Confused About Renewable Energy Standards?

Despite strong resistance from conservatives and the fossil fuel industry, the State Legislature of Colorado recently voted to strengthen the state’s successful renewable energy standard. The news was cause for celebration here in the Centennial state, as it continues a tradition that began in 2004, when Colorado residents became the first to approve a renewable energy standard by ballot initiative.

Since that time, many other states have adopted their own Renewable Energy Standards (RES) also known as renewable portfolio standards (RPS) or renewable electricity standards. But how many are there now, and what do they really mean for the economy and environment?

If you’ve heard the terms but never been quite clear on the details, this post will help. And if your state is considering an RES, or has an RES that is coming up for renewal, the information below should be quite helpful in cutting through the industry propaganda and discovering what’s at stake.

What is a Renewable Energy Standard? According to the US Energy Information Administration (EIA), renewable energy standards are:

…policies designed to increase generation of electricity from renewable resources. These policies require or encourage electricity producers within a given jurisdiction to supply a certain minimum share of their electricity from designated renewable resources. Generally, these resources include wind, solar, geothermal, biomass, and some types of hydroelectricity, but may include other resources such as landfill gas, municipal solid waste, and tidal energy.

How Does An RES Work? The different ways an RES policy can be applied are as varied as the terms used to refer to it. In general, however, these standards set a minimum requirement for the share of electricity that’s to be supplied from designated renewable energy resources by a certain date/year. Each State decides what energy sources are eligible for inclusion under the RES, and most are tailored to best fit the State’s particular resource base or local preferences. The principle behind the RES is that by mandating a set level of clean electricity by a certain date, a) power companies will be compelled to make changes they might otherwise have avoided, b) companies working to develop or install renewable energy harvesting technologies will be supported, and c) green jobs will be created.

One caveat that most people don’t realize is that many states allow utilities to comply through tradeable credits, which means “a producer who generates more renewable electricity than required to meet its own RES obligation may either trade or sell credits to other electricity suppliers who may not have enough eligible renewable electricity to meet their requirements. In some cases, a State will make a certain number of credits available for sale.” At first, it would seem that this allowance makes it easy for utilities to wiggle out of the requirement, but since the standard is set at a state level, it presumably means that the same amount of clean electricity will be available, even though only a handful of companies may do the heavy lifting.

How Many Have An RES On The Books? The EAI reports 30 States and the District of Columbia had enforceable RPS or other mandated renewable capacity policies, as of January 2012. Additionally, seven States had voluntary goals for renewable generation. Each standard is very unique, with its own set of requirements, percentages, and exceptions. (Check out this PDF from The Center for Climate and Energy Solutions for a comparison of different state RES).

What’s The Downside? By now you’re probably thinking that RES sounds great and every state should have one, but they’re not a silver bullet. These policies are controversial because some people believe they are the government’s way of forcing you to buy one type of energy over another. Implementation can be hard, especially for smaller, rural electricity cooperatives, and yes, sometimes these standards actually increase the price of energy. Of course the upside is that an RES is a kick in the butt for utilities that would have us burning coal for the next 100 years. And ultimately, as the price of renewable energy continues to decrease, the cost differences will be negligible and we’ll be left with reliable electricity that doesn’t poison the planet or its inhabitants.

Do State RES Really Make A Difference?

So, adopting an RES is all well and good, but do they actually make a difference? Do residents of RES states actually enjoy cleaner electricity and more green jobs as a result? Here are a few examples:

In North Carolina, Renewable Portfolio Standards have helped generate $3.7 billion in economic activity in 2012 and contributed to the current 15,200 clean energy jobs in North Carolina, according to the North Carolina Sustainable Energy Association, all while reducing pollution. And the bill is about more than just wind and solar. Prestage Farms, a turkey and pork processor, has plans to build an innovative waste-to-energy plant that produces energy while reducing waste.

Just last month, legislators in Kansas — the home of Koch Industries — defeated a renewable energy repeal bill, likely because the renewable industry is also a major job creator in the state.

And just for good measure, American Progress reports that there are no data showing that these standards cause electricity rates to skyrocket, in fact, some states see big savings. Remember Colorado? “Xcel, the largest utility in Colorado, says that the state’s renewable energy standard will ultimately save their consumers as much as $100 million over 25 years,” reports American Progress. “And in California solar power is cheaper than building a new natural gas power plant: Solar developers have committed to selling power for 8.923 cents per kilowatt-hour, while natural gas is expected to cost at least 8.956 cents per kilowatt-hour for the same type of contract.”


Related Reading:

The Case For A Federal Renewable Energy Standard

Ohio Needs Clean Energy

California Leads The Nation In Developing A Clean Energy Economy


Image via Thinkstock

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Carrie-Anne Brown

thanks for sharing :)

Edo R.
Edo R.2 years ago

Thanks for sharing!

Grace Adams
Grace Adams2 years ago

Connecticut has a renewable energy standard for its two electric utilities. They just has a big fight in the state legislature over it--demanding that utilities meet renewable energy standards with renewable energy generated in Connecticut and not JUST buying hydro-power from Quebec for their entire renewable energy requirement. CL&P got a rate increase to help meet the requirements and renewable energy people got a commitment to buy more renewable energy generated in Connecticut.

Quanta Kiran
Quanta Kiran2 years ago


Sue H.
Sue H.2 years ago

Excellent article, thanks.

Marcel Elschot
Marcel Elschot2 years ago

Thanks for sharing

Arild Warud
Arild Warud2 years ago

Thanks for the info.

Natasha Salgado
Natasha Salgado2 years ago

Great info! Thanks

Frank S.
Past Member 2 years ago

Trading or selling credits to other electricity companies is like cheating on an exam. Why have standards at all when the state allows cheating. The stupidity of this is overwhelming...
Big Oil strikes again.

Anna Undebeck
Anna Undebeck2 years ago

Every little step in the right direction is better than nothing. Thanks for the article!