It’s no secret that renewable energy in New England has gone mainstream. Just drive down the highway and you will see solar arrays on commercial buildings, installation trucks driving to their next project or wind turbines dotting the landscape; all reminding us that we are experiencing a clean energy boom. According to a recent report by the Mass Clean Energy Council (MassCEC) on clean energy jobs in Massachusetts, the Commonwealth’s clean energy economy employs nearly 100,000 people at over 6,400 companies, representing nearly $11 billion in investment.
One could argue that the Renewable Portfolio Standard (RPS) is the single policy that has done the most to create this boom and advance clean energy in the Northeast and 29 states total across the U.S.
What exactly is an RPS? An RPS is a program designed to promote the adoption of renewable energy. It requires utilities and other energy providers to procure a set amount of their energy from renewable sources. For example, in Massachusetts the rate increases each year by 1% through 2030 with a total target of 25%, and in Connecticut by 1.5% through 2020 with a target of 20%.
The RPS allows renewable energy generators like wind farms and solar energy system owners to sell Renewable Energy Certificates (RECS), in addition to the energy itself. A REC represents 1 megawatt-hour of renewable power that can be bought and sold. In this way, there is a liquid market where energy providers (utilities and other retail providers) can easily secure the RECs needed to meet their regulatory requirements. The additional revenue acts as an incentive for developers and owners and makes it easier to finance projects. The RPS is an efficient market-based policy that has provided the stimulus to launch the region’s clean energy industry and to help states meet their legal commitments to reduce greenhouse gas emissions.
However, a new study by the Northeast Clean Energy Council shows that the supply of RECs is outpacing the regulatory demand requirement—supply is outpacing demand. This puts at risk the ability of renewable energy developers to secure the financing they need to build their projects.
Continue reading excerpts from Solect Energy’s Craig Huntley’s article in the June issue of NEREJ to learn more about what exactly an RPS entails, how it’s helped the country quantify our renewable energy goals, and the potential RPS programs bring for our future.
For the complete article in NEREJ, click the link below to access the article.