A renewable portfolio standard (RPS) is a policy that requires electricity retailers to provide a minimum percentage or quantity of their electricity supplies from renewable energy sources. An RPS establishes a base level of demand but allows the market to determine which renewable energy resources will meet that demand. Historically, state legislatures and regulatory agencies have been the driving force behind RPS policy formulation, although some RPS polices have been adopted through citizen ballot initiatives. Initially proposed as a mechanism to support renewable energy development in competitively restructured electricity markets, the RPS model today serves additional policy aims such as fuel diversity and in-state economic development. By the end of 2007, 25 states and the District of Columbia had enacted RPS policies, ranging from 2% of the electricity supply in Iowa to 40% in Maine. Three other states, Illinois, Virginia and Vermont, have established nonbinding renewable energy goals. The time horizon for achieving the RPS varies among states. And there are significant differences in state RPS designsuch as technology and geographic eligibility, methods that can be used to achieve compliance, and implementation specificsthat make it difficult to generalize about RPS policies nationally.
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