Effects of renewables portfolio standards on renewable energy generation

Renewable energy as a share of total electricity generated has been increasing in recent years. According to The Energy Information Administration (EIA), half the installed capacity for electricity generation in 2017 came from renewable energy. Thirty-eight states have enacted policies to encourage or require some of their generated electricity to come from renewable sources. Renewables Portfolio Standards (RPS) have varying requirements and objectives among the states, but the overall objective is to diversify the ways electricity is generated and reduce emissions of greenhouse gases. Data are obtained from the EIA, The Census Bureau, The Bureau of Economic Analysis, and The Database of State Incentives for Renewables and Efficiency. The objective of this study is to investigate the effect of implementing a renewable energy policy at the state level and to add to the literature in several ways. First, this study uses a fixed effects regression model on a state-level panel data set from 2001 to 2016, that allows for the inclusion of the increase in the share of total renewable energy generation after 2006. Second, RPS policies that require compliance, as well as voluntary policies, are included to capture the effects of all state level incentives on renewable energy generation. Third, the effects of RPS policies on the shares of wind, solar, and geothermal energy generation are examined. Finally, a policy recommendation is made for those states considering some form of RPS policy. Results show that after states enacted an RPS, either voluntary or required, the share of renewable energy generation increased. Shares of wind, solar, and geothermal electricity generation also increased. The implications for policy include recommendations for which type of RPS policy would be optimal for states considering the most effective way to increase renewable energy generation using an RPS.