The Costs and Benefits of Renewable Portfolio Standards

Connecticut’s Renewable Portfolio Standard (RPS) requires electric companies and competitive suppliers to procure part of their power from renewable and other clean energy resources. The companies and suppliers can meet the RPS by buying renewable energy credits on the regional wholesale market.

Researchers at the National Renewable Energy Laboratory and the Lawrence Berkeley National Laboratory have attempted to quantify the costs and benefits of such policies in 29 states, including Connecticut, where RPS policies have been in place for more than five years.

Source: National Renewable Energy Laboratory and the Lawrence Berkeley National Laboratory

The above graph shows some of their findings on RPS cost. The red circles represent RPS targets, and are measured as a percentage of retail sales on the right side of the graph. The green bars represent estimated incremental RPS costs as a percentage of retail rates. For example, in Connecticut, RPS costs are estimated to be just over 2% of the average retail rate, with a recent RPS target of just under 10% of retail sales and a final RPS target of 20% of retail sales.

The researchers note that comparing across states is difficult, as states take different approaches to implementing each RPS and utilities and regulators use different techniques for measurement. And, if costs are complicated, benefits are even more so, since the benefits of RPS policies include factors that are traditionally difficult to calculate monetarily, such as public health benefits and decreased carbon emissions.