International Best Practices for Implementing and Designing Renewable Portfolio Standard (RPS) Policies

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Technical Report

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April 2019

International Best Practices for

Implementing and Designing

Renewable Portfolio Standard

(RPS)

Policies

Jenny Heeter

Bethany Speer,

and Mark B. Glick

National Renewable Energy Laboratory

Hawaii Natural Energy Institute

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Office of Energy Efficiency & Renewable Energy

Operated by the Alliance for Sustainable Energy, LLC

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Laboratory (NREL) at www.nrel.gov/publications.

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Technical Report

NREL/TP-6A20-72798

April 2019

International Best Practices for

Implementing and Designing

Renewable Portfolio Standard

(RPS)

Policies

Jenny Heeter

Bethany Speer,

and Mark B. Glick

1 National Renewable Energy Laboratory

Hawaii Natural Energy Institute

Suggested Citation

Jenny Heeter, Bethany Speer, and Mark B. Glick

. International Best Practices for

Renewable Portfolio Standard (RPS)

Policies. 2019. Golden, CO: National Renewable

Energy Laboratory. NREL/

TP-6A20-72798. https://www.nrel.gov/docs/fy19osti72798.pdf.

NOTICE

This work was authored, in part, by the National Renewable Energy Laboratory, operated by Alliance for Sustainable

Energy, LLC, for the U.S. Department of Energy (DOE) under Contract No. DE-AC36-08GO28308. Funding

provided by the United States Agency for International Development (USAID) under Contract No. IAG-17-2050.The

views expressed in the article do not necessarily represent the views of the DOE or the U.S. Government including

USAID.

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iii

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ABOUT NREL

The National Renewable Energy Laboratory (NREL) is a national laboratory of the U.S.

Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the

Alliance for Sustainable Energy, LLC. With U.S. Government Support, NREL collaborates with

the Vietnam Low Emission Energy Program to provide technical assistance to the Government

of Vietnam in strengthening its enabling environment, including its power sector planning

processes, for renewable energy development.

ABOUT HNEI

The Hawaii Natural Energy Institute (HNEI), a research unit of the School of Ocean and Earth

Science and Technology, University of Hawai'i at Manoa, conducts research of state, national

and international importance to develop, test and evaluate novel renewable energy technologies.

The Institute leverages its in-house work with public-private partnerships to demonstrate real-

world operations and enable integration of emerging technologies into the energy mix. Founded

in 1974, HNEI was established in statute in 2007 with an expanded mandate to coordinate with

state and federal agencies. In this capacity, HNEI develops, deploys and demonstrates renewable

energy systems and supports energy transitions, often through partnerships with industry and

government, including state, national and international jurisdictions and organizations.

ACKNOWLEDGMENTS

For review of the paper, the authors thank Warren Leon, Clean Energy States Alliance; Ed Holt,

Ed Holt and Associates; Dan Bilello, Sadie Cox, and Emily Newes, NREL; and Son Ha-Dang

and Khanh Tuong Nguyen, Vietnam Low Emission Energy Program. For editorial support the

authors thank Lauryn Dempsey and Mike Meshek (NREL).

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

Table of Contents

1 Introduction ........................................................................................................................................... 1

2 Key RPS Design Elements and Best Practices ................................................................................................. 3

2.1 Use Analysis to Inform RPS Design ........................................................................................... 4

2.2 Gather Stakeholder Input in Developing Targets and RPS Design ............................................... 6

2.3 Identify Eligible Renewable Resource Types and Ages ............................................................... 6

2.4 Clearly Define the RPS ................................................................................................................. 7

2.5 Ensure Compliance via Enforcement ............................................................................................ 9

2.6 Provide a Cost-Containment Mechanism .................................................................................... 10

3 Policy and Procurement Mechanism Interactions ........................................................................................ 12

3.1 Renewable Energy Auctions ....................................................................................................... 12

3.2 Renewable Energy Compensation Policies ................................................................................. 13

3.3 Transmission Planning ................................................................................................................ 14

3.4 Other Policy Interactions ............................................................................................................. 15

4 International RPS Examples ........................................................................................................................... 16

4.1 United States ............................................................................................................................... 16

4.2 Mexico ......................................................................................................................................... 18

4.3 China ........................................................................................................................................... 18

4.4 Korea ........................................................................................................................................... 19

4.5 Australia ...................................................................................................................................... 20

4.6 Philippines ................................................................................................................................... 21

4.7 Summary of International RPS Examples

................................................................................... 22

5 References ......................................................................................................................................................... 23

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List of Figures

Figure 1. Distribution of RPS targets internationally, by terminal year date and

percentage of renewable energy ...................................................................................................... 1

Figure 2. Types of renewable energy potential ............................................................................... 5

Figure 3. Map of state RPSs ......................................................................................................... 16

Figure 4. Growth in non-hydropower renewable generation from 2000 to 2016 ......................... 17

Figure 5. Annual and cumulative RPS capacity additions by technology .................................... 17

Figure 6. Progress toward the 2020 renewable energy target: January 2017–June 2018 ............. 21

List of Tables

Table 1. RPS Targets in Asia .......................................................................................................... 2

Table 2. Examples of Key Components of an RPS ........................................................................ 4

Table 3. Korea’s RPS Interim Targets .......................................................................................... 19

Table 4. Korea’s REC Weighting Scheme ................................................................................... 20

Table 5. Country-Specific Examples of How an RPS Can be Structured .................................... 22

List of Text Boxes

Text Box 1. Renewable Energy Certificate (REC) Tracking ....................................................... 10

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1 Introduction

Renewable energy targets have been around since the 1970s and have taken several forms,

including renewable energy action plans, government announcements, and renewable portfolio

standards (IRENA 2015). In this report, we focus on one subset of renewable energy targets:

renewable portfolio standards (RPSs). An RPS is a public policy tool requiring a certain amount

of renewable electricity relative to the entire electricity supply. RPSs are an enforceable form of

renewable energy targets (IRENA 2017); in order to be termed an RPS, there must be a

compliance penalty for non-performance. As of April 2017, 173 countries had set some form of

renewable energy target (IRENA 2017). Of those countries, at least 67 countries had set targets

for renewable capacity or generation (IRENA 2017).

RPSs vary in their end or “terminal” year and percentage of renewable electricity required. Most

countries have set RPSs at or below 30%, with terminal dates of 2020 and 2030 being the most

common (Figure 1)

Figure 1. Distribution of RPS targets internationally, by terminal year date and

percentage of renewable energy

Source: REN21 2017

2010

2015

2020

2025

2030

2035

2040

2045

2050

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

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Within Asia, RPS targets vary from 10% to 30%, with target years between 2020 and 2050

(Table 1).

Table 1. RPS Targets in Asia

Country Target Year

Bangladesh 10% 2020

China 20% 2030

Indonesia 25% 2025

Republic of Korea 11% 2030

Lao People's Democratic Republic 30% 2025

Philippines (draft policy) 35% 2030

Vietnam 20% 2050

Note: Thailand has a 30% target by 2036 as part of its Power Development Plan but the target is not an RPS.

Source: REN21 2017

RPS policies are all unique: different political motivations, target types, and technology

approaches exist. For example, political jurisdictions may implement an RPS because of a desire

for self-sufficiency, carbon emissions reductions/environmental protection, green jobs, economic

development, improvement to the balance of trade, reduction in price volatility, or other reasons.

These goals can serve as a starting point when considering the design of an RPS. An RPS can set

a share of energy demand (e.g. 20% of electricity supply) or fixed amount of energy production

or consumption (in GW or GWh) (IRENA 2017). An RPS can also be technology-agnostic or

specific, and it is typically a percentage of retail sales, which includes sales from conventional

generation.

As RPSs expand globally, individual countries are working to incorporate them into their energy

sector planning. In Vietnam, the government announced an updated plan for electricity

development and renewable energy use.

The plan calls for (1) increasing electricity supply (from

~39,000 megawatts (MW) in 2015 to 60,000 MW in 2020 and ~130,000 MW in 2030) and (2)

increasing the share of electricity generated from renewable energy (from 6.5% in 2020 to 10.7%

in 2030). The Prime Minister approved the country’s Renewable Energy Development Strategy,

which regulates the RPS for 2020, 2030, and 2050.

To ensure successful implementation of the RPS and other policies, the Government of Vietnam

requested a policy study examining effective RPS policies globally. The key findings of that

study, which were delivered to the Government of Vietnam, are described in this report, the

purpose of which is to provide an overview of RPSs internationally and to highlight key design

elements and best practices for RPSs. This report includes a discussion of the other polices that

can support RPS fulfillment. It draws on case studies of policies in the United States, Mexico,

China, Korea, Australia, and the Philippines.

The Government of Vietnam announced this as part of the Revised National Power Development Plan VII (in short

“the Revised PDP-7”).

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2 Key RPS Design Elements and Best Practices

RPS policies vary internationally, but all are grounded in common elements generally designed

to achieve the desired underlying policy objectives at the least cost. Common elements include a

target, a target year, list of eligible renewable technologies, consideration of renewable imports,

and a compliance and enforcement structure:

• RPS targets are typically set as a production target (in MWh). Setting a production target

in megawatt-hours incentivizes project developers to use equipment and installations that

maximize renewable energy generation. In some cases, targets have been set in

megawatts (MW) (capacity). Though setting a capacity target may be less

administratively complex, it does not consider how much electricity is actually produced.

Thus, it could incentivize generators to come online but perhaps be located in areas with

lower-quality resources (e.g., areas lacking steady winds) or in areas with high

congestion, resulting in curtailment of renewable generation.

• RPS targets are typically established on an annual basis with an end-year target. For

example, the RPS target may be 30% of annual retail electricity sales in 2030, starting at

20% in 2020 and increasing 1% annually to reach the 30% end-year target. This provides

certainty to project developers. All areas, but especially those with rapid load growth

where end-year retail sales may be difficult to forecast, may need to develop mechanisms

to determine the actual megawatt-hours required based on defined data sources (e.g. retail

sales reports) and defined time frames (e.g. within one quarter after the calendar year

ends).

• RPS policies provide a list of eligible technologies. Because stakeholders may have

different definitions of “renewable,” having a list of eligible technologies is essential for

tracking compliance. In some cases, countries are establishing “clean” portfolio standards

that include nuclear generation. In addition to which types of technologies are eligible,

RPSs define any temporal constraints. For example, the RPS may include only renewable

generation produced after the RPS was enacted.

• RPS policies determine whether renewable imports are eligible. The RPS can also be

designed to either include or exclude renewable generation that is imported from a

neighboring country or region, as (1) in some regions, significant amounts of electricity

may already be imported, (2) renewable energy resources may be able to be developed at

lower costs in other regions and then imported, and (3) legal, contract, or other

restrictions may prohibit discriminating against electricity imports. In contrast, some RPS

policies exclude renewable imports to support local industry and create jobs in-country,

or for other reasons.

• A compliance and enforcement structure is essential to assure investors that a market

for renewable technologies will exist over the life of their investment. An RPS is most

impactful for mobilizing private sector investment if it is legally binding to reduce the

likelihood of changes to the policy (IRENA 2017).

Examples of these common elements are provided in Table 2.

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Table 2. Examples of Key Components of an RPS

Key Component

Example

Target

20% renewable electricity by 2050

Interim schedule

5% renewable electricity by 2020, 10% by 2030, 15% by 2040

Eligible resources

All solar photovoltaics, wind, biomass, and hydropower facilities less than 10

MW that began commercial operation on or after July 1, 2019

Compliance entities

All load-serving electricity companies with more than 50,000 customers

Regulatory entity

Public Utilities Commission

Penalties for

noncompliance

$50/MWh

In this section, we describe the key elements of RPS design along with RPS best practices,

including (1) using analysis to inform RPS design, (2) gathering stakeholder input in developing

targets, (3) identifying eligible renewable resource types and vintages, (4) clearly defining the

RPS, (5) enforcing compliance, and (6) providing a cost-containment provision.

2.1 Use Analysis to Inform RPS Design

Ideally, analysis is done before the RPS is established; however, RPSs have sometimes been

implemented quickly without much analysis. With better planning tools and economic data on

renewables, setting the upper limits and interim targets of RPS policy can be informed by

analysis of the technical and economic potential of renewable resources within the political

jurisdiction. A fundamental question is the potential amount and value of renewable generating

capacity. Renewable energy potential can be examined in multiple ways:

• Resource potential includes consideration of physical constraints, physical potential, and

the energy content of the resource. For example, solar irradiance measures how much

power per unit area is hitting the earth’s surface (e.g., in units of kWh/m

/day) and is key

to establishing solar capacity values. Measurements can also consider cloud cover,

atmospheric water vapor and trace gasses, and other physical features that limit resource

potential. The National Renewable Energy Laboratory (NREL), the World Bank, and

others have developed resource potential maps and Geographic Information System

(GIS) tools. See https://www.nrel.gov/international/global_energy.html and

https://maps.nrel.gov/rede-asean/ for more information.

• Technical potential further restricts resource potential to consider only areas where the

resource could technically operate. These factors could include topographic constraints,

land-use constraints, and system performance considerations. For example, solar PV

modules cannot be installed on steep hillsides and may be restricted on federally

protected land.

• Economic potential determines how much of the renewable resource is cost-competitive.

For example, though there may be ample off-shore wind resource and technical potential,

the costs may be too high, at least in the short term, to have much economic potential.

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The cost of any required infrastructure improvements, such as new transmission lines,

can also be included when examining economic potential. Because economic potential

will vary depending on technology costs, it is important to consider how these costs may

change over time. To the extent that an RPS has multiple policy objectives (e.g.,

promoting the use of distributed generation, supporting new technologies), economic

potential would be based on an assessment of how the additional objectives could be

achieved as cost-effectively as possible for each of the resource options of the desired

portfolio (Leon 2012).

• Market potential limits the renewable resources to those resource with economic

potential that can be implemented in light of any existing policy, regulatory, or finance

restrictions. For example, although a country might have large economic potential for

large-scale hydropower facilities, other restrictions, such as the need to relocate impacted

human populations, may in practice reduce the amount of large-scale hydropower

developed.

The hierarchy of the different potential classifications and key assumptions within each are

summarized in Figure 2. Understanding each level of potential (resource, technical, economic,

and market) can help shape an effective RPS.

Figure 2. Types of renewable energy potential

Source: Lopez et al. 2012

When considering high rates of renewable penetration an understanding of electrical grid

operational constraints based on load analysis and other modeling can be completed to ensure

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system reliability.

Operational constraints will differ based on the types of renewable energy

resources used, the percentage target, and other factors. Capacity expansion, production cost and

optimization models, and scenario analysis can support an overall assessment of cost-effective,

grid-connected renewable energy potential that can inform the selection of RPS targets.

2.2 Gather Stakeholder Input in Developing Targets and RPS Design

After analysis is completed, ultimate decisions will need to be made about the key elements

to be specified in the RPS. Because RPS implementation is a long-term process that requires

coordination and support among diverse parties, having stakeholder input and buy-in during the

target development process can lead to smoother policy implementation and sustained support. If

the process involves such things as legislation and rulemaking, the involvement of stakeholders

in preparing the policy may prove critical to adoption of the policy.

For example, in Vietnam, a balanced working group of RPS stakeholders could be assembled to

communicate with the Electricity and Renewable Energy Agency (EREA) about vetting the

design. Such a working group may include any obligated entity (e.g., the utility), the energy

regulator, the grid manager (e.g., the National Load Dispatch Center in Vietnam), renewable and

non-renewable industry representatives, academia, representatives of consumer groups, as well

as appropriate local, state, and federal policymakers. Because stakeholders come from diverse

academic and professional backgrounds, working group members can be selected so that their

experience and knowledge levels cover the technical review tasks and various aspects of the

policy framework. For example, individuals with renewable resource siting and generating

background and experience might gauge the technical feasibility, while community leaders,

consumer advocates, and policymakers would anticipate and mitigate potential barriers that may

need to be addressed to ensure implementation.

2.3 Identify Eligible Renewable Resource Types and Ages

Countries have defined eligible resources in different ways in order to meet their policy

objectives. Policy objectives could include job creation, economic benefits, air quality benefits,

or other objectives. Typically, RPSs define renewable resources to include solar, wind,

geothermal, hydropower, and biomass. However, many countries restrict which renewable

resources can be used based on costs, environmental impact, or other country objectives, for

example, encouraging technologies that could better provide economic development or jobs

benefits. Often, hydropower resources are limited to those with minimal environmental impact,

for example, run-of-river hydropower. Hydropower projects may also be limited by the system

size (e.g., 10 MW). Biomass resources may be restricted based on their carbon footprint, though

that determination may be contentious, as different stakeholders may have different perspective

on methods for examining carbon impacts.

Countries may consider providing mandates for individual technology types. In the United

States, states commonly have a “carve-out” of their RPS policy for solar generation. Technology

carve-outs can ensure the desired diversity of generating technologies; rather than a singular

focus on the least cost option. Renewable energy diversity could be encouraged to limit over-

reliance on a single resource option, which could result in more intermittency than if

See, for example, Energy Transition Initiative (2017) for details on Hawaii’s distributed generation

planning efforts.

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complementary resources are encouraged (e.g. if solar is peaking in midday and wind is peaking

at night).

Countries may also want to consider limiting undesirable renewable energy projects. For

example, if the country has a greenhouse gas reduction goal, it may want to restrict renewable

energy projects that are built on forests or farmland, as cutting down trees and other vegetation

would reduce the carbon reduction benefit of the renewable energy project. Countries may adopt

complementary policies to address land use issues.

Finally, RPS polices may consider the age of qualifying renewable generators. For example,

some countries may wish to include only generators that were installed after the RPS policy was

established. Other RPS policies may establish a target that includes existing renewable resources

and allows all existing and future renewable resources to qualify. Existing renewable energy

projects may be fully paid for through preexisting contracts and may not require additional

payments or contracts to be economically viable. The age of eligible generators can be an

important consideration if the policy goal of the RPS is to drive new renewable energy

generation. Countries may want to (1) consider setting a higher target and including existing

renewable energy generators or (2) consider setting a lower target and excluding existing

renewable generators. If the country does wish to include older renewable energy generators, it

could create a separate tier for these generators so that they are not competing directly with new

generators.

2.4 Clearly Define the RPS

Whether an RPS is established by statute, regulation or executive order, it is important that

the authorizing language be clearly defined and unambiguous to avoid misinterpretation or

misunderstanding by energy stakeholders and the public. Essential components that require

clear definition include:

1. Allowable resource types

2. Timing of the interim and final targets

3. Specific entities to be held accountable for meeting targets and the method of

compliance, reporting, and enforcement

4. Whether targets apply to all renewable generation—however defined—or only new

generation

5. Exclusions or waivers, with attention to loopholes that might have unintended

consequences.

Obligated Entities

Typically, RPSs are applied to entities that supply electricity to consumers. In a regulated

electricity market, this would be the monopoly utility. In a restructured electricity market, it

would be a retail electric supplier. Utilities and retail electric suppliers already procure electricity

supply for their customers, and so may have the required capabilities and finance to procure

renewable energy. In contrast, if an RPS obligation is placed on individual generating units, such

as in Korea (see section 4.4) those units may not know how much renewable energy to procure,

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as they do not have information about retail sales. Generating units may also not have a

contracting pathway to ensure the renewable energy is delivered to customers.

In some cases, large customers procuring their own electricity must also comply with RPS

requirements. This is the case, for example, in Mexico. Large customers there may procure

electricity via a power purchase agreement (PPA) with a renewable generator or via an electricity

supplier that provides a specified percentage of renewable energy in its supply. For more on

corporate procurement of renewable energy internationally, see Bird et al. (2017).

Policymakers can consider exemptions to the RPS when it may be reasonably expected to create

an economic hardship to the electricity consumer or utility. RPS policies may consider the

unknown cost of integrating renewable energy into the grid by providing exemptions for some

utilities or customer types. For example, in the United States, some states have exempted small

electricity suppliers (e.g., those that have less than a certain number of customers), particularly in

remote locations, where renewable resources may be more difficult to develop or higher cost.

Other entities may be exempt if the energy law or regulation does not or cannot apply to them.

Determining the Target Timing

Introducing an RPS may require some significant preparation time. The first compliance year

may need to be years after the RPS law is passed. This will provide time for obligated entities to

develop a compliance strategy, let some existing electricity contracts lapse, and allow time for

new renewable energy projects to be built.

In order to support market development, RPSs also typically specify interim targets. Without

this, compliance entities may under-procure renewable energy and be unable to meet a final

target obligation. For example, if there is only one mandated target, 30% by 2030, and no interim

targets were established, such as 20% by 2020, increasing one percentage point per year until

2030, compliance entities may reach 2030 and already have procured non-renewable resources to

meet their load.

A final timing issue can exist when the RPS target is based on a percentage of retail sales.

Because a year’s final retail sales figures will be unavailable until after the year is concluded,

compliance entities may need some time, for example, in the first quarter of the following year,

to make sure their RPS purchases fulfill their obligation. This can be especially true in retail

choice markets where a year’s retail sales are more unpredictable than in a monopoly utility

market. Rapid load growth may also lead to uncertainty about how much renewable energy will

be required.

Existing or New Contracts

Policymakers should consider existing energy supply contracts when setting the final and interim

targets of an RPS. Compliance entities may have existing power contracts or own non-renewable

generation that has not recovered all its costs. To ensure the RPS can be met, compliance entities

may be required to file an RPS compliance plan with their energy regulator. Such a plan would

include details about how the compliance entity plans to transition from its existing power

contracts and supply.

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Another option to address existing contracts is to make the RPS apply only to new contracts and

renewable energy resources. Policymakers and regulators could work together to determine

whether exempting existing contracts would still allow enough renewable generation to come

online to meet the RPS.

2.5 Ensure Compliance via Enforcement

Oversight and enforcement are required for an RPS to be effective at deploying new renewable

resources and meeting targets. Investors need to be confident a renewable energy market will

exist over the life of the investment before making what in many cases are very large capital

expenditures. Therefore, the methodology for assessing and verifying compliance needs to be

clear, and it must ensure a designated oversight governmental body or authoritative entity that

can enforce all penalties prescribed according to the RPS policy. Without these measures, critical

investments may not be made due to lack of investor confidence and the RPS would function

more as an aspiration rather than a firm, irrefutable objective on which renewable developers and

investors could not rely.

Typically, compliance and enforcement are functions of the regulatory body that oversees

electricity or energy. The RPS can set a schedule for the compliance entity to file reports (usually

annually) to the regulatory body on its performance and progress toward interim targets. The

reporting will depend on how the compliance entity procures renewable energy, its market

structure, and other factors. For example, if the compliance entity is a monopoly utility that

procures renewable energy vis-à-vis PPAs, an annual report might include both (1) an update on

the amount of renewable energy produced during the year relative to the next interim target and

(2) a copy of any contracts for renewable energy that were signed during the reporting year.

Monopoly utilities may also own their renewable generation assets directly. In addition to

providing contracting information, monopoly utilities would need to show some documentation

via a meter reading or other measure, that the energy owned or contracted for was actually

delivered. Another option to show compliance is to require compliance to be demonstrated with

the use of renewable energy certificates (RECs), and defining a REC as the environmental

attributes of one MWh from an eligible generator. Compliance entities could then show proof of

RECs via a REC tracking system account. (See Text Box 1 for details on international tracking

systems.)

Enforcement

If the regulatory body determines that the compliance entity has not met its obligations, a penalty

or other means to address enforcement of the requirement can help ensure future annual targets

will be met. Penalties established via law or regulation provide certainty that they will be

enforced. One type of penalty is the alternative compliance payment (ACP). If the RPS requires

a certain number of megawatt-hours of renewable electricity, an ACP might specify that the

compliance entity must pay a penalty, such as $100 for each MWh out of compliance. Regulators

may find that a declining ACP schedule is appropriate, given anticipated declines in renewable

energy costs. An ACP could start at a particular level and decline over time (e.g., starting at

$100/MWh in the first year and declining by $10/MWh per year before plateauing at $50/MWh

in all subsequent years). In the United States, ACPs have been structured so that they differ for

solar carve-outs and the main tier of the RPS, in recognition that solar costs have historically

been higher than costs of main tier resources (primarily wind).

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Other types of penalties could be used for noncompliance. For example, in California, there is

not an ACP, but regulators are allowed to assess fees on the utility for noncompliance. The fees

cannot be passed on to ratepayers but instead must be absorbed by the utility’s shareholders.

Text Box 1. Renewable Energy Certificate (REC) Tracking

Around the globe, there are systems to track RECs, which may also be termed “energy attribute

certificates”, “green energy certificates” or other terms. While some operate in multiple countries,

others are country-specific. Tracking systems are electronic registries and as such, require software

and database expertise to develop. Typically, a third-party with expertise in software and database

development will develop and maintain the tracking system. The government may fund the third-party

directly or have it funded via participant fees. In the United States, most tracking systems have a

governance board that sets and revises operations protocols. Governments and other users of the

tracking system participate in the governance. Tracking systems that cover multiple regions include:

• International REC (I-REC) Standard: This standard was developed by a nonprofit organization as a

framework for standardization across REC tracking systems. It supports issuing, tracking and

redeeming RECs in 24 countries as of February 2019. It provides a central tracking platform that

local tracking systems may use.

• Tradable Instruments for Global Renewables (TIGRs): Developed by environmental registry

service provider APX, TIGRs are energy attribute certificates hosted on a tracking platform and

with certain standards for eligible generation types. TIGRs are predominantly used in Southeast

Asia (e.g., Singapore and Philippines).

Country-specific REC tracking systems include the following:

1. Australia’s Large-scale Generation Certificates (LGCs) and small-scale technology certificates

(STCs): In Australia, the government supports a REC registry that tracks and allows for the transfer

of LGCs and STCs. LGCs are used to demonstrate compliance with the country’s renewable

energy target. They have broad resource eligibility and are produced by over 500 generators and

target wholesale markets with minimum parcel sizes of 5,000 certificates.

2. Mexico’s Certificados de Energía Limpia (CELs): These certificates were established for

compliance with national clean energy requirements for corporate and industrial customers. CELs

have broad resource eligibility, including nuclear and cogeneration in addition to renewable

generation, though the formula for calculating CEL generation favors renewables and distributed

generation.

3. South Africa’s zaRECS: The zaRECs market has 29 registered generators and is based on the

European Energy Certificate System.

4. United States’ RECs: REC markets were established for compliance with state-level RPSs and

voluntary markets.

Source: IRENA (2018)

2.6 Provide a Cost-Containment Mechanism

Given uncertainty in future generation costs, most RPSs have a cost containment mechanism.

This mechanism ensures customers are protected from excessive cost increases associated with

the policy by lawfully exempting the obligated entity from complying with the RPS during that

reporting period.

Common ways to cap costs include:

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

• Alternative Compliance Payment (ACP): As discussed in the previous section, an ACP

places a ceiling on the cost of compliance as entities are allowed to pay the ACP in lieu

of contracting for renewable generation. This makes the ACP effectively a cap on the

cost of compliance because obligated entities will not pay more for RECs than the ACP.

• Cost Cap: Retail rate caps are designed to ensure end-use consumer electricity rates do

not rise above a specified percentage or dollar amount. Rate caps are typically structured

to examine the incremental costs of the RPS compared to the cost of retail electricity

service. Obligated entities are exempt from RPS procurement to the extent that

incremental costs exceed the retail rate cap. Retail rate caps can be challenging to

calculate, as the rates are based on “incremental RPS costs;” those costs need to be

calculated based on what the compliance entity would have done absent an RPS policy

(Heeter et al. 2014). For example, the cost of renewable procurement would be compared

to the projected cost of the resource the compliance entity would have used without the

RPS mandate. Because that purchase did not actually occur, the cost has to be estimated.

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

3 Policy and Procurement Mechanism Interactions

Setting an RPS target is only one step in supporting renewable energy deployment. It may be

desirable to also develop policies and procurement strategies that enable financing of new

renewable energy projects. Renewable energy developers need a clear, often long-term method

to be compensated for the electricity produced. As of early 2015, at least 60 countries were

addressing the need for long-term financing by using renewable energy auctions to procure

renewable energy (IRENA and CEM 2015). Some countries have mandates for renewable

energy auctions that can work either separately from or in conjunction with an RPS. In other

countries, feed-in-tariffs, bilateral contracting, and/or competitive solicitations are used for RPS

procurement (Kreycik, Couture, and Cory 2011). These renewable procurement options are also

used in countries without an RPS. This section highlights policies and procurement mechanisms

that can assist in RPS implementation.

3.1 Renewable Energy Auctions

Renewable energy auctions are one way to provide long-term contracts for renewable energy that

can then be used to meet an RPS. Without long-term contracts, the revenue a project will receive

via energy sales is uncertain. Long-term contracting is important so that project developers can

provide the revenue certainty needed to secure project financing. Renewable energy auctions can

be structured in multiple ways. Internationally, it is common for a utility or government to issue

a solicitation for a certain amount of capacity or generation. Project developers then submit their

price bids, and bids are selected based on cost and possibly other criteria (IRENA and CEM

2015). Auctions may include a component that screens developer qualifications before allowing

them to bid. After that, bidders are allowed to submit sealed-bids; selection is done based on

price alone. In this way, auctions allow for both price competition and greater price transparency

and discovery than other procurement avenues.

Key considerations for auctions include:

• Ensure a Sufficiently Large Marketplace: Without a significant pool of bidders, pricing

will not be competitive. Factors that impact market size include the timing of the auction

as well as the amount of renewable energy being purchased (Kreycik, Couture, and Cory

2011).

• Mitigate Against Project Failure: If bidders bid at too low a price, they may not have the

funds needed to build their projects. To ensure against project failure, the auction could

require that winning bidders be penalized for noncompliance. Winning bidders could

be required to post a construction bond to ensure funds are available to assess

noncompliance.

• Lower Transaction Costs by Streamlining Procurement: Developing a bid may be time-

consuming, especially for new project developers. This has the effect of limiting the

market to more experienced developers, which could result in less price competition.

Reverse auctions create a streamlined process that may minimize costs to bidders (Cox et

al. 2015).

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

3.2 Distributed Renewable Energy Generation Compensation Policies

Generation from on-site distributed generation is typically allowed in an RPS. A method for

compensating these distributed generation systems for their electricity output is needed, as they

will not be selling directly to a wholesale market or utility. Common compensation policies

include policies such as a feed-in-tariff (FIT) and net metering.

FITs provide administratively set prices for renewable energy compensation (e.g., 10 cents per

kilowatt-hour) under a long-term, fixed-price contract. Renewable developers see benefits from

a FIT because their long-term revenue is relatively fixed, allowing them to gain access to

financing. From an administrative and economic perspective, setting and adjusting FIT pricing

can be challenging, particularly with declining renewables costs. That means that once the tariff

is set, it could provide less or more compensation than developers need to finance their projects.

According to Cox and Esterly (2016), key components of FIT design—some of which address

some of the previously mentioned challenges—include:

• Setting and Revising FIT Payment Levels: FIT payments can be set based on the

technology type and market status. Policymakers may want to decrease the FIT payments

as renewable energy costs decline.

• Providing a Cost Containment Approach: This can be done by limiting either the capacity

of projects that will be eligible for the FIT or the total funding available through the FIT

program.

• Establishing long-term contracts and guaranteeing grid access.

Net metering policies provide another method for compensating distributed renewable energy

generation. Customers receive either a monetary or a kilowatt-hour reduction in their monthly

bill for generation consumed, while the excess is exported to the grid.

Key components of net metering design include:

• Determining the Compensation Rate: In the United States, net metering compensation is

usually set at the retail rate, though other methodologies exist. Some utilities compensate

distributed generation at a time-of-use rate, which can be favorable to solar if the solar

peak coincides with the peak time-of-use rate. Utilities and policymakers may also want

to consider how their rates may incentivize the use of storage paired with distributed

generation. For example, net metering policies that provide low compensation rates for

sending energy back to the grid at certain times may have the effect of incentivizing

distributed generation paired with storage.

• Providing a Cost Containment Approach: Similar to FIT design, net metering policies can

cap the amount of generation allowed under the program (i.e., implementing a “program

cap”) and/or the size of individual generators allowed (Heeter et al. 2014).

• Treatment of Excess Generation: When a customer generates more electricity than is

used, net metering policies can determine whether the generation is rolled over to the

next month, the next year, or indefinitely. Some policies proscribe that excess generation

FITs can also be used to compensate utility-scale generators.

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

at the end of the year be compensated rather than continually rolled over to the next

period.

For example, compensation policies played a key role in developing distributed energy in

Hawaii. Early-stage renewable energy growth there was primarily driven by customer

participation in net metering and standard interconnection agreement programs. Together, these

programs accounted for more than 90% of the distributed energy resources capacity installed in

the Hawaiian Electric Company service territories. The feed-in tariff program accounted for the

remainder. These programs were established to encourage customers to install distributed energy

resources with standardized agreements and simpler compensation mechanisms. The net

metering program was successful in creating a local market for distributed energy resources,

spurring such rapid growth that the 2015 interim RPS target of 15% was exceeded by 8.4%

(Energy Transition Initiative 2017).

3.3 Transmission Planning

Depending on the aggressiveness of the RPS and other factors, countries may want to consider

expanded transmission capacity. In particular, if renewable energy resources are far from where

energy demand is located, new transmission may be required (Cochran et al. 2012). Without

adequate transmission capacity to transport renewable energy to where it is needed, that

renewable energy may not be delivered. As a result, the RPS targets may not be met.

For example, transmission planning and stakeholder engagement efforts were successful in

enabling new transmission projects in Texas through its “competitive renewable energy zone”

(CREZ) process. Senate Bill 20 directed the state’s public utilities commission to develop a

CREZ process, ultimately leading to the development of transmission projects to transmit more

than 18,000 MW of wind from the western part of the state to the eastern part.

According to Cochran et al. (2012) and Lee, Flores-Espino and Hurlbut (2017), key components

of a renewable energy zone process include:

• Delegating Planning Authority to One Centralized Institution: The goal here is to ensure

one institution has planning authority to streamline the planning process. This lead

organization can oversee planning and be responsible for its completion. Separate

working groups can be established to identify appropriate zones and modeling

transmission expansion options.

• Allowing Public Input into Transmission Siting: Even when one institution leads the

planning process, engaging stakeholders throughout the process is still important.

Engaging the public can provide input into which locations might be available for

transmission development.

• Aligning Planning of Timescales for Generation and Transmission Development:

Renewable energy projects can be developed in a few years, while constructing new

transmission typically takes 10 or more years, from start to finish. As a result, renewable

energy projects may be developed but be constrained by existing transmission capacity.

By speeding up transmission development, renewable energy projects and transmission

capacity timing can be aligned.

“Net Metering,” NREL, https://www.nrel.gov/state-local-tribal/basics-net-metering.html.

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

In cases where transmission build out may be too costly or otherwise unfeasible, jurisdictions

may want to evaluate the benefits of off-grid or micro-grid solutions.

3.4 Other Policy Interactions

Countries may have complementary polices that interact with an RPS, including:

• Tax Incentives: Providing tax incentives, such as the federal production tax credit in the

United States, to renewable energy projects improves the economic viability of renewable

energy projects. The tax code can also be used to provide property tax or other tax

exemptions for renewable energy projects.

• Financial Incentives: These can include upfront payments for renewable energy

deployment, ongoing payments, or credit mechanisms such as loan programs, guarantees,

and credit enhancements (Cox 2016).

• Carbon Reduction Policies: Cap-and-trade or carbon tax policies can effectively raise the

price of carbon-emitting generation, thereby making the price of renewable energy more

cost-competitive.

• Energy Efficiency Mandates: Where an RPS is based on a percentage of retail sales,

if the amount of retail sales declines, the amount of renewable energy required would

decline accordingly. Setting an energy efficiency portfolio standard or target can be a

desirable strategy for areas with significant projected energy growth.

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

4 International RPS Examples

The RPS case studies described in this section provide examples of the various ways RPSs

can be structured, given local power markets and government priorities. We review policies in

the United States, Mexico, China, Korea, and Australia to provide examples of policy structures.

We also discuss the draft RPS design in the Philippines in this section. Policy examples are

summarized in Table 5.

4.1 United States

The United States has both vertically integrated and restructured power markets, providing a

variety of policy examples. Policy structures vary in terms of targets, time frames, obligated

entities, technologies, vintages, locations, resource tiers/carveouts/multipliers,

REC

mechanisms, contracting requirements, compliance mechanism, cost caps, and other features

(Barbose 2017).

In the United States, RPSs have been implemented at the state level since the 1980s. They are

enacted in 29 states and the District of Columbia (Figure 3), and they apply to 56% of total U.S.

retail electricity sales (Barbose 2017).

Figure 3. Map of state RPSs

Source: Barbose 2017

IOU = investor-owned utility

Since RPSs were initially adopted, policy details have evolved significantly. One key change

has been increased end-year targets, with states such as Hawaii (75% by 2040 and 100% by

2045), Vermont (75% by 2032), California (50% by 2030), and Oregon (50% by 2040) pursuing

Resource tiers or carveouts refers to a set percentage of the RPS that is dedicated to a particular resource type or

class of renewable energy (e.g. solar or distributed generation). Multipliers are incentives (e.g. 2x credit) for

particular resource types or classes.

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

the highest penetration levels. About 18 states have established solar or distributed generation

carveouts.

RPSs have contributed to approximately 50% of total U.S. renewable energy generation growth

for renewable energy since 2000 (Barbose 2017). Total renewable energy growth actually

exceeded RPS requirements owing to voluntary corporate procurement and green power markets,

utility purchases of renewable energy based on economic decisions, and RPS requirements being

exceeded by obligated entities (Figure 4). Although historically wind was the primary resource

making up RPS requirements, today solar is contributing the most on a capacity basis, due to

solar carve-outs and the economic competitiveness of utility-scale solar in some markets (Figure

5).

Figure 4. Growth in non-hydropower renewable generation from 2000 to 2016

Source: Barbose 2017 TWh = terawatt-hours

Figure 5. Annual and cumulative RPS capacity additions by technology

Source: Barbose 2017

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

4.2 Mexico

In 2012, Mexico passed the General Climate Change Law with clean energy generation targets

(Export.gov 2017). Then, beginning in 2013, Mexico began to undertake extensive constitutional

power sector reforms including separating generation and distribution and creating a wholesale

power market controlled by an independent grid operator. As part of those reforms, Mexico

established new clean energy targets for electricity generation: 25% by 2018, 30% by 2021, and

35% by 2024 (Zinaman et al. 2018).

Compliance entities include load-serving entities and large consumers that purchase energy from

the wholesale market. To comply, obligated entities must purchase clean energy certificates

(or CELs—certificados de energías limpias in Spanish) which are akin to RECs and represent

one megawatt-hour of power generated without fossil fuels (IEA 2017). CELs can be purchased

separately from electricity through the wholesale market or together with electricity as part of

long-term PPAs, including via renewable energy auctions. The penalty for noncompliance is

$200 per certificate. Oversight is provided by the Comisión Reguladora de Energía (the

Commission on Energy Regulation, or CRE) (Zinaman et al. 2018). As of June 2017, Mexico

was well on its way to meeting its clean energy standard with renewable energy representing

20.82% of total electricity generation (Rodrigues 2017).

4.3 China

In 2016, China’s National Energy Administration adopted the 13

Renewable Energy

Development Five Year Plan, for 2016–2020. This plan established renewable energy targets

through 2020. The targets were to increase non-fossil energy to 15% by 2020 and 20% by 2030

(IEA 2018). And in 2018, the National Energy Administration released a draft national policy—

titled Renewable Portfolio Standard and Assessment Methods (NEA 2018)—that proposes key

changes to the renewable mandate, including the following:

1. Regulated Entities: Include provincial grid companies, distribution companies and retail

electricity companies, industrial users with captive power plants, and commercial and

industrial users who purchase power bilaterally.

2. Mandatory RPS with a Penalty System: State power grids will determine a replacement

REC price, and entities can buy replacement RECs to make up any shortcoming in their

obligation. If the mandate is not met, the government can delay approval of new fossil

fuel capacity, or it can reduce the approved capacity. For retail electricity companies that

do not comply, their market trading power can be reduced or canceled in the following

year.

3. Shift from Capacity Targets to Generation Targets: The draft obligation is based on a

percentage of the megawatt-hours of renewable production compared to total electricity

sales. This is a shift from China’s earlier megawatt targets, which resulted in capacity

installations that suffered high levels of curtailment, in some cases (Hove and Wetzel

2018).

The draft policy also provides non-hydropower renewable energy power targets for 2020, by

province, along with 2018 targets (NEA 2018). According to the draft policy, all market entities

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

in the same province have the same target. The 2018 targets average 9.4% and the 2020 targets

average 12.2% (Hove and Wetzel 2018).

4.4 Korea

Korea’s RPS was implemented beginning in 2012, and it has since been revised. The RPS

requires generation companies (gencos) with over 500 MW of capacity to procure a minimum of

10% of “new” and renewable energy by 2023. While the compliance entity is set at the genco

level, the Korea Electric Power Corporation (KEPCO) has monopoly rights on transmission,

distribution, and retail sales and a near monopoly on generation.

The RPS includes annual interim targets (Table 3). The obligated entities can either produce

renewable energy or procure the power and RECs through the Korean Power Exchange, which is

the required forum for nearly all gencos to sell power, excluding those in island communities

(KEPCO 2018; Lee, Kim and Kim 2018). Penalties for noncompliance are a maximum of 150%

of trading prices of RECs. The penalty varies depending on the cause and frequency of

noncompliance.

Table 3. Korea’s RPS Interim Targets

Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Ratio

(%)

2.0 2.5 3.0 3.0 3.5 4.0 5.0 6.0 7.0 8.0 9.0 10.0

Source: KEPCO 2018

Examples of “new” energy include hydrogen, fuel cells, liquified coal, and other technologies.

The Korean definition of renewable energy includes solar, wind, water, marine, geothermal,

biomass, waste-to-energy, and other technologies. Rather than using carveouts, Korea is using

a weighted REC scheme

to incent investments in certain technologies and applications. For

example, floating solar PV, fuel cells, tidal waves, and energy storage connected to wind power

receive greater REC weights. See Table 4 for details on the weighting scheme.

Renewable energy suppliers smaller than 1 MW can opt to sell power to the Korea Electric

Power Corporation (KEPCO) via a PPA. Larger suppliers can use the Korean Power Exchange

to trade both power and RECs, with electricity prices being determined by the system marginal

price. Suppliers need to register their projects and apply to the Korea Energy Agency’s New and

Renewable Energy Center (KEMCO) to certify RECs within 90 days of the power being

generated. KEMCO issues RECs to qualifying suppliers within 30 days. However, given the

fluctuation in electricity prices, a recent change enabled renewable energy suppliers over 1 MW

to also bundle the sale of power and RECs via fixed price, 20-year contracts. This was done to

reduce the risk to renewable energy suppliers by providing stable revenue over the economic life

of a project.

Also referred to as a “multiplier” in the United States. Multipliers have been less common that the use of set-asides

or carve-outs for individual technologies in the United States (Wiser, Barbose, and Holt 2010).

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

Table 4. Korea’s REC Weighting Scheme

Category REC

Weighting

Energy Source and Criteria

Facility Type Criteria

Solar PV 1.2 Facility installed on general site Less than 100 kW

1.0 More than 100 kW

0.7 More than 3,000 kW

1.5 Facility installed on existing buildings Less than 3,000 kW

1.0 More than 3,000 kW

1.5 Facilities floating on the water

Others 0.25 Integrated gas combined cycle, byproduct gas

0.5 Waste, landfill gas

1.0

Hydro, onshore wind, bioenergy, refuse derived fuel, waste

gasification, and tidal power (with embankment)

1.5 Wood biomass

Offshore wind (grid connection of less than 5 km)

2.0 Fuel cell, tidal power

2.0 Offshore wind (grid connection of more than 5 km), geothermal, tidal

power (without embankment)

1.0-2.5 Energy storage systems (connected to

wind power)

Origination Year

5.5 2015

5.0 2016

4.5 2017

Source: KEPCO Research Institute 2018

4.5 Australia

In Australia, RPSs have been used at the federal and state levels. At the federal level, the

Renewable Energy Target (RET) went into effect in 2011. It requires compliance entities to

supply 16% renewable energy, which increases to 23.5% in 2020 (Clean Energy Regulator

2018a; IEA 2017a). Compliance entities are usually electricity retailers, which are defined as

any “individual or company who is the first person to acquire electricity on a grid which has an

installed capacity of 100 MW or more” (Clean Energy Regulator 2018a).

The RET includes one target for generation from large-scale generators and one from small-scale

generators. Targets use RECs to determine compliance based on the size of the generator, termed

large-scale generation certificates (LGCs) and small-scale technology certificates (STCs).

Compliance entities must retire a certain number of LGCs and STCs (IEA 2017a). LGCs are

issued for every megawatt-hour of large-scale renewable energy. STCs are issued to small-scale

generators upfront for estimated generation through 2030; the upfront issuance allows STC

developers (e.g., homeowners) to fund their purchases.

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

If compliance is not met, a non-deductible shortfall charge must be paid, though 10% of a

shortfall can be carried forward to the following year with no penalty. Penalties are AUD 65

for each REC (IEA 2017a).

The policy does allow for exemptions by businesses involved with Emissions-Intensive Trade-

Exposed, or EITE, activities (Clean Energy Regulator 2018b). EITE industries are those with

high emissions that are price sensitive to international markets, for example, aluminum smelting.

The Clean Energy Regulator, which tracks progress toward the 2020 target, estimates that 6,400

MW of projects would be needed to meet the target. As of June 2018, there were 8,309 MW of

projects: 2,290 MW were in operation, 5,275 MW were committed, and 744 MW were probable

(Clean Energy Regulator 2018c). See Figure 6.

8,309 MW

Accredited Capacity Committed Capacity

Probable

Capacity

2,290 MW 5,275 MW

744

Operating Firmly Announced

Figure 6. Progress toward the 2020 renewable energy target: January 2017–June 2018

Source: Clean Energy Regulator 2018c

4.6 Philippines

While Philippines does not currently have an RPS, it has completed a draft design of an RPS.

Until recently, the Philippines had driven renewable energy development largely through a FIT

that provided a kilowatt-hour payment to qualified renewable energy generators. However, the

policy required interconnection to the grid before a project could be considered eligible, thus

putting considerable risk on the project developer. The tariff level was also aggressive, resulting

in a program that was ultimately oversubscribed and that left many projects stranded.

Given the political and cost challenges associated with a FIT, the Philippines government

decided to move toward an RPS—the first in Southeast Asia. The RPS, currently in draft form,

sets a 35% by 2030 target and requires distribution utilities, electric cooperatives, and retail

electricity suppliers to source a portion of their energy supply from eligible renewable energy

facilities. Eligible technologies include biomass, waste-to-energy, wind energy, solar energy,

run-of-river hydropower, impounded hydroelectric power systems, ocean energy, hybrid

systems, and geothermal. Eligible projects are issued RECs and can sell them to compliance

entities. Compliance entities may also source renewable energy from PPAs or from their own

generators.

The current target is set at 1% annual increments. However, this is estimated to only achieve a

23% penetration by 2030 and may not result in the building of renewable energy capacity

beyond business-as-usual projections. Annual increments may need to be raised if the 35% by

2030 target is to be reached (Duffy and Janubas 2018).

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

4.7 Summary of International RPS Examples

Countries have set different RPS target levels and end years (Table 5). They provide examples of

how energy attributes have been used for demonstrating RPS compliance. They also highlight

how compliance penalties have been set, and which entities are required to comply with the RPS.

Table 5. Country-Specific Examples of How an RPS Can be Structured

Country

(or State)

RPS Target

(End Year)

Energy Attribute

Mechanism

Compliance

Entities

Compliance

Penalty

California

(United

States)

50% (2030) renewable energy

certificate (REC)

utilities (some smaller

utilities are exempt)

administrative

penalties at the

discretion of the

regulator

Mexico 35% (2024) clean energy

certificate (CELs)

load-serving entities

and large consumers

that purchase energy

from the wholesale

market

administrative

penalties of

$200/MWh

China

(draft policy)

20% (2030) in development provincial grid

companies,

distribution

companies and retail

electricity companies,

industrial users with

captive power plants,

and commercial and

industrial users who

purchase power

bilaterally

requirement to buy

replacement RECs;

penalties can include

delay or cancellation

of fossil fuel capacity

or reduced market

trading power

Korea 11% (2030)

RECs self-generated

or purchased

generation companies

with over 500 MW of

capacity

maximum of 150% of

REC trading prices

are imposed for

noncompliance;

amount of penalties

depends on causes

and frequency of

noncompliance

Australia 23.5%

(2020)

RECs; up to 10% of

non-compliance may

be forgiven in year

one if the shortfall is

made up in the

following year

electricity retailers AUD 65 per REC

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

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