Market Drivers Interactions

Economics, policies, and consumer choices all drive growth in renewable electricity. For instance, a number of states have established renewable portfolio standards, which require a certain proportion of the electricity that utilities and other providers sell in the state to come from renewable resources. Customers also drive demand for renewables by choosing to purchase electricity from renewable resources beyond what their states may require. As demonstrated on the Consumer Choice Drivers webpage, both these types of drivers have contributed to the growth of renewable electricity.

One key motivation for purchasing green power is the ability of a consumer to demonstrate to its customers, employees, and other stakeholders that its renewable electricity purchases are making a difference. To do this, consumers must be able to show that they contributed to demand for renewables beyond what is already required by policies. In policy circles, this is referred to as “regulatory surplus” because the additional renewable electricity being purchased is in surplus to regulatory requirements. To substantiate claims that consumers’ purchases are additional and benefit the environment or their community, green power buyers also must own the renewable energy certificates (RECs) associated with their purchases.

Policies and consumer choice are complementary drivers. Policies like renewable portfolio standards are better market drivers when they set a floor rather than a ceiling for renewable electricity demand and allow consumer choice to play a complementary role in driving additional demand for renewable electricity. Green power buyers—both small and large electricity users—are motivated to accelerate the pace at which new renewable resources are added to the grid. Utilizing both policies and consumer choice as market drivers can accelerate the transition to clean energy and spread the effort and cost.