1. Renewable Portfolio Standards: Design and Impact Haitao Yin Shanghai Jiao Tong University Nick Powers University of Michigan

2. My Research Interests Environmental / Natural Disaster Insurance Corporate Environmental Management Renewable Energy Policies

3. Renewable Portfolio Standards: Design and Impact Haitao Yin Shanghai Jiao Tong University Nick Powers University of Michigan

4. Renewables Portfolio Standards State Goal State RPS ☼ Minimum solar or customer-sited RE requirement * Increased credit for solar or customer-sited RE **Includes separate tier of non-renewable “alternative” energy resources Solar water heating eligible An RPS requires all electricity generators (or retailers) to demonstrate that they have supported a certain amount of renewable energy generation. 34 States and DC

5. Motivations Existing research sends mixed message on the potential impacts of RPS  Positive relationship between RPS and renewable development (Menz and Vachon, 2006; Adelaja and Hailu, 2007) “ RPS adoption is a major driver of installed wind capacity in the United States. ” (Adelaja and Hailu, 2007)  The impact of RPS is questionable. (Michaels, 2007; Bushnell, Peterman and Wolfram, 2007; Kneifel, 2008) “ The actual record of state implementations has been largely symbolic ” ( Michaels, 2007 )

6. Motivations Existing research takes a blunt approach when studying the impact of RPS  A cross sectional approach is adopted ( Menz and Vachon, 2006; Adelaja and Hailu, 2007 ); But states have inherent differences that could be driving this correlation.  Design of RPS is ignored ( Menz and Vachon, 2006; Adelaja and Hailu, 2007; Kneifel, 2008 ); However, the devil is in details ……

7. RPS Design: Requirement This approach does not consider two critical factors  Coverage of RPS 100% Covered: IA, (VT), DC, TX, HI, MD, MN, WI Less than 60% covered: CT, PA, MT, AZ, IL, CO  Whether existing renewable generation is eligible

8. RPS Design: Requirement StNom. RqmtAdj. RqmtInc. Rqmt Rank of Nom. Rqmt Rank of Adj. Rqmt Rank of Inc. Rqmt ME30.0027.6401114 CA14.3110.59 0 2214 HI8.00 1.02338 NV6.005.150.384512 WI5.69 1.23547 NM5.004.424.33671 NJ4.584.442.7776 3 MN4.36 2.7788 2 TX2.04 1.62996 MA2.001.72 11 5 CT2.001.871.8010 4 PA1.500.000121614 AZ1.050.62 131410 MD1.00 0.05141213 IA0.86 0.6715139 NY0.810.590.49161511

9. Growth of Renewable Capacity in Selected States

10. RPS Design: In-State Protection Some states have imposed restrictions, called in-state requirements, on the system.  Allow no REC trading (IA, HI);  Set aside: require that a certain percentage of RECs must be purchased from within the state (NY, MT, NC);  Give extra credit to in-state renewable generation (DE, CO, AZ);  Output of the facility must be physically metered and verified in-state by the program administrator (TX, NV).

11. Empirical Analysis ENEWSHARECAP is the percentage of generating capacity in a state that is non-hydro renewable, represents a state-specific intercept, represents year fixed effects, represent other state policies that are designed to encourage renewable investment, and represents various social and economic variables that might have an impact on the development of renewable energy. is a measure for the RPS policy that varies both within and between states.

12. Estimation Results

13. Conclusions RPS, if designed appropriately, appears to be an effective tool to encourage renewable energy investment. It is crucial to dig into policy design details when assessing policy effectiveness.

14. The Growth of Renewable Generation: RPS States vs. Non-RPS States “RPS states” refers to those states that passed an RPS in or before 2006.

15. Percentage of Renewable Generation RPS States vs. Non-RPS States “RPS states” refers to those states that passed an RPS in or before 2000.