International Best Practices for Implementing and Designing Renewable Portfolio Standard (RPS) Policies

Thu, 05/16/2019 - 12:12
South Africa, Middle East and North Africa, South Asia, Latin America and Caribbean, East Asia and Pacific, Europe and Central Asia, North America, Sub-Saharan Africa

A Renewable Portfolio Standard (RPS) is a public policy tool requiring a certain amount of renewable electricity relative to the entire electricity supply. These policies are meant to increase generation from “renewable”, or more broadly “clean” technologies that are legally defined within the policy. An RPS can be motivated by environmental, economic, or geopolitical reasons. As of April 2017, 173 countries had some form of and RPS in place.

To be considered an RPS, the case studies suggest the policy must include: a capacity target (either as a percentage of the grid, a MW generation capacity, or a MWh produced energy), a target year, a list of eligible technologies and whether the technology can be existing or new, considerations for renewable imports and credits, and an enforcement structure. While this is the basic structure, there are large variations in RPS structures internationally. The RPS itself is influenced by policy design that often includes capacity analysis (i.e. how much sunlight hits a region), stakeholder input, incentivizing procurements, and a cost-containment provision.
Besides RPSs, other policies can be developed to procure renewable technologies or support the adoption of the RPS. Feed-in-tariffs or price structures like net metering can help to provide a stable income that enables financing. Transmission planning, identifying a central compliance authority, and aligning of program timescales can also be used to support the RPS.

As described below, in the report, six countries are cited with unique features of their RPSs. These features are highlighted to enable further exploration in various contexts and may not be suitable for all countries or jurisdictions.

  • Australia enacted an RPS at both state and federal levels. Unique to Australia was the inclusion of large- and small-scale credits, one benefiting generators and one benefiting distributed producers such as homeowners.
  • China enacted its RPS in stages and it included three key mechanisms: using generation (MWh) instead of capacity (MW) targets, regional mandates, and establishing regulated entities for compliance and enforcement.
  • Korea implemented an RPS for large generation companies (over 500 MW). The Korean RPS included both credits and power-purchasing agreements to encourage procurement. However, instead of technology-specific carve-outs the Korean RPS included weighting factors to increase payments to specific technologies.
  • Mexico implemented an RPS using clean energy credits that applied to more technologies including nuclear energy. Additionally, the enforcement mechanism was based on energy produced and was valued at $200/MWh if the RPS was not achieved.
  • The Philippines does not have an RPS but is adopting one to improve upon their feed-in-tariff, which did not achieve their intended goals. The Philippines RPS design is unique in its market place for credits that can be sold directly to compliance officers.
  • The United States has multiple RPSs at the state levels. Several US RPSs are unique in their reliance on carve-outs for particular technologies and implementations (i.e. solar and distributed).
Source details
  • National Renewable Energy Laboratory (NREL)
  • Hawaii Natural Energy Institute (HNEI)