From Legislation to Installation: The Effects of State RPS Policies on Installed Solar Capacity

Abstract

This past decade has seen an increase in interest and concern for the development of renewable sources of energy. This concern stems from increased attention to global warming and the impacts that fossil fuel energy sources may have on the environment. With gridlock at the federal level concerning which policy goals to pursue, state level incentives and renewable policies have appeared with increasing popularity. While these policies and incentives are still relatively new, enough years have passed with a significant level of state participation to discern preliminary results. As policies age and results are better understood, a national policy may one day be developed. This paper analyzes the relationship between the different existing state renewable energy policies, solar installation prices, and installed solar capacity within a state to determine whether or not these policies are having an impact. Also considered is the effectiveness of different aspects within individual renewable policies such as policy stringency, years until compliance, and monetary penalties for missing renewable capacity targets. Regression results have shown RPS policies within 5 years of compliance and the average price of solar installation to be statistically significant in their negative effect on state solar installation capacity. Other noteworthy results include the positive but statistically insignificant impact of an ACP, Solar Carve Out, and 10 year window until compliance of an RPS on state solar installation. A Renewable Portfolio Standard encompasses more renewable energy sources than solar, and reliance upon these sources rather than solar may have the potential to skew the results of this study, which focused solely on solar. The interplay between different renewable energy policies within a state was also outside the scope of this essay, but may have played a role in influencing the investment decision into solar.