Renewable portfolio standard

• 1. Introduction

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  The renewable portfolio standard behind California's push toward a cleaner grid took concrete form in October 2015, when the state legislature passed Senate Bill 350. The law ordered retail sellers and publicly owned utilities to procure 50 percent of their electricity from eligible renewable resources by 2030. At its core, a renewable portfolio standard requires increased production of energy from sources like wind, solar, biomass, and geothermal power. The same policy goes by other names depending on where it operates. In the United States it's often called the Renewable Electricity Standard at the federal level, and in the United Kingdom, the Renewables Obligation. How does a regulation force electricity suppliers to change what they sell, without the government building a single power plant? What exactly is being bought and sold when a certificate for clean electricity changes hands? And why did some governments write these rules as fixed percentages, while others left the mechanism to competition among suppliers?

• 2. The Certificate Market

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  In jurisdictions such as California, minimum RPS requirements are set into law. In others, the mechanism can rely on the private market for its implementation instead. Either way, the system runs on certificates. Certified renewable energy generators earn a certificate for every unit of electricity they produce. They can sell that certificate alongside the electricity itself to supply companies. Under the RPS mechanism, electricity supply companies carry the obligation to produce a specified fraction of their output from renewable sources. Supply companies then pass the certificates they've collected to a regulatory body, offering proof that they met that obligation.

  Since 2013, the levelized cost of electricity from wind fell below every fossil fuel option, with solar matching that trend by 2015. Supporters of the RPS model point to numbers like these as proof that opening renewable supply to competition works. They argue that letting the market decide who supplies renewable power drives competition, efficiency, and innovation. That combination, they claim, pushes the price of clean electricity down until it can beat fossil fuel generation on cost alone. RPS programs tend to open the door to price competition between different types of renewable energy, though eligibility rules and multipliers can narrow that competition.

  That certificate-and-obligation model does not stop at one border. It has been written into energy law across a very different set of countries and states.

• 3. Reaching Across Borders

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  Twenty-nine of the fifty U.S. states have adopted an RPS-type mechanism, alongside the District of Columbia. The same basic approach also operates outside American borders, in the United Kingdom, Italy, Poland, Sweden, Belgium, and Chile. Sharing a label does not mean sharing a design. Some governments set out a hard percentage target with a firm deadline. Others build a market and let electricity suppliers work out the details of compliance on their own.

  In Australia, that shape takes the form of a single law, the Renewable Energy (Electricity) Act 2000.

• 4. Targets Across Asia

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  China set its first renewable energy target in 2006, then revised the figures in 2009 into two separate goals. One target aimed for 500 gigawatts of renewable electricity capacity by 2020. That figure broke down into 300 gigawatts of hydropower, 150 of wind, 30 of biomass, and 20 of solar photovoltaic power. The other set renewable energy overall at 15 percent by 2020. That figure folds in nuclear power alongside wind, solar, and the rest of the non-fossil fuel mix.

  Japan built its framework earlier still, on the 1997 Act on the Promotion of New Energy Usage. Under that law, Japan targeted 118 million kilowatt hours for the year 2012, a figure attributed to METI.

  The Republic of Korea has had its own version since 2012. It goes by the Act on the Promotion of the Development, Use, and Diffusion of New and Renewable Energy.

  Europe, meanwhile, was moving toward the same goal independently, already bound by its own continent-wide renewable electricity rules.

• 5. Europe's Shared and Separate Rules

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  In 2007, the European Union set a shared group of targets for every member state to work toward. One target called for 33 percent of electricity from renewable sources by 2020. The other called for 20 percent of total energy from renewables by that same year. Member states remained free to pass more ambitious targets of their own, and Germany did exactly that.

  Germany's Renewable Energy Act has been in force since 2000. The law has driven strong growth in renewable power capacity by guaranteeing private investors a fixed feed-in tariff for the electricity they generate. In September 2010, Germany set targets well beyond what the EU required. Electricity was to reach 35 percent renewable by 2020, and 80 percent by 2050. Overall energy was to reach 18 percent by 2020-30 percent by 2030, and 60 percent by 2050.

  Britain built a related system under a different name entirely: the Renewables Obligation.

• 6. Britain's Renewables Obligation

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  In April 2002, England and Wales began requiring licensed suppliers to source a growing share of electricity from renewable sources. Scotland ran a parallel version, the Renewables Obligation (Scotland), while Northern Ireland waited until April 2005 to join. Both replaced the Non-Fossil Fuel Obligation, a scheme that had operated since 1990.

  The obligation started small: suppliers had to source just 3 percent of their electricity from renewables in the 2002/03 period. That figure has climbed steadily. It reached 11.1 percent in 2010/11, or 4.0 percent in Northern Ireland. Political commitments pushed it further still, to 15.4 percent by 2015/16, or 6.3 percent in Northern Ireland. The scheme now runs until 2037, or 2033 in Northern Ireland.

  That extension, from an original 2027 end date out to 2037, was declared on the 1st of April 2010. It is detailed in the National Renewable Energy Action Plan.

  Since the scheme began, it has more than tripled the level of eligible renewable electricity generation. Total UK supply climbed from 1.8 percent renewable to 7.0 percent by 2010.

  The United States had tried a version of its own well before Britain did, under an entirely different law and a different name.

• 7. America's Uneven Path

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  In 1978, the U.S. Congress passed the Public Utility Regulatory Policies Act as part of the National Energy Act. The law aimed to promote greater use of renewable energy, largely through feed-in tariffs. It contained little language spelling out explicit renewable energy objectives or quotas.

  In 2009, Congress considered a federal-level RPS requirement for the first time. The Senate Committee on Energy and Natural Resources reported the American Clean Energy and Security Act out of committee that July. It included a Renewable Electricity Standard, calling for 3 percent of the United States' electrical generation to come from non-hydro renewables by 2013. The full Senate never passed the bill.

  In Michigan and Virginia, solar generation counts for twice as much as other renewable sources. That's because different state RPS programs issue a different number of Renewable Energy Credits, depending on which generation technology produced the electricity.

  The Lawrence Berkeley National Laboratory credits RPS requirements with 60 percent of the total increase in American renewable electricity generation since 2000. That same laboratory reports the policy's role has been shrinking. RPS programs accounted for 71 percent of the country's annual renewable energy builds in 2013. Just two years later, in 2015, that figure had fallen to only 46 percent.

  That decline leaves an open question about what happens to America's renewable growth if RPS mandates keep receding as a share of new building.