What is the Renewables Portfolio Standard and how does it work?
The Renewables Portfolio Standard (RPS) would require each company that generates electricity in the U.S., or in a given state, to obtain part of the electricity it supplies from renewable energy sources such as wind. To meet this requirement, the company could either generate electricity from renewables itself or buy credits or electricity from a renewable generator such as a wind farm. This “credit trading” system has been used effectively by the federal Clean Air Act to require utilities to reduce pollutant emissions. Aside from the “minimum renewable content” requirement, the RPS imposes very few other requirements on companies–they are free to buy, trade, or generate electricity from renewables in whatever fashion is most efficient and economical for them. The RPS is therefore often described by its supporters as being “market-friendly,” because it allows market forces to decide which renewable energy sources will be developed where, and also allows price competition. Several fed
