Renewable energy potential and adoption of renewable portfolio standards

•This paper tests for the impact of renewable energy potential on RPS adoption.•Both wind and solar potential are positively related to the probability of RPS adoption.•Economic and political factors are also found to impact RPS adoption.

Thirty states have adopted renewable portfolio standards (RPSs) that set targets for renewable energy generation by mandating electric power utilities obtain a minimum percentage of their retail load from renewable sources. To date, a number of studies have consistently found that political and economic factors impact RPS adoption. Studies have also examined the impact of renewable energy potential in a state on the probability of RPS adoption, but results have largely been statistically weak and inconclusive. After controlling for political and economic factors, we estimate that a one standard deviation increase in wind potential is associated with an approximately 4.2 percentage point increase in the probability of having an RPS, and a one standard deviation increase in solar potential is associated with a 6.1 percentage point increase in the probability of having an RPS.