Maryland’s Renewable Portfolio Standard (RPS) is intended to increase use of renewable resources in the state by establishing the minimum amount of renewable energy that the state’s electricity providers must sell in a given year. This legally-established renewable energy procurement goal gradually increases over time to meet the overall target of 20% renewable power by 2022.
The state profile below explores the design of this policy, highlighting the factors that influence the success of Maryland’s RPS goals and the tradeoffs inherent to it. Once you’re comfortable with the information on this page, you can evaluate the policy’s expected viability with the RPS Feasibility Calculator. You can also use the calculator to change the policy requirements, trajectory, cost cap, and more, to see how altering Maryland’s policy design affects its success.
- 20% of the state’s retail electric sales from must be from renewable sources by 2022 subject to the cost cap
- Carve-out for solar and offshore wind
- Implicit overall cost cap defined by compliance payments
Carve-outs can create economic opportunities in the state by introducing new or promising technologies into the market. However, these standards limit the utilities’ ability to substitute between renewable energy sources, potentially increasing the cost of the policy. Maryland’s RPS includes a small carve-out for solar technologies, which grows to about 11% of the total RPS requirement by 2022. The Maryland General Assembly recently established a new standard for offshore wind. This legislation places a maximum size of the carve-out at 2.5%, but the final schedule for implementation is yet to be determined.
Compare the goal established in the RPS to what is being achieved.
The following chart compares the variety of sources currently used to generate Maryland’s electricity. The color of each bar is indicative of the carbon intensity of each source.
Cost Cap Details
Maryland does not have an overall explicit cost cap. However, by allowing alternative compliance payments (ACPs), Maryland sets an effective cap on the premium a utility will be willing to pay for renewable energy. The RPS sets different ACP rates for different classes of energy established by the statute (see below). If the renewable energy premium exceeds this cap, the utility would prefer to meet the standard by making the lower cost alternative compliance payments. Maryland utilizes an explicit cost cap to govern the solar and offshore wind carve-outs. The limit on solar RECs is set to a 1% increase in a utilities revenue from electric sales in Maryland. If exceeded, this will pause the RPS. Similarly, Maryland limits the potential cost to customers of a large offshore wind project to $1.50 increase in average residential bill. Using the RPS Feasibility Calculator you can make adjustments to cost of alternative compliance, determining how this impacts the provision of renewable power and the overall viability of the RPS.
Historic retail prices (¢ / kWh)
The above chart presents historical data from the Energy Information Administration (EIA) on the price at which residential customers can purchase electricity. Typically, states set explicit cost caps relative to the retail price (as opposed to the lower wholesale price).
Maryland’s current RPS was originally enacted in 2004 and has since been amended multiple times. Most recently Maryland’s RPS was updated to include a carve-out for offshore wind. The implementation of this carve-out is yet to be determined. Currently, statute requires that 20% of the state’s retail electric sales come from renewable sources by 2022. In addition to the solar carve-out, each general annual requirement (until 2019) is divided into two tiers of generation. Tier 1 includes renewable sources like solar, wind, biomass and geothermal energy. As of 2011, it includes waste-to-energy sources, including poultry-litter incineration. After 2011, Tier 2 serves to allow a small amount of hydropower to count toward the RPS. This policy is currently administered by the Maryland Public Service Commission.
RPS Technical Details
|Eligible Technologies||Solar Water Heat, Solar Thermal Electric, Photovoltaics, Landfill Gas, Wind, Biomass, Hydroelectric, Geothermal Electric, Geothermal Heat Pumps, Municipal Solid Waste, Anaerobic Digestion, Tidal Energy, Wave Energy, Ocean Thermal, Fuel Cells using Renewable Fuels, Geothermal Direct-Use|
|Geographic Eligibility||RECs generated in PJM or delivered to PJM are eligible for the RPS|
|Percent of Total Load||93.4%|
|Technology Requirements||Solar—2% by 2020, Offshore wind—yet to be finalized. The general RPS is divided into two tiers of generation with their own requirements in each year.|
|Sectors||Municipal Utility, Investor-Owned Utility, Rural Electric Cooperative, Retail Supplier|
|Penalty||Alternative Compliance Payments: $0.02/kWh for Tier I resources, $0.015/kWh for Tier II sources, $0.45/kWh for solar in 2008, $0.40kWh for solar in 2009 decreasing by $0.05 biannually until 2023|
Tools and other links
- Database of State Incentives for Renewables & Efficiency (DSIRE) RPS data page—Datasets available for download in .xlsx format
- National Renewable Energy Laboratory (NREL) Energy Analysis Portal—Resources on renewable energy policies, and interactive web tools
- Energy Information Administration (EIA) U.S. Energy Mapping System—An interactive energy resource map with a myriad of data layers to explore