energy law joel roberson [email protected] spring 2007 state strategies for promoting renewable...

Energy LawEnergy Law

Joel RobersonJoel Roberson

[email protected]@kentlaw.edu

Spring 2007Spring 2007

Topic: State Strategies for State Strategies for Promoting Renewable EnergyPromoting Renewable Energy

Reducing Dependency Through Reducing Dependency Through Promotion of Renewable Promotion of Renewable

EnergyEnergy• Renewable Portfolio StandardsRenewable Portfolio Standards

• Grant ProgramsGrant Programs

• Loan ProgramsLoan Programs

• Personal and Corporate Tax IncentivesPersonal and Corporate Tax Incentives

• Mandatory Government Procurement Mandatory Government Procurement RulesRules

• Government-funded researchGovernment-funded research

Top Seven Energy Consuming Top Seven Energy Consuming StatesStates

1.1. TexasTexas

2.2. CaliforniaCalifornia

3.3. FloridaFlorida

4.4. New YorkNew York

5.5. OhioOhio

6.6. PennsylvaniaPennsylvania

7.7. IllinoisIllinois

Source: Energy Information Administration – State Energy Data 2003

1. TEXAS1. TEXAS

• Total Energy Total Energy Consumption: 12,369.8 Consumption: 12,369.8 trillion Btutrillion Btu

• #1 Residential Energy #1 Residential Energy ConsumerConsumer

• #3 Commercial Sector #3 Commercial Sector ConsumerConsumer

• #1 Industrial Sector #1 Industrial Sector ConsumerConsumer

• #2 Transportation #2 Transportation Sector ConsumerSector Consumer


Texas Renewable Energy Texas Renewable Energy MandateMandate

• In 1999, the Public Utility In 1999, the Public Utility Commission of Texas adopted three Commission of Texas adopted three new rules:new rules:– Renewable Portfolio Standard (RPS)Renewable Portfolio Standard (RPS)– Renewable Energy Credit (REC) Trading Renewable Energy Credit (REC) Trading

ProgramProgram– Renewable Energy Purchase Renewable Energy Purchase

RequirementsRequirements

Texas Renewable Portfolio Texas Renewable Portfolio StandardStandard

• Enacted: December, 1999Enacted: December, 1999• Effective: January, 2000Effective: January, 2000• Original Requirement:Original Requirement:

– 2,000 renewable Megawatts (MW) by 20092,000 renewable Megawatts (MW) by 2009• Acceleration in August, 2005:Acceleration in August, 2005:

– 2,280 MW by 20072,280 MW by 2007– 3,272 MW by 20093,272 MW by 2009– 4,264 MW by 20114,264 MW by 2011– 5,256 MW by 20135,256 MW by 2013– 5,880 MW by 2015 (min. 500 MW from sources 5,880 MW by 2015 (min. 500 MW from sources

other than wind)other than wind)– 10,000 MW by 202510,000 MW by 2025

Texas Renewable Energy Texas Renewable Energy Credit Trading ProgramCredit Trading Program

• Enacted: December, 1999Enacted: December, 1999• Effective: July, 2001Effective: July, 2001• Procedures:Procedures:

– Each credit = 1 Megawatt-hourEach credit = 1 Megawatt-hour– Each utility provider is assigned a Each utility provider is assigned a

portion of the annual RPS goal according portion of the annual RPS goal according to a Capacity Conversion Factor (CCF)to a Capacity Conversion Factor (CCF)

– A utility provider that fails to meet the A utility provider that fails to meet the assigned RPS standards must purchase assigned RPS standards must purchase credits or face penalties.credits or face penalties.

2. CALIFORNIA2. CALIFORNIA• Total Energy Total Energy

Consumption: 8,130.3 Consumption: 8,130.3 trillion Btutrillion Btu






California Emerging California Emerging Renewables ProgramRenewables Program

• Initiated: 1998Initiated: 1998– Part of the broader Part of the broader

Renewable Energy ProgramRenewable Energy Program

• Rebate Program:Rebate Program:– Wind:Wind:

•$2.50 per watt for the first 7.5 kW$2.50 per watt for the first 7.5 kW•$1.50 per watt between 7.5 kW and 30 kW$1.50 per watt between 7.5 kW and 30 kW

– Fuel Cell:Fuel Cell:•$3.00 per watt$3.00 per watt

• Funding Level: $118 mil from 2002-Funding Level: $118 mil from 2002-20062006

California’s Renewable California’s Renewable Portfolio Standard (RPS) Portfolio Standard (RPS)

ProgramProgram• Initiated: 2002Initiated: 2002

• RPS Requirement:RPS Requirement:– Required 20% renewable energy by 2017Required 20% renewable energy by 2017

• Acceleration of RPS Program:Acceleration of RPS Program:– In 2003, the RPS 20% RPS deadline was In 2003, the RPS 20% RPS deadline was

accelerated to 2010.accelerated to 2010.– In 2004, Governor Schwarzenegger In 2004, Governor Schwarzenegger

recommended a further acceleration of the RPS recommended a further acceleration of the RPS system requiring 33% renewable energy by system requiring 33% renewable energy by 2020.2020.

California Self-Generation California Self-Generation Incentive Program (SGIP)Incentive Program (SGIP)

• Initiated: 2001Initiated: 2001• Includes:Includes:

– Wind TurbinesWind Turbines– Fuel CellsFuel Cells– MicroturbinesMicroturbines– Internal Combustion EnginesInternal Combustion Engines– Gas TurbinesGas Turbines

• Incentive Payments:Incentive Payments:– $1.00 to $4.50 depending on technology$1.00 to $4.50 depending on technology

California Leading the Way on California Leading the Way on Wind Energy GenerationWind Energy Generation

Source: Windustry – January 2006

California Solar InitiativeCalifornia Solar Initiative

• Enacted: January, 2006Enacted: January, 2006• Rebates Begin: January, 2007Rebates Begin: January, 2007• Rebate Payment Schedule:Rebate Payment Schedule:

– Units under 100 kW (one-time payment):Units under 100 kW (one-time payment):•Residential and Commercial: $2.50 per wattResidential and Commercial: $2.50 per watt•Government: $3.25 per wattGovernment: $3.25 per watt

– Units 100 kW and larger (monthly for 5 years):Units 100 kW and larger (monthly for 5 years):•Taxable Entity: $0.39 per kilowatt-hourTaxable Entity: $0.39 per kilowatt-hour•Government/Nonprofit: $0.50 per kilowatt-hourGovernment/Nonprofit: $0.50 per kilowatt-hour

• Funding Level: $2.9 billion from 2007-Funding Level: $2.9 billion from 2007-20172017

3. FLORIDA3. FLORIDA







Florida Solar Energy System Florida Solar Energy System Incentive ProgramIncentive Program

• Enacted: June, 2006Enacted: June, 2006

• Effective: July, 2006Effective: July, 2006

• Expires: June, 2010Expires: June, 2010

• Incentive:Incentive:– Photovoltaics: $4.00 per watt (Max: $20K Photovoltaics: $4.00 per watt (Max: $20K

residential; $100K non-residential)residential; $100K non-residential)– Solar Water Heater: $500 residential; $15 per Solar Water Heater: $500 residential; $15 per

1,000 BTU non-residential/multi-family (Max: 1,000 BTU non-residential/multi-family (Max: $5K)$5K)

– Solar Thermal Pool Heaters: $100 per installationSolar Thermal Pool Heaters: $100 per installation

• Funding Level: $2.5 million for FY 06-07Funding Level: $2.5 million for FY 06-07

Florida Renewable Energy Florida Renewable Energy Technologies Grants ProgramTechnologies Grants Program

• Enacted: June, 2006Enacted: June, 2006• Effective: ImmediateEffective: Immediate• Eligibility:Eligibility:

– In-state entityIn-state entity– Involved in demonstration, commercialization, Involved in demonstration, commercialization,

research, or development for a qualifying research, or development for a qualifying activityactivity

• Qualifying Activity:Qualifying Activity:– ““electrical, mechanical, or thermal energy electrical, mechanical, or thermal energy

produced . . . [using] hydrogen, biomass, solar produced . . . [using] hydrogen, biomass, solar energy, geothermal energy, wind energy, energy, geothermal energy, wind energy, waste heat, or hydroelectric power.” waste heat, or hydroelectric power.”

• Funding Level: $15 million for FY 06-07Funding Level: $15 million for FY 06-07

Florida Renewable Florida Renewable Technologies Investment Technologies Investment

Corporate Tax CreditCorporate Tax Credit• Enacted: June, 2006Enacted: June, 2006• Effective: July, 2006Effective: July, 2006• Expiration: June, 2010Expiration: June, 2010• Benefits:Benefits:

– 75% of capital costs, operation, maintenance, research 75% of capital costs, operation, maintenance, research and developmentand development

• Qualifying Activities:Qualifying Activities:– Hydrogen-Powered Vehicles and Fueling StationHydrogen-Powered Vehicles and Fueling Station– Commercial Stationary Hydrogen Fuel CellsCommercial Stationary Hydrogen Fuel Cells– Biodiesel and Ethanol Production, Storage, and Biodiesel and Ethanol Production, Storage, and

DistributionDistribution

• Cannot be combined with the Investment Tax Cannot be combined with the Investment Tax CreditCredit

Florida Renewable Energy Florida Renewable Energy Production Corporate Tax Production Corporate Tax

CreditCredit• Enacted: June, 2006Enacted: June, 2006

• Effective: January, 2007Effective: January, 2007

• Expiration: June, 2010Expiration: June, 2010

• Benefit:Benefit:– $0.01 per Kilowatt-hour (Max: $5 million)$0.01 per Kilowatt-hour (Max: $5 million)

• Qualifying Activity:Qualifying Activity:– ““electrical, mechanical, or thermal energy electrical, mechanical, or thermal energy

produced . . . [using] hydrogen, biomass, solar produced . . . [using] hydrogen, biomass, solar energy, geothermal energy, wind energy, energy, geothermal energy, wind energy, waste heat, or hydroelectric power.”waste heat, or hydroelectric power.”

4. NEW YORK4. NEW YORK







New York Solar and Fuel Cell New York Solar and Fuel Cell Tax CreditTax Credit

• Enacted: August, 1997Enacted: August, 1997• Solar Energy:Solar Energy:

– Effective: January, 1998Effective: January, 1998– 25% of the cost of equipment and installation25% of the cost of equipment and installation– Capped at $5,000 creditCapped at $5,000 credit– Residential equipment that utilizes solar power Residential equipment that utilizes solar power

for heating, cooling, hot water, or electricityfor heating, cooling, hot water, or electricity– Non-recreational applicationsNon-recreational applications

• Fuel Cell Energy:Fuel Cell Energy:– Effective: January, 2003Effective: January, 2003– 20% tax credit (Max: $1,500)20% tax credit (Max: $1,500)– Max rated baseload capacity: 25 kWMax rated baseload capacity: 25 kW– Utilizes proton exchange membrane (PEM)Utilizes proton exchange membrane (PEM)

New York Green Building Tax New York Green Building Tax Credit ProgramCredit Program

• Enacted: May, 2000Enacted: May, 2000• Effective: January, 2001Effective: January, 2001• Expiration: December, 2009Expiration: December, 2009• Qualifying Credits:Qualifying Credits:

– Whole Building CreditWhole Building Credit– Base Building CreditBase Building Credit– Tenant Space CreditTenant Space Credit– Fuel Cell CreditFuel Cell Credit– Photovoltaic Module CreditPhotovoltaic Module Credit– Green Refrigerant CreditGreen Refrigerant Credit

• Available to corporations and individualsAvailable to corporations and individuals• Funding Level: $25 million 2005-2009Funding Level: $25 million 2005-2009

New York Renewable Power New York Renewable Power Procurement PolicyProcurement Policy

• Executive Order: June, 2001Executive Order: June, 2001• Effective: ImmediatelyEffective: Immediately• Applicability:Applicability:

– All state agencies under the control of All state agencies under the control of the Governorthe Governor

• Requirement:Requirement:– 10% of state purchased energy must be 10% of state purchased energy must be

from renewable sources by 2005from renewable sources by 2005– 20% of state purchased energy must be 20% of state purchased energy must be

from renewable sources by 2010from renewable sources by 2010

New York Renewable Portfolio New York Renewable Portfolio StandardStandard

• Enacted: September, 2004Enacted: September, 2004• Effective: ImmediatelyEffective: Immediately• Requirement:Requirement:

– 25% of renewable energy by 201325% of renewable energy by 2013

• NY State Energy Research and Development NY State Energy Research and Development Authority encourage the development of new Authority encourage the development of new renewable energy resourcesrenewable energy resources

• Incentive Funding: $45 million through 2009Incentive Funding: $45 million through 2009– 30.7% supports PV technology30.7% supports PV technology– 10% supports small wind10% supports small wind– 24.9% supports fuel cells24.9% supports fuel cells– 24.4% supports anaerobic digestion24.4% supports anaerobic digestion– 10% discretionary10% discretionary

New York Solar Sales Tax New York Solar Sales Tax ExemptionExemption

• Enacted: July, 2005Enacted: July, 2005• Effective: September, 2005Effective: September, 2005• Expires: December, 2009Expires: December, 2009• Benefit:Benefit:

– Sale and installation of solar-energy systems is Sale and installation of solar-energy systems is free from NY state taxfree from NY state tax

– Locality can also exempt taxes on this Locality can also exempt taxes on this transactiontransaction

• Requirement:Requirement:– Solar energy must be used for heating, cooling, Solar energy must be used for heating, cooling,

hot water, and/or electricityhot water, and/or electricity– Non-recreationalNon-recreational

5. OHIO5. OHIO







Ohio Energy Conversion Ohio Energy Conversion Facilities Corporate Tax Facilities Corporate Tax

ExemptionExemption• Real property used in energy Real property used in energy

conversion are exempt from property conversion are exempt from property taxation and are not considered an taxation and are not considered an improvementimprovement

• Applicable technologies:Applicable technologies:– Solar-thermal systemsSolar-thermal systems– Photovoltaic systemsPhotovoltaic systems– WindWind– BiomassBiomass– Landfill gasLandfill gas– Waste-recovery systemsWaste-recovery systems

Ohio Energy Loan Fund (ELF) Ohio Energy Loan Fund (ELF) Grant ProgramGrant Program

• Enacted: 1999Enacted: 1999• Benefit:Benefit:

– Various grants up to $150KVarious grants up to $150K

• Qualifying Projects:Qualifying Projects:– Distributed Energy ResourcesDistributed Energy Resources– Non-residential Renewable EnergyNon-residential Renewable Energy– Residential Renewable EnergyResidential Renewable Energy– New Solar Homes IncentiveNew Solar Homes Incentive– Manufacturing Energy Efficiency Manufacturing Energy Efficiency

IncentivesIncentives– Small Business Energy Savers IncentiveSmall Business Energy Savers Incentive

Ohio Wind Production & Ohio Wind Production & Manufacturing Incentive Manufacturing Incentive

ProgramProgram• Effective: February, 2007Effective: February, 2007

• Wind-energy Generation:Wind-energy Generation:– An incentive of $0.01 per kilowatt-hourAn incentive of $0.01 per kilowatt-hour– Available for up to five yearsAvailable for up to five years– Must be operational before December, Must be operational before December,

20082008

• Ohio Manufactured TurbinesOhio Manufactured Turbines– An incentive of $0.012 per kilowatt-hourAn incentive of $0.012 per kilowatt-hour– Turbine parts are made in Ohio or Turbine parts are made in Ohio or

assembled by Ohio employees.assembled by Ohio employees.

6. PENNSYLVANIA6. PENNSYLVANIA







Pennsylvania Energy Pennsylvania Energy Development Authority (PEDA) Development Authority (PEDA)

GrantsGrants• Enacted: December, 1982Enacted: December, 1982

• Grant Funding:Grant Funding:– PEDA provides grants to provide PEDA provides grants to provide

financial incentives towards the creation financial incentives towards the creation of clean, alternative-energy projects and of clean, alternative-energy projects and investment in the Pennsylvania energy investment in the Pennsylvania energy sectorsector

• Funding Levels:Funding Levels:– $5 million in 2006$5 million in 2006– Max of $1 million per grantMax of $1 million per grant

Pennsylvania Alternative Pennsylvania Alternative Energy Portfolio StandardEnergy Portfolio Standard

• Enacted: November, 2004Enacted: November, 2004

• Effective: February, 2005Effective: February, 2005

• Requirement:Requirement:– 8% of electricity must be generated by Tier I 8% of electricity must be generated by Tier I

sources (solar, wind, geothermal, fuel cells, etc) sources (solar, wind, geothermal, fuel cells, etc) by 2021by 2021

– 10% of electricity must be generated by Tier II 10% of electricity must be generated by Tier II sources (waste coal, solid waste, wood sources (waste coal, solid waste, wood byproducts, etc) by 2021byproducts, etc) by 2021

• Pennsylvania was the first state to include Pennsylvania was the first state to include waste coal, coal-mine methane and coal waste coal, coal-mine methane and coal gasificationgasification

Pennsylvania Wind-Energy Pennsylvania Wind-Energy System ExemptionSystem Exemption

• Enacted: November, 2006Enacted: November, 2006

• Effective: January, 2007Effective: January, 2007

• Benefit:Benefit:– Wind turbines and related equipment are Wind turbines and related equipment are

not assessed for property tax purposesnot assessed for property tax purposes– Instead, real property used for wind Instead, real property used for wind

energy are assessed using income energy are assessed using income capitalization approachcapitalization approach

7. ILLINOIS7. ILLINOIS







Illinois Sustainable Energy Illinois Sustainable Energy PlanPlan

• Sustainable energy is defined as:Sustainable energy is defined as:– Wind– Solar thermal energy,– Photovoltaic cells and panels, – Agricultural products and organic

biomass– Methane recovered from landfills, – Hydropower from existing dams

Illinois Renewable Portfolio Illinois Renewable Portfolio Standard (RPS)Standard (RPS)

• Enacted: June, 2001Enacted: June, 2001• Effective: July, 2001Effective: July, 2001• Renewable Portfolio Requirements:Renewable Portfolio Requirements:

– 2% of retail load to be renewable in 20072% of retail load to be renewable in 2007– Increase 1% each year reaching 8% in 2013.Increase 1% each year reaching 8% in 2013.– 75% of the renewable energy used to meet the RPS must 75% of the renewable energy used to meet the RPS must

come from wind power.come from wind power.

• Energy Efficiency Portfolio Goal:Energy Efficiency Portfolio Goal:– 10% reduction in projected load growth in years 2007-

2008,– 15% reduction in years 2009-2011,– 20% reduction in years 2012-2014, and – 25% reduction in years 2015-2017.

Illinois Manufacturing Energy Illinois Manufacturing Energy Efficiency Program (MEEP)Efficiency Program (MEEP)

• Eligibility:Eligibility:– Illinois manufacturersIllinois manufacturers

• Rebate ProgramRebate Program– 50% of the of qualifying expenses50% of the of qualifying expenses– Max of $10,000Max of $10,000

• Qualifying ExpensesQualifying Expenses– Development an energy efficiency Development an energy efficiency

action planaction plan– Technical assistance for energy efficient Technical assistance for energy efficient

technology.technology.

Illinois Renewable Energy Illinois Renewable Energy Resources Program (RERP) Resources Program (RERP)

RebatesRebates• Enacted: December, 1997Enacted: December, 1997

• Effective: ImmediatelyEffective: Immediately

• Benefit:Benefit:– 30% of qualifying expense30% of qualifying expense– Max of $10KMax of $10K

• Qualifying ExpenseQualifying Expense– New solar-energy technology with a New solar-energy technology with a

design capacity greater than 800 wattsdesign capacity greater than 800 watts

energy law joel roberson [email protected] spring 2007 state strategies for promoting renewable...

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