Renewable Portfolio Standard / Clean Energy Standard

A Clean Energy Standard (CES) and a Renewable Portfolio Standard (RPS) are closely related electricity-portfolio standards that mandate a specific percentage of electricity to be produced from qualifying sources each year. They differ primarily in which sources qualify: an RPS typically counts only renewable resources (wind, solar, geothermal, hydro, etc.), while a CES is broader and may also qualify nuclear power, fossil generation paired with carbon capture, and other low-carbon firm resources. Either should stress continuous improvement by regularly ratcheting up the proportion of qualifying sources, beginning with a relatively modest increase over existing levels and steadily increasing over time. This time horizon—best when 20 years or longer—provides time to incorporate qualifying generation into the grid, helps overcome planning challenges, and sets clear goals for investors. Programs should also specify that qualifying sources must be new or very recently built to avoid windfalls to existing generation. Both program types guarantee a minimum market size relative to demand, reducing uncertainty for manufacturers and investors, and increasing potential returns for research and development in clean and renewable technologies.

Portfolio standards should reward performance, not investment, by allowing for a broad set of resources to qualify, and allowing the market to determine which technologies are built and can achieve compliance at the lowest cost. Similarly, the best-designed policies make bid pricing transparent. Care must be taken to set targets at the appropriate level for the market so as to avoid rewarding inefficient generation in cases where the target is too large relative to resource availability.

Compliance is typically tracked through a system of tradable credits (Renewable Energy Credits or RECs for an RPS, Clean Energy Credits or CECs for a CES), with each MWh of qualifying generation assigned a unique tracking number. A credit system allows suppliers lacking adequate qualifying resources to purchase credits rather than investing in qualifying generation of their own, helping to minimize the overall cost of compliance. Non-complying suppliers should be penalized well above the market credit value to provide a sufficient incentive for participation.

The EPS represents both standards through a single unified framework. A model run can configure either an RPS, a CES, or both at once, with independent qualifying-resource definitions and percentage targets for each. This reflects how many real jurisdictions stack these policies — for example, a state-level RPS layered on top of a federal CES, or vice versa. See the main electricity sector page for the implementation details.

For a more detailed discussion, see the applicable chapter of Designing Climate Solutions, our book on smart energy and climate policy design.