A renewable portfolio standard (RPS) is a regulation that requires the increased production of energy from renewable energy sources, such as wind, solar, biomass, and geothermal. Other common names for the same concept include Renewable Electricity Standard (RES) at the United States federal level and Renewables Obligation in the UK.
The RPS mechanism places an obligation on electricity supply companies to produce a specified fraction of their electricity from renewable energy sources. Certified renewable energy generators earn certificates for every unit of electricity they produce and can sell these along with their electricity to supply companies. Supply companies then pass the certificates to some form of regulatory body to demonstrate their compliance with their regulatory obligations. RPS can rely on the private market for its implementation. In jurisdictions such as California, minimum RPS requirements are legislated. California Senate Bill 350 passed in October 2015 requires retail sellers and publicly owned utilities to procure 50 percent of their electricity from eligible renewable energy resources by 2030. RPS programs tend to allow more price competition between different types of renewable energy, but can be limited in competition through eligibility and multipliers for RPS programs. Those supporting the adoption of RPS mechanisms claim that market implementation will result in competition, efficiency, and innovation that will deliver renewable energy at the lowest possible cost, allowing renewable energy to compete with cheaper fossil fuel energy sources.[1] Since 2013, the Levelized cost of electricity from Wind energy dropped below that of all fossil fuels, followed in 2015 by Solar energy.
RPS-type mechanisms have been adopted in several countries, including the United Kingdom, Italy, Poland, Sweden, Belgium,[2] and Chile, as well as in 29 of 50 U.S. states, and the District of Columbia.[3] [4]