Do the Renewable Portfolio Standards (RPS) promote the renewable electricity generation in the USA? Evidence from panel data econometric study

Renewable Portfolio Standard (RPS) is a widely implemented and discussed supply side state-level regulatory policy instrument aimed to promote generation of renewable energy. Existing literature on RPS developed from discussion of an appropriate policy design, its implementation on national versus state levels and factors driving states to adopt the policy to the analysis of its effectiveness and economic impact. The main objective of this paper is to analyze the impact of the RPS on the share of renewable energy in electricity production and to quantify it using the panel data econometrics methods. Existing literature gives contradictory evidence of RPS policy impact on various measures of renewable energy production. It seems that binary RPS indicators (taking value of one if a policy is implemented and zero otherwise) are not good predictors since they do not take into account difference between regional policies, while RPS stringency variable had good explanatory power. In this paper, I propose to use RPS fractional goal as a proxy for RPS stringency, which is easily available and does not require difficult calculations. A set of control variables and econometric model are chosen in line with previous research.