title: "What Is a Renewable Portfolio Standard (RPS)?" description: How state renewable portfolio standards work — mandates, targets, solar carve-outs, and their impact on energy prices and clean energy growth. summary: How state renewable portfolio standards work — mandates, targets, solar carve-outs, and their impact on energy prices and clean energy growth. category: policy difficulty: Intermediate updated: 2026-02-10 tags: ["RPS", "policy", "renewable energy", "state policy", "mandates"] relatedTools: ["/tools/incentive-finder"] faqs:
- question: How many states have an RPS? answer: As of 2025, 30 states plus the District of Columbia and 3 U.S. territories have mandatory RPS requirements. An additional 7 states have voluntary renewable energy goals. The U.S. does not have a federal RPS, making this entirely a state-level policy.
- question: Do RPS mandates increase electricity prices? answer: Studies are mixed but generally show minimal price impact. A comprehensive review by Lawrence Berkeley National Laboratory found that RPS compliance costs average 2–3% of retail electricity bills. In many cases, the cost of new renewables (especially wind and solar) has fallen below the cost of new fossil fuel generation, making RPS compliance cost-neutral or net-negative.
- question: What happens if a utility doesn't meet the RPS? answer: Non-compliant utilities must make Alternative Compliance Payments (ACPs) — essentially penalty payments ranging from $25 to $100+ per MWh of shortfall. These payments fund state renewable energy programs. In practice, most utilities meet or exceed requirements because purchasing RECs or building renewables is cheaper than the penalty.
- question: What is a solar carve-out? answer: A solar carve-out requires that a specified portion of the RPS target be met specifically with solar energy (not just any renewable source). This creates dedicated demand for solar — and in states with SREC markets, significant revenue opportunities for solar system owners.
Renewable Portfolio Standards (RPS)
A Renewable Portfolio Standard is a state regulation that requires electricity providers to obtain a minimum percentage of their power from renewable energy sources by a specified date. RPS policies are the primary driver of utility-scale renewable energy deployment in the United States.
How RPS Works
The Basic Mechanism
- State legislature or regulatory agency establishes a target (e.g., 50% renewable by 2030)
- Utilities must acquire Renewable Energy Certificates (RECs) or generate renewable electricity equal to the required percentage of their retail sales
- Compliance is verified annually by the state regulatory agency
- Non-compliance triggers Alternative Compliance Payments (penalties)
Eligible Resources (Varies by State)
Most state RPS programs include:
- Solar (photovoltaic and concentrated solar)
- Wind (onshore and offshore)
- Hydroelectric (sometimes limited to small hydro under 30 MW)
- Biomass and biogas
- Geothermal
- Marine/tidal energy
Some states include controversial resources:
- Municipal solid waste (waste-to-energy)
- Large hydroelectric
- Nuclear (usually not eligible, but Ohio briefly included it)
State RPS Targets (Selected)
| State | Target | Deadline | Notes | |-------|--------|----------|-------| | California | 100% clean energy | 2045 | SB 100; includes non-renewable zero-carbon sources | | New York | 70% renewable / 100% zero-emission | 2030 / 2040 | CLCPA; most aggressive near-term target | | Massachusetts | 80% clean energy | 2050 | Includes offshore wind carve-out | | New Jersey | 50% renewable | 2030 | Includes 7,500 MW offshore wind target | | Virginia | 100% clean energy | 2045 (Dominion) / 2050 (Appalachian) | Clean Economy Act (2020) | | Colorado | 100% renewable | 2040 (Xcel) | SB 19-236; utility-specific targets | | Hawaii | 100% renewable | 2045 | First state to set 100% target (2015) | | Texas | 10,000 MW | 2025 (achieved early) | Non-binding goal; exceeded target by 3x+ | | Illinois | 50% renewable | 2040 | CEJA (2021); includes equity provisions | | North Carolina | 70% clean energy | 2030 | HB 951; includes nuclear in "clean" definition |
Solar Carve-Outs
Several states require a specific percentage of RPS compliance to come from solar:
| State | Solar Carve-Out | SREC Market? | |-------|:-:|:-:| | New Jersey | 5.1% of retail sales by 2028 | Yes (SREC-II) | | Maryland | 14.5% by 2030 | Yes | | Massachusetts | Specified targets by capacity block | Yes (SMART program) | | Washington, D.C. | 10% by 2041 | Yes (highest SREC prices) | | Pennsylvania | 0.5% (solar PV) | Yes | | Illinois | Specified by block/year | Yes (Adjustable Block Program) |
In states with active SREC markets, residential solar owners can earn additional revenue by selling the RECs their system generates — potentially $500–$3,000+ per year depending on system size and SREC prices.
Impact on Clean Energy Growth
RPS policies have been remarkably effective:
- States with RPS mandates account for the vast majority of renewable energy investment
- The Database of State Incentives for Renewables and Efficiency (DSIRE) tracks all state-level policies
- Between 2000 and 2024, RPS-driven demand helped scale wind costs down 70% and solar costs down 90% (LBNL data)
- As of 2024, the U.S. has over 250 GW of wind and solar capacity — most deployed in states with RPS mandates
Cost Impact
Lawrence Berkeley National Laboratory's annual RPS compliance cost analysis consistently finds:
- Average compliance cost: 2–3% of retail electricity bills ($1–$3/month for typical homes)
- Some states report net savings because new renewables are cheaper than the fossil fuel generation they displace
- The indirect economic benefits (job creation, reduced health costs from air pollution, energy price stability) are estimated to significantly exceed compliance costs
Criticism and Debate
Arguments For
- Create market certainty that attracts investment
- Reduce emissions and air pollution
- Drive technology cost reductions through scale
- Create clean energy jobs
Arguments Against
- May increase costs in regions with limited renewable resources
- Technology-neutral standards may favor cheapest option (wind) at the expense of diversity
- Some argue carbon pricing is more economically efficient
- Mandates can create distortions in wholesale markets
States Without RPS
About 20 states (largely in the Southeast and parts of the Mountain West) have no mandatory RPS. These include Alabama, Arkansas, Florida, Georgia, Idaho, Kentucky, Louisiana, Mississippi, Nebraska, South Dakota, Tennessee, West Virginia, and Wyoming. Some of these states are nonetheless seeing significant renewable deployment driven by economics alone — solar and wind are often the cheapest new generation options regardless of mandates.