

resources as they needed to meet their 2006 RPS requirements. 

The RPS also has a diversification requirement that utilities are supposed to meet by 2011. Of 

the total mandate, no less than 20% must come from solar power, and no less than 10% must 

come from a renewable technology other than wind or solar. Despite these goals, nearly all of the 

state’s eligible renewable generation in 2006 came from wind. RPS rules allow for waiving the 

diversity requirement on a number of grounds—cost caps being key—but the utility would have 

to make up the difference by procuring more electricity from other renewable resources.8

New Mexico has also implemented laws to facilitate transmission expansion, and was the first 

state to create a transmission authority in addition to having an RPS. The New Mexico 

Renewable Energy Transmission Authority participates in regional transmission planning 

groups, and is empowered to initiate its own projects.9

 Regional transmission proposals under 

discussion would connect areas containing the state’s best potential for geothermal and 

 

7

 “Order Approving Facilities and Associated Capacities, Adopting Requirements for M-RETS Participation, and 

Requiring Report,” In Re: Interstate Power and Light Company and Midamerican Energy Company, Docket 

Number AEP-07-1 (November 21, 2007) 

8

 New Mexico Administrative Code, 17.9.572, “Renewable Energy for Electric Utilities.” 

9

 New Mexico Renewable Energy Transmission Authority Act (House Bill 188), 2007. 

 10
concentrating solar power, which would facilitate achievement of the state’s diversification 

requirement. 

Minnesota. Renewable energy is gaining as a share of the state’s generation mix by about 0.5 

percentage points annually, while the state’s use of fossil fuel is decreasing by a slightly greater 

amount. By 2007, renewable resources accounted for 5.9% of the electricity generated in 

Minnesota. 

Until recently, Minnesota’s renewable energy mandate applied only to the state’s largest utility 

(Xcel Energy). All others were required to make a “good-faith effort” to achieve lower goals, 

and the Minnesota PUC was authorized to investigate a utility’s good-faith effort on a regular 

basis. In 2007, the requirement was broadened to become a generally applicable RPS, although 

the ultimate requirement for Xcel (30% of sales by 2020) is more rigorous than for other utilities 

(25% by 2025). 

Regional Outcomes 

New England and New York. Renewable energy outcomes in New England and New York 

reflect strong intra-regional dynamics. These states share the same electric reliability region and 

two regional transmission organizations with significant wholesale power exchanges. The 

aggregated picture reflects little overall growth in renewable energy’s share of the regional fuel 

mix between 2001 and 2007. However, the geographic distribution of renewable and fossil fuel 

generation shifted significantly. Fossil fuel generation has declined in Maine, New York, and 

Vermont. The difference has been offset by increased fossil fuel use in New Hampshire, 

Connecticut, Rhode Island, and Massachusetts. New York accounted for the lion’s share of the 

region’s renewable energy growth, with smaller increases in Maine and Vermont. 

The effect of RPS policies on the geographic shift, however, is unclear. New York, 

Massachusetts, and Connecticut all have an RPS. But, in both of the latter, use of fossil fuels 

grew faster than the use of renewables. 

Electricity suppliers in Massachusetts have been in technical compliance with RPS requirements, 

but only two-thirds of the compliance is due to actual procurement of renewable resources 

(DOER 2007). Suppliers exercised the option for no-fault alternative compliance payments for 

one-third of their 2005 obligations, equivalent to 368 GWh of electricity. Massachusetts’ RPS 

shortfall largely reflects a regional shortage of new renewable capacity; although, during the 

2001-2006 time frame, the state added some new renewable capacity in the form of biomass and 

landfill methane facilities. 

The Midwest. The region with the most robust renewable energy growth is the Upper Great 

Plains. Iowa and Minnesota, which had renewable energy requirements at an early stage, account 

for two-thirds of the renewable energy growth in the region. Above-average outcomes for these 

two early RPS states have been driven by wind power—Iowa and Minnesota account for 18% of 

installed U.S. wind capacity (AWEA 2008). At the same time, Illinois and Wisconsin are 

increasing their use of fossil fuels for power generation. These are the two largest states for total 

power generation in the region. Renewable energy’s share of the Illinois fuel mix has been 

mostly unchanged since 2001; while, in Wisconsin the share has increased slightly from 1.7% to 

2.1%. 

 11
Other Early RPS States 

Outcomes for three other early RPS states—New Jersey, California, and Nevada—are notable 

because of the obstacles they have encountered implementing their requirements. Generation 

from renewable sources in New Jersey actually declined between 2001 and 2007. Fossil fuel 

generation has decreased even faster, however, indicating a growing overall reliance on power 

flowing into the state from elsewhere in the PJM Interconnection grid area. 

Providers cite difficulty obtaining sufficient RECs to meet their RPS obligations. The staff of the 

New Jersey Board of Public Utilities said possible reasons for the shortage included, among 

other factors: 

• the establishment of new RPS requirements in several other states in the PJM 

Interconnection, which has increased competition for the renewable capacity added in 

the region since 2001; 

• the option provided by other states (but not New Jersey) to “bank” RECs for two and 

sometimes three years; 

• the choice of several small facilities not to have their generation metered by PJM, 

resulting in the disallowance of those facilities’ energy for providing RPS-compliant 

RECs; 

• growth in the use of RECs for the voluntary market; and 

• insufficient growth in new construction of renewable energy generation facilities (N.J. 

Board of Public Utilities 2008). 

Development of new renewable generation is proceeding slowly in California, despite having an 

aggressive RPS goal. In 2007, for example, only 114 MW of new RPS-eligible capacity came 

online, and most of it was in Oregon. Barriers cited by the California PUC in its 2008 legislative 

report include transmission, permitting challenges, and developer inexperience, among other 

factors (Calif. PUC 2008). 

To address the transmission issues, the state has initiated a Renewable Energy Transmission 

Initiative to identify the transmission projects needed to accommodate the state’s renewable 

energy goals (CEC 2008). Once renewable energy zones and possible transmission corridors 

have been identified by the RETI study, candidate projects will go to the California PUC for 

review. The California PUC is also considering whether to authorize the use of tradable RECs 

for compliance with the RPS. 

Nevada is using its existing geothermal capacity more—and its existing coal-fired capacity 

less—while increasing its use of imported power to meet its growing demand. Although it has 

significant potential for additional geothermal and solar power, Nevada has been challenged by 

its inability to move power from regions rich in geothermal potential to its largest load center, 

Las Vegas. In addition, Nevada utilities were greatly affected by the California energy crisis, 

which (among other consequences) hurt the utilities’ credit ratings. New renewable generating 

plants that signed power purchase agreements with the utilities were unable to secure financing. 

 12
Only after the state created a separate charge on customers’ bills did investors feel confident that 

the utilities would pay renewable generators for their power. 

In December 2007, an advisory committee on renewable energy transmission access delivered to 

Governor Jim Gibbons a report that mapped out the state’s most developable resources and 

recommended the construction of transmission lines and collector systems to connect those 

resources to load (Nevada 2007). The report also identified geothermal and solar projects under 

development that, when connected to the grid, would double the state’s non-hydro renewable 

energy generating capacity. 

 13
Conclusions 

There is no policy magic behind an RPS; simply having an RPS is no guarantee of more 

renewable capacity. Achieving an RPS goal depends on knowing where the most cost-effective 

renewable resources are, and how they are going to get to market. An RPS results in more 

capacity expansion when accompanied by complementary policies that will help achieve RPS 

goals, such as resource assessments, transmission expansion, and regional collaboration. As 

demonstrated by Texas and Iowa, an RPS mandate need not be high to work. 

The effectiveness of an RPS in any particular state often depends on regional coordination. One 

effort toward such multistate collaboration is a new initiative by the Western Governors’ 

Association to identify concentrations of renewable energy resources and to assess high-level 

regional transmission scenarios for connecting these zones to load. A similar multistate resource 

assessment in the Southeast—where only North Carolina has enacted an RPS—could help 

identify least-cost renewable energy strategies that would fully take regional factors into account. 

One element of RPS design that merits further empirical analysis is the effect of safety cap 

mechanisms such as cost thresholds and alternative compliance payments. This would be 

especially useful to states considering a new RPS or increasing an existing one. Ratepayer 

impact is a criticism frequently raised by RPS opponents, and many states have responded by 

including provisions to prevent costs from escalating excessively. Issues addressed in such an 

analysis should include how frequently the price cap is triggered, the types of renewable 

resources involved, the effect on investment and development risk, and the magnitude of 

renewable energy’s incremental cost relative to the price impact of natural gas volatility. 

 14
References 

American Wind Energy Association (AWEA). (2008). “U.S. Wind Energy Projects.” Accessed 

2008 at http://www.awea.org/projects/. 

California Energy Commission (CEC). (2008). “California Renewable Energy Transmission 

Initiative Mission Statement,” accessed March 19, 2008, at 

http://www.energy.ca.gov/reti/Mission_Statement.pdf. 

California Public Utilities Commission (PUC). (2008) “Renewables Portfolio Standard Quarterly 

Report.” January 2008. 

Cory, K. S.; Swezey, B. G. (2007). “Renewable Portfolio Standards in the States: Balancing 

Goals and Implementation Strategies.” 36 pp.; NREL Report No. TP-640-41409. 

Eisen, J. (2005). “The Environmental Responsibility of the Regionalizing Electric Utility 

Industry,” Duke Environmental Law & Policy Forum, Vol. 15 (2005), pp. 295-314. 

Hurlbut, D. (2008). “A Look behind the Texas Renewable Portfolio Standard – A Case Study,” 

Natural Resources Journal, Vol. 48, winter 2008. 

Massachusetts Department of Energy Resources (DOER). (2007). “Massachusetts Renewable 

Portfolio Standard: Annual RPS Compliance Report for 2005,” February 20, 2007 (corrected 

August 23, 2007). 

Nevada (State of). (2007). “Phase I Report,” Governor Jim Gibbons’ Nevada Renewable Energy 

Transmission Access Advisory Committee, December 31, 2007. 

New Jersey Board of Public Utilities. (2008). “In the Matter of the Renewable Portfolio 

Standards – Request for Board Action Regarding Renewable Energy Certificates.” (January 31, 

2008). 

Wiser, R.; Barbose, G. (2008) “Renewable Portfolio Standards in the United States: A Status 

Report with Data through 2007,” Lawrence Berkeley National Laboratory, April 2008. 

 15
Table 2. States with a Renewable Portfolio Standard 

State 

Year 

effective 

(last 

amended) 

Iowa 1983 (1997) 

Minnesota 1997 (2007) 

Connecticut 1998 (2007) 

Maine 1999 (2007) 

New Jersey 2001 (2006) 

Wisconsin 2001 (2006) 

Massachusetts 2002 

Texas 2002 (2005) 

Arizona 2002 (2006) 

Nevada 2002 (2006) 

New Mexico 2002 (2007) 

California 2003 (2006) 

Hawaii 2004 (2006) 

Rhode Island 2004 (2006) 

Colorado 2004 (2007) 

New York 2005 

District of Columbia 2005 

Maryland 2005 (2007) 

Pennsylvania 2005 (2007) 

Montana 2006 

Delaware 2006 (2007) 

Washington 2007 

Illinois 2007 

New Hampshire 2007 

Oregon 2007 

North Carolina 2008 

Note: North Dakota, Missouri, Utah, Vermont, and Virginia have non-mandatory state goals for generation 

from renewable energy resources. 

 16
Table 3. State Trends in Generation from Renewable Energy, 2001-2007 

Capacity 

added 

(MW/yr) 

Increase in 

generation 

(GWh/yr) 

Annual 

increase in 

share of state 

capacity 

Annual 

increase in 

share of state 

fuel mix 

TX 341 TX 1,087 NM 1.4% ME 1.3% 

CA 166 CA 375 ND 1.0% IA 0.7% 

MA 150 IA 370 IA 0.8% NM 0.7% 

OK 126 OK 364 AK 0.7% MN 0.5% 

IA 125 WA 286 MN 0.6% SD 0.5% 

AL 112 MN 278 ID 0.6% OK 0.5% 

NM 107 NM 255 NE 0.5% OR 0.4% 

MN 105 OR 215 WY 0.4% KS 0.3% 

NY 98 NY 184 KS 0.4% MT 0.3% 

OR 80 SC 161 TX 0.3% ND 0.3% 

WA 73 KS 159 OK 0.2% CO 0.3% 

PA 57 CO 147 WV 0.2% TX 0.3% 

ND 55 VA 114 MA 0.2% WA 0.2% 

CO 49 PA 99 CT 0.1% HI 0.2% 

KS 49 MT 90 VT 0.1% NV 0.2% 

NE 46 ND 89 LA 0.1% WY 0.2% 

GA 44 IL 82 IL 0.1% NE 0.1% 

WV 39 FL 74 HI 0.0% MS 0.1% 

WY 35 WY 72 NC 0.0% VA 0.1% 

ID 33 MS 67 RI 0.0% SC 0.1% 

LA 32 WI 65 FL 0.0% NY 0.1% 

MT 32 WV 64 DC 0.0% RI 0.1% 

FL 29 KY 60 DE 0.0% WI 0.1% 

ME 27 NV 58 OH 0.0% WV 0.1% 

IL 27 ME 57 IN 0.0% VT 0.1% 

NC 23 NE 46 MT 0.0% KY 0.1% 

WI 19 LA 42 NJ 0.0% MD 0.0% 

TN 18 ID 38 TN -0.1% LA 0.0% 

NV 15 SD 31 WI -0.1% ID 0.0% 

CT 14 HI 29 KY -0.1% IL 0.0% 

VA 13 MD 25 MS -0.2% PA 0.0% 

AZ 8 MI 20 AL -0.2% IN 0.0% 

SC 8 IN 17 PA -0.2% AK 0.0% 

OH 6 VT 17 UT -0.2% OH 0.0% 

NH 5 AR 17 MI -0.2% FL 0.0% 

NJ 4 OH 14 NY -0.3% CT 0.0% 

HI 2 NC 6 MD -0.3% MO 0.0% 

VT 1 RI 5 WA -0.3% MI 0.0% 

IN 1 MO 3 MO -0.3% DE 0.0% 

RI 0 MA 2 CO -0.3% DC 0.0% 

AR 0 CT 2 GA -0.3% NJ 0.0% 

AK 0 AK 1 SD -0.5% AZ 0.0% 

DC - DE 0 VA -0.7% NC 0.0% 

DE - DC - NV -0.7% MA 0.0% 

KY (0) UT (1) SC -0.7% UT 0.0% 

UT (2) NJ (1) AR -0.8% AR 0.0% 

MS (6) NH (1) CA -0.9% CA -0.1% 

MI (6) AZ (2) OR -0.9% TN -0.1% 

MD (13) AL (33) NH -1.0% AL -0.1% 

SD (21) TN (61) AZ -1.0% GA -0.2% 

MO (58) GA (136) ME -1.1% NH -0.4% 

US 0.1% US 0.1% 

 17
 18

Table 4. State Trends in Generation from Fossil Fuels, 2001-2007 

Capacity 

added 

(MW/yr) 

Increase in 

generation 

(GWh/yr) 

Annual 

increase in 

share of state 

capacity 

Annual 

increase in 

share of state 

fuel mix 

AK -60 ME -1,075 NM -1.4% ME -3.4% 

ND -15 NY -966 ND -1.0% WA -0.7% 

VT -1 MS -879 WY -0.5% MT -0.7% 

ID 5 VA -590 IA -0.3% IA -0.7% 

SD 13 RI -273 KS -0.2% NM -0.7% 

HI 31 NJ -213 WV -0.2% VA -0.5% 

MT 37 WA -138 MN -0.2% MD -0.5% 

WY 44 MD -103 VT -0.1% NY -0.5% 

DC 124 CA -73 AK -0.1% CO -0.4% 

WV 132 SD -57 DE 0.0% NE -0.3% 

WA 139 MI -24 IN 0.0% MN -0.3% 

KS 142 DC -10 OK 0.0% TX -0.3% 

TN 146 VT -5 DC 0.0% OH -0.3% 

RI 162 AK -2 MT 0.0% MI -0.3% 

NM 171 KS -1 ID 0.1% OK -0.3% 

MO 197 ND 25 KY 0.1% CA -0.3% 

ME 207 HI 96 UT 0.1% HI -0.3% 

OR 225 ID 99 TN 0.2% ND -0.2% 

NE 226 WY 181 OH 0.2% NJ -0.2% 

NC 243 TN 195 LA 0.2% KS -0.2% 

UT 258 NE 213 NC 0.2% WY -0.2% 

MN 280 MT 225 TX 0.3% WV -0.1% 

NH 290 OR 230 NE 0.3% VT -0.1% 

CT 321 DE 250 WA 0.4% UT -0.1% 

NJ 393 IA 312 MO 0.4% IN 0.0% 

IA 418 MN 315 HI 0.5% DE 0.0% 

DE 478 LA 443 SD 0.5% DC 0.0% 

NV 493 NV 615 IL 0.6% LA 0.0% 

MD 505 CT 650 WI 0.7% NV 0.0% 

KY 522 NM 670 NJ 0.8% OR 0.0% 

LA 527 CO 676 MI 0.8% MO 0.1% 

WI 651 UT 845 GA 0.9% MS 0.1% 

CO 712 NC 847 FL 0.9% NC 0.2% 

IN 712 AR 868 CO 1.0% MA 0.2% 

MI 791 WI 903 MD 1.1% ID 0.3% 

AR 794 MA 1,188 OR 1.3% KY 0.4% 

VA 932 KY 1,252 AL 1.3% WI 0.4% 

SC 982 WV 1,319 MA 1.4% IL 0.4% 

MA 1,068 NH 1,551 VA 1.6% RI 0.5% 

IL 1,074 SC 1,557 MS 1.6% AK 0.6% 

OK 1,081 IN 1,593 NY 1.7% TN 0.6% 

OH 1,092 OH 2,030 NV 1.7% PA 0.6% 

MS 1,195 IL 2,090 AR 1.8% CT 0.7% 

AL 1,324 MO 2,490 PA 1.8% FL 0.7% 

NY 1,433 AL 2,593 SC 2.1% SC 0.7% 

GA 1,434 OK 2,813 CA 2.2% AR 0.7% 

AZ 1,990 TX 3,705 CT 2.4% AL 0.9% 

TX 2,152 GA 3,989 RI 2.6% SD 0.9% 

CA 2,665 PA 4,038 AZ 2.7% GA 1.1% 

PA 2,763 AZ 4,350 ME 2.8% AZ 2.2% 

FL 2,909 FL 6,509 NH 3.7% NH 3.0% 

US 0.1% US 0.1% 
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State Clean Energy Practices: Renewable Portfolio Standards 

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David Hurlbut 

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14. ABSTRACT (Maximum 200 Words)

The State Clean Energy Policies Analysis (SCEPA) project is supported by the Weatherization and 

Intergovernmental Program within the Department of Energy’s Office of Energy Efficiency and Renewable Energy. 

This project seeks to quantify the impacts of existing state policies, and to identify crucial policy attributes and their 

potential applicability to other states. The goal is to assist states in determining which clean energy policies or policy 

portfolios will best accomplish their environmental, economic, and security goals. For example, a renewable portfolio 

standard (RPS) mandates an increase in the use of wind, solar, biomass, and other alternatives to fossil and nuclear 

electric generation. This paper provides a summary of the policy objectives that commonly drive the establishment of 

an RPS, the key issues that states have encountered in implementing an RPS, and the strategies that some of the 

leading states have followed to address implementation challenges. The factors that help an RPS function best 

generally have been explored in other analyses. This study complements others by comparing empirical outcomes, 

and identifying the policies that appear to have the greatest impact on results. 

15. SUBJECT TERMS

energy efficiency; renewable energy; policy; state policy; stakeholder drivers; economic development; environmental; 

energy security; renewable portfolio standards; RPS 

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