Renewable Portfolio Standards

May 14, 2022 3 min

Renewable Portfolio Standards

Why are Renewable Portfolio Standards important?

Renewable Portfolio Standards encourage renewable energy use in states throughout the country, reducing reliance on fossil fuels.

California’s standards are among the most ambitious in the U.S., requiring that 33% of the power provided by electric utilities come from renewable sources by 2020. Since the policy’s implementation in 2002, solar capacity has grown tremendously as utilities shift focus away from fossil fuels.

Strong RPS policies are key to solar’s future success in California. Some reasons the RPS is so important include:

  • A diversified energy portfolio
    • Integrating solar into the grid stabilizes electricity rates
  • Reducing greenhouse gas emissions
    • Renewable energy is emission-free, letting California reach reduction goals
  • Economic benefits
    • A growing solar industry provides local jobs that stimulate the economy

A diversified energy portfolio

Fossil fuel prices rely on rapidly changing global market prices that offer no stability to consumers.

Consider that while natural gas prices are at a current low, the last decade saw rapid shifts in pricing. Even if rates are low today, changes in supply and market pricing could increase future rates with little warning.

Traditionally cheap coal-fired electricity has steadily increased over the years as well, thanks to decreased overall production and higher transportation costs. If prices continue to fluctuate wildly, utilities that solely rely on fossil fuels will be forced to shift higher costs on to ratepayers.

California ratepayers are more insulated from those higher costs thanks to RPS policies. Unlike fossil fuels, electricity from solar is free from market speculation. Plus, since 2003, nearly 70% of all new grid capacity in California has come from renewable resources like solar and wind.

While initial startup costs for solar tend to be higher than fossil fuels, production is much cheaper. That’s making it possible for utilities to meet their renewable energy requirements without passing huge costs on to consumers.

Renewable Portfolio Standard policies typically include cost-containment measures to protect consumers from any higher than expected costs. A study from the Lawrence Berkeley National Laboratory said ratepayers usually experience cost impacts of 1.6% or less.

Reducing greenhouse gas emissions

California’s Global Warming Solutions Act of 2006 requires that the state reduce its total greenhouse gas emissions to 1990 levels by 2020.

Unfortunately, California’s electric utilities still provide the majority of their electricity from fossil fuels, which are the main source of greenhouse gas emissions in California. According to the Environmental Protection Agency, burning coal, oil, and natural gas was responsible for 79% of harmful emissions in 2010.

Shifting away from fossil fuels and toward renewable energy is key to meeting California’s emission reduction goals, making the RPS a valuable tool in the fight against climate change.

The Union of Concerned Scientists predicts that meeting the 33% renewable energy standard will displace nearly 13 million tons of greenhouse gases in 2020, or the equivalent of 10 to 15 new fossil fuel plants.

Without the RPS, it’s doubtful that utilities would have taken steps to expand their renewable energy use on their own. That would make it nearly impossible to reduce greenhouse gas emissions by target amounts.

Economic benefits

An unintended benefit of California RPS policies has been local job growth, particularly in the solar industry.

Between 1995 and 2012, employment in the California solar industry increased by over 166%. The majority of that growth occurred thanks to more aggressive RPS requirements, particularly since 2009. Between 2009 and 2012, solar capacity in California increased from just 712 MW to more than 2,074 MW.

The rapid rise in demand for solar capacity led to the creation of numerous businesses in the solar industry. Today, over 1,505 solar companies in California employ approximately 43,700 workers.

Those 43,700 workers are greatly contributing to local economies throughout California. Because solar jobs tend to be labor intensive and require in-person consultation, they can’t be shipped overseas or out-of-state.

Keep RPS policies strong

Renewable Portfolio Standards throughout the country have come under attack from organizations with special interests in fossil fuels.

By electing the right politicians and supporting groups who fight for solar, you can keep California’s RPS strong. Find out more by exploring additional information on solar policies in California.