Have State Renewable Portfolio Standards Really Worked? Synthesizing Past Policy Assessments to Build an Integrated Econometric Analysis of RPS effectiveness in the U.S.

40 Pages Posted: 26 Oct 2012 Last revised: 16 Jan 2013

See all articles by Gireesh Shrimali

Gireesh Shrimali

Indian School of Business (ISB), Hyderabad

Steffen Jenner

University of Tuebingen; Harvard University

Felix Groba

German Institute for Economic Research (DIW Berlin)

Gabriel Chan

University of Minnesota - Minneapolis - Humphrey School of Public Affairs

Joe Indvik

ICF International

Date Written: October 25, 2012

Abstract

Renewable portfolio standards (RPS) are the most popular U.S. state-level policy tools for promoting deployment of electricity from renewable energy (RES-E). While several econometric studies have estimated the effect of RPS policies on RES-E deployment, results are sometimes contradictory. Thus, there is a need to not only reconcile these studies but also establish a definitive answer to the question whether RPS policies have been effective in increasing RES-E deployment.

We use a panel – 50 states over 1990-2010 – of renewable deployment, policy design elements and market dynamics to capture the heterogeneity in state RPS design and state characteristics. We run time series cross sectional regressions with fixed effects, and verify the causal effect implied by our results with a nonparametric matching analysis. We trace discrepancies among past findings to differences in data classification and model specification.

We show that the key feature of RPS policies – RPS stringency – has no effect, and in some cases a negative effect, on RES-E deployment. We also investigate the impact of individual RPS features. We show that renewable energy certificate (REC) unbundling as well as the presence of RPS in neighboring states is correlated with greater RES-E deployment locally, while other features – such as allowing greater flexibility to buy renewable energy from out-of-state – slows in-state RES-E deployment.

We show that mandatory green power options have a positive effect on RES-E deployment while net metering schemes appear to have a negative impact. However, we were unable to detect any impact of an interaction effect between RPS and these policies. Finally, we investigate the impact of policies on the deployment of individual renewable technologies (biomass, geothermal, solar, and wind) and demonstrate differentiated policy impacts, such as biomass driving the result on RPS stringency.

Keywords: Renewable energy, Renewable portfolio standards, Panel data models, Matching analysis

JEL Classification: C23, H23, Q42, Q48

Suggested Citation

Shrimali, Gireesh and Jenner, Steffen and Groba, Felix and Chan, Gabriel and Indvik, Joe, Have State Renewable Portfolio Standards Really Worked? Synthesizing Past Policy Assessments to Build an Integrated Econometric Analysis of RPS effectiveness in the U.S. (October 25, 2012). USAEE Working Paper No. 12-099; DIW Berlin Discussion Paper No. 1258. Available at SSRN: https://ssrn.com/abstract=2166815 or http://dx.doi.org/10.2139/ssrn.2166815

Gireesh Shrimali (Contact Author)

Indian School of Business (ISB), Hyderabad ( email )

Hyderabad, Gachibowli 500 019
India

Steffen Jenner

University of Tuebingen ( email )

Wilhelmstr. 19
72074 Tuebingen, Baden Wuerttemberg 72074
Germany

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

Felix Groba

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Gabriel Chan

University of Minnesota - Minneapolis - Humphrey School of Public Affairs ( email )

130 Humphrey School, 301 19th Ave. S
Minneapolis, MN 55455
United States
612-626-8910 (Phone)
612-625-3513 (Fax)

HOME PAGE: http://www.hhh.umn.edu/

Joe Indvik

ICF International ( email )

1725 I Street N.W.
Washington, DC 20006
United States

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