Texas’s Renewable Portfolio Standard (RPS) is intended to increase use of this and other renewable resources in the state. The RPS establishes 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 10,000 megawatts of installed renewable capacity by 2025.
The state profile below explores the design of this policy, highlighting the factors that influence the success of Texas’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 Texas’s policy design affects its success.
- Utilities must install 10,000 MW of renewable capacity by 2025
- Carve-out for non-wind resources
- Implicit ‘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. Texas’s RPS requires that, starting in 2005, 500 MW of the capacity goal be met through renewable sources other than wind.
Compare the goal established in the RPS to what is being achieved.
It is important to note that Texas surpassed its 10,000 MW installed capacity goal in 2009.
The following chart compares the variety of sources currently used to generate Texas’s electricity. The color of each bar is indicative of the carbon intensity of each source.
Cost Cap Details
Texas does not have an explicit cost cap. However, by allowing alternative compliance payments (ACPs), Texas sets an effective cap on the premium a utility will be willing to pay for renewable energy. The RPS sets this cap at $50/MWh for the general RPS requirement. If the renewable energy premium exceeds this cap, the utility would prefer to meet the standard by making the lower cost alternative compliance payments. Although the Public Utilities Commission of Texas has statutory authority to establish similar penalties for the non-wind portion of the RPS requirement, they have not yet done so. This essentially means the non-wind capacity goal is voluntary. 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).
The current RPS was enacted in 2005 by S.B 20, which revised the original RPS mandate for Texas created by the Public Utility Commission of Texas (PUCT) in 1999. In both cases, the purpose was to develop electricity procurement plans for renewable power. The current S.B 20 legislation more specifically: 5,880 MW (roughly 5% of Texas’ electricity demand) of renewable power annually by 2015 and 10,000 MW by 2025. Since wind power accounts for nearly all of the current renewable energy generation in Texas, S.B 20 created a target of 500 MW of renewable-energy generation from resources other than wind. Renewable energy may be bundled with RECs.
RPS Technical Details
|Eligible Technologies||Solar Water Heat, Solar Thermal Electric, Photovoltaics, Landfill Gas, Wind, Biomass, Hydroelectric, Geothermal Electric, Geothermal Heat Pumps, Tidal Energy, Wave Energy, Ocean Thermal|
|Geographic Eligibility||Texas meets 100% of its requirements through to 2025 with in-state wind power at present.|
|Percent of Total Load||Primary RPS: 75.9%|
|Technology Requirements||Non-Wind—500 MW annual Req.|
|Sectors||Investor-Owned Utilities and Retail Suppliers. Municipal Utilities and Coops May Opt-in.|
|Penalty||ACP: $50 for general RPS, None for non-wind carve-out|
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
- DSIRE State RPS Page—Visit for detailed information on RPS and complete legislation