Renewable (Energy) Portfolio Standards: What they are and why they're important

by Dan Burgess, Boston GreenScene's Policy Corner Commentator

Massachusetts has taken several legislative steps in an attempt to stimulate renewable energy growth.  One such step is the introduction of Renewable Portfolio Standards (RPS).  What are they? RPS are mandated clean energy objectives for utility companies.  These objectives dictate that utility companies create or purchase a certain percentage of their overall energy portfolio from clean energy generation sources. RPS were originally introduced in Massachusetts in 1997 and are established in twenty-nine states and the District of Columbia.

States with Renewable Portfolio Standards and Goals by DSIRE
 

While originally introduced in 1997, RPS were significantly expanded as a part of the Green Communities Act.  The Green Communities Act mandated that qualifying Massachusetts utility companies comply with a RPS that increases by 1% per year until 2020, to 15% of total generation.  According to a 2008 study performed by the Department of Renewable Energy Resources (DOER) and the Renewable Energy Trust, “Projects in Massachusetts currently under construction, design, or consideration, if approved and developed, would generate 3.7 million MWh.  Completion of these projects would meet roughly half of the RPS obligation, leaving an additional 3.8 MWh to be met from other renewable sources.”

To meet the RPS mandated by Massachusetts, utility companies will solicit competitive bids from large clean electricity producers.   If these utility companies do not meet the renewable standards set, they will be forced to submit an alternative compliance payment derived from the Consumer Price Index of the preceding year.  While this process, known as tendering, will help to encourage an additional 3.8 MWh of clean energy production over the next eleven years, it is ultimately unclear that this RPS will have a positive economic impact on more than a few clean energy investors.

Utility companies will attempt to fill this 3.8 MWh clean energy gap with large projects and these sizable projects likely will not positively impact small, individual clean energy producers.  In addition, these large projects take substantial time to come to fruition and can be unpopular with local residents.  A clear example of this is the long-delayed and controversial Cape Wind project.   Overall, Renewable Portfolio Standards will ensure that Massachusetts utility companies are providing residents with more clean energy, but further action should be taken to ensure utility companies support a broader cross-section of clean energy projects.

Comments

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[manolo blahnik]

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[supra tenis]

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[UGG Sale]

These objectives dictate that utility companies create or purchase a certain percentage of their overall energy portfolio from clean energy generation sources. RPS were originally introduced in Massachusetts in 1997 and are established in twenty-nine states and the District of Columbia.