The California Renewable Portfolio Standard’s Impacts on the Electricity Sector in an Uncertain Cost Environment

Omid M. Rouhani, Adrienne Kandel, and Matthew Christian


Renewable Portfolio Standard, Renewable Generation, Regulations, California


According to the Renewable Portfolio Standard (RPS) of California, 33% of the electricity sales must be generated from renewable resources by 2020. The RPS has important implications for electricity consumers, producers, generation units, and the rest of the electricity sector. This paper estimates the effects of implementing the RPS target on electricity prices, greenhouse gas emissions, and portfolios of renewable sources of electricity in different settings. Based on the RPS Calculator, a publicly available model, we built a new model which accounts for uncertainty in prices and generation costs, and demand responsiveness to prices. Without any technology breakthroughs, our model estimates that the average 2020 electricity price in California will be increased to $0.166/ kilowatt-hour (kWh) to meet the 33% RPS, 2% higher than the price of the 20% RPS. When conventional fuel prices are high, the 2020 price of producing electricity will not be much different for the 33% RPS target than for the 20% RPS target. And, the main in-state resources to meet 33% RPS will be solar (29%), wind (25%), and geothermal (23%).

Important Links:

Go Back