Limiting the Cost of Renewables – Lessons for California
June 4, 2012
Many US states use Renewable Portfolio Standards (RPS) to drive deployment of renewable energy. These policies use market-based mechanisms to encourage cost-effective deployment. Many RPSs also include additional measures to limit policy costs; these are intended to mitigate the risk that the RPS will impose higher costs than originally anticipated.
As part of California’s 33 percent RPS, state electricity regulators at the California Public Utilities Commission (CPUC) are required to develop a mechanism to limit the cost of the policy. To support CPUC in this task, Climate Policy Initiative reviewed experience in a number of states with costs limits in renewable energy policies.