Traditional regulated utilities have not been the major adopters of renewable energy, except large hydropower.  Therefore, a variety of promotional policies have been used to stimulate utility acceptance of renewable energy. 

The traditional regulated utility develops new power generating stations on the basis of integrated resource plans and with the approval of its regulating body, which determines the portion of the project investment cost that is included in the utility rate base.  

The regulated utility typically finances its power plants through a combination of corporate equity and debt (in the form of long-term bonds.)  The equity to debt ratio is traditionally about 50:50.

In many countries, the rates charged by regulated utilities are determined by a public regulatory authority to ensure an “appropriate” rate of return.  The basic method for setting rates, called rate-base regulation, uses many factors, including capital investment, operating costs and system reliability, in calculating the allowable rates, but utility capital investment is by far the most significant determining factor.  Fuel costs are typically passed through to the customer. 

Rate-base regulation incentivizes utility managers to be conservative in their technology choices and to prefer low capital costs power plants even if future fuel prices are likely to be very volatile.  Therefore, regulated utilities have not typically been strong adopters of renewable energy, with the exception of hydropower and in a few cases geothermal. 

Prior to restructuring and deregulation, there were several progressive utilities in the U.S that made significant contributions to the development of renewable energy technologies, but that ended when the utility was unbundled into separate generation, transmission and distribution components.  The generating companies now had to compete with generating companies from nearby service areas, and from new generating companies entering their traditional service territory.

In many developing countries, national or regional utilities are operated by the government, and the rates are set politically, which typically leads to chronic financial losses for the utility.  Such public utilities have difficulty raising capital for conventional investments, and are typically unwilling to even consider renewable energy technologies, except hydropower.

Because the traditional utilities have not adopted renewable energy, a variety of promotional policies have been used to stimulate utility acceptance of renewable energy.  The most effective mechanisms used to date have been feed-in tariffs and renewable portfolio standards, which generally result in the regulated utility purchasing the output from renewable energy projects developed by others.