State and Local Policy Analysis

NREL's state and local policy analysis team examines the effects of policy on renewable energy development and deployment on a state and local level.

Clean Energy Policy Analysis

One of NREL's key state and local policy initiatives is the Clean Energy Policy Basics project. Through this project, NREL analysts seek to quantify the connection between state and local policies and clean energy market development and identify the impact of state policy on decision makers. Learn more about clean energy policy on the NREL State & Local Activities website.

Key Analyses for 2016

Understanding of the Benefits and Impacts of RPS Programs

A new study by researchers from the U.S. Department of Energy's National Renewable Energy Laboratory (NREL) and Lawrence Berkeley National Laboratory (Berkeley Lab) estimates that $2.2 billion in benefits came from reduced greenhouse gas emissions and $5.2 billion from reductions in other air pollution, in mid-range estimates, for state renewable portfolio standard (RPS) policies operating in 2013. RPS policies require utilities or other electricity providers to meet a minimum portion of their load with eligible forms of renewable electricity.

In addition to environmental benefits, the study estimates that RPS policies supported 200,000 renewable energy-related jobs in 2013. Renewable energy jobs from RPS projects were concentrated mostly in California, where large amounts of utility-scale photovoltaic generation was being built in 2013.

This work was a follow-up and complement to an earlier study by the two labs that focused on the costs of state RPS programs to date that noted the need for a full understanding of the potential benefits, impacts, and costs of RPS programs. To that end, the most recent study provides a point of comparison for estimates of RPS program costs. Based on the results of this national study, benefits resulting from reduced greenhouse gas emissions equate to 0.7 to 6.4 cents per kilowatt-hour (kWh) of renewable energy, while benefits from reduced emissions of criteria air pollutants amount to 2.6 to 10.1 cents per kWh. Consumer savings from wholesale electricity market and natural gas price reductions represent another 0 to 1.2 cents per kWh and 1.3 to 3.7 cents per kWh, respectively. Ranges are presented as the models and methodologies used are sensitive to multiple parameters.

Key Analyses for 2015

Quantifying the Level of Cross-state Renewable Energy Transactions

A new NREL presentation and visualization document and display data collected from renewable energy certificate (REC) tracking systems and other public sources to help improve the understanding of the extent to which states are using renewable energy from outside their borders to comply with renewable portfolio standards (RPSs). This first-ever assessment employed two methods:

Data were gathered from regional REC tracking systems, state agencies, and utility compliance reports to identify cross-state transactions that were used to meet RPS compliance requirements in 2012 and 2013. States on average sourced 61% of 2012 RPS requirements from in-state resources (65% on weighted average basis).

Generator-specific information, including data on power purchase agreements (PPAs), gathered from several sources was used to estimate regional renewable energy flows. Due to data limitations, only a subset of PPA counterparties could be matched with power plants; as a consequence, only 43% of the total net generation from power plants with a PPA in place are reflected in the analysis.

These two approaches are complementary but address different aspects of cross-state interactions, as power generated in a given year may not be used for RPS compliance in that same year.

The REC data set indicates that states in New England and the mid-Atlantic are using greater percentages of out-of-state renewable energy certificates (RECs) than states in the Midwest and West. RPS requirements typically restrict eligible RECs to a state's region.

This first-time assessment was greatly improved through input from renewable energy certificate tracking system administrators and state RPS administrators.

Key Analyses for 2014

A Survey of State-Level Cost and Benefit Estimates of Renewable Portfolio Standards

Based on an analysis of data from state compliance filings and other sources, a new joint NREL/LBNL report finds that the estimated incremental RPS cost over a period from 2010-2012—the cost above and beyond what would have been incurred absent the RPS—was less than 1% of retail electricity rates on average. This is well below the cost caps that most state legislatures have adopted as part of their RPS.

The authors find that a lack of benefits estimates and methodological differences limit the ability to directly compare benefits and costs. Such estimates can inform policymaker assessments of existing RPS policies, modifications to existing policies, and potential new policies.

The report also includes a review of the limited number of published quantitative assessments of RPS benefits—which vary widely in both methodology and magnitude.

NREL analyst Joyce McLaren and RAP principal Carl Linvill presented Here Comes the Sun: Regulatory Considerations Associated with the Expanded Adoption of Distributed Solar. Installed solar photovoltaic (PV) capacity more than tripled in the past three years, while installed costs for residential and commercial systems have fallen by about 30%. Industry analysts forecast that PV capacity will double from current levels by the end of 2015. Increased adoption of distributed generation, particularly distributed solar PV, will change utility-customer interactions, cost recovery, and revenue streams. Regulators face the challenge of defining and preparing for the potential rate and revenue impacts of expanded distributed PV. The regulatory context and rate structures governing utilities and owners of residential and commercial-scale distributed PV present both market opportunities and market barriers that will influence the path forward for proliferating distributed PV.

A number of regulatory models and rate design alternatives are available to address the challenges posed by the transition toward increased adoption of distributed PV. In a recent paper, Regulatory Considerations Associated with the Expanded Adoption of Distributed Solar, NREL teamed with the Regulatory Assistance Project (RAP) to frame these issues, explore the regulatory implications, and examine the options for addressing this growing challenge.

Download: Presentation| Video | Transcription | Full Report
Using interviews and a questionnaire, Treatment of Solar Generation in Electric Utility Resource Planning—by Joyce McLaren and Karlynn Cory of NREL and John Sterling and Mike Taylor of Solar Electric Power Association (SEPA)—begins a discussion about how solar technologies are considered in the resource planning process. Today's utility planners have a different market and economic context than their predecessors, including planning for the growth of renewable energy. State and federal support policies, solar PV price declines, and the introduction of new business models for solar PV "ownership" are leading to increasing interest in solar technologies, especially PV.

Key Analyses for 2013

NREL Report Analyzes Renewable Energy Development Outlook in the West

In a new report, NREL assesses the outlook for utility-scale renewable energy development in the West once states have met their RPS requirements.

A new NREL report, Beyond Renewable Portfolio Standards: An Assessment of Regional Supply and Demand Conditions Affecting the Future of Renewable Energy in the West, by David J. Hurlbut, Joyce McLaren, and Rachel Gelman of NREL assesses the outlook for utility-scale renewable energy development in the West once states have met their renewable portfolio standard (RPS) requirements. In the West, the last state RPS culminates in 2025, so the analysis uses 2025 as a transition point on the timeline of renewable energy development. Most western states appear to be on track to meet their final requirements, relying primarily on renewable resources located relatively close to the customers being served. What happens next depends on several factors, including trends in the supply and price of natural gas, greenhouse gas and other environmental regulations, consumer preferences, technological breakthroughs, and future public policies and regulations. Changes in any one of these factors could make future renewable energy options more or less attractive.

Key Analyses for 2012

State Renewable Portfolio Standards

Analysts Jenny Heeter and Lori Bird recently published the report Including Alternative Resources in State Renewable Portfolio Standards: Current Design and Implementation Experience. As of November 2012, 29 states, the District of Columbia, and Puerto Rico have instituted a renewable portfolio standard (RPS). An RPS sets a minimum threshold for how much renewable energy must be generated in a given year. Each state policy is unique, varying in percentage targets, timetables, and eligible resources. This paper examines state experience with implementing renewable portfolio standards that include energy efficiency, thermal resources, and non-renewable energy and explores compliance experience, costs, and how states evaluate, measure, and verify energy efficiency and convert thermal energy. It aims to gain insights from the experience of states for possible federal clean energy policy as well as to share experience and lessons for state RPS implementation.

Key Analyses for 2010

Policies on Net Metering

SEAC analysts Elizabeth Doris, Sarah Busche, and Stephen Hockett recently published the report Net Metering Policy Development and Distributed Solar Generation in Minnesota: Overview of Trends in Nationwide Policy Development and Implications of Increasing the Eligible System Size Cap.
The goal of the Minnesota net metering policy is to give the maximum possible encouragement to distributed generation assets, especially solar electric systems. However, according to a published set of best practices that prioritize the maximum development of solar markets within states, the Minnesota policy does not incorporate many of the important best practices that may help other states transform their solar energy markets and increase the amount of grid-connected distributed solar generation assets. Reasons cited include the low system size limit of 40kW (the best practices document recommends a 2 MW limit) and a lack of language protecting generators from additional utility fees. This study was conducted to compare Minnesota's policies to national best practices. It provides an overview of the current Minnesota policy in the context of these best practices and other jurisdictions' net metering policies, as well as a qualitative assessment of the impacts of raising the system size cap within the policy based on the experiences of other states.

As U.S. states increasingly focus on developing renewable energy resources, there is a need to track the progress of development, as well as the policies and support mechanisms being implemented to encourage this development. Beyond tracking, the evaluation of policy measures is necessary to determine their effectiveness, guide future efforts, and efficiently allocate resources.

This report addresses each of these needs. It provides a detailed picture of the status of renewable energy development in each of the U.S. states using a variety of metrics and discusses the policies being used to encourage this development.

The report then explores the context in which renewable energy development occurs by discussing the factors that can affect the uptake of power generation technologies. The analysis offers suggestions on how policies can be used to address these variables, which leads to tailored policy support that considers the specific circumstances within each state.

The analysis presents results of several quantitative evaluation methods that have been designed to explore the link between policy implementation and actual development. These analyses are an attempt to move beyond designed-based policy evaluation and develop performance-based evaluation methods instead.

Finally, the report discusses contextual factors, aside from policy, that affect renewable energy development. Understanding contextual factors, which create the framework for renewable energy markets, is essential for effective policy design and implementation. The report concludes with a summary of the main points from each chapter, discussion of next steps, and a list of resources.

Decoupling Policies

NREL has published Decoupling Policies: Options to Encourage Energy Efficiency Policies for Utilities. This report provides information for states and communities on clean energy policies. Decoupling can be a win-win strategy to both utility companies and their customers by breaking the link between electricity and gas sales and revenue. This document describes how a well-designed decoupling plan can help keep utility profits steady and customers' energy costs in check—removing the disincentive for utilities to promote energy efficiency programs.

Renewable Energy Rebates

SEAC analysts Eric Lantz and Elizabeth Doris recently published the report State Clean Energy Practices: Renewable Energy Rebates. This report highlights the impacts of specific renewable energy rebate programs on renewable energy markets around the country, as well as rebate program impacts on overarching energy policy drivers. It also discusses lessons learned, challenges, ideal applications, keys to success, and complementary and alternative policies. Results indicate that rebate programs can have a strong deployment impact on emerging renewable energy markets. This report focuses on renewable energy rebate programs, which are being analyzed as part of the State Clean Energy Policies Analysis (SCEPA) project. SCEPA looks at the impacts of existing state policies and identifies crucial policy attributes and their potential applicability to other states.

The Database of State Incentives for Renewables and Efficiency (DSIRE) is a comprehensive source of information on state, local, utility, and selected federal incentives that promote renewable energy. DSIRE also has information on the programs, rules and regulations, and financial incentives.