Incentives, Mandates, and Incentives, Mandates, and Federal / State Policies for Federal / State Policies for

Promoting Renewable EnergyPromoting Renewable Energy

Forrest StegelinForrest Stegelin

Extension Agribusiness EconomistExtension Agribusiness Economist

University of GeorgiaUniversity of Georgia

Renewable Energy ConceptRenewable Energy Concept

Renewable energyRenewable energy is derived from resources that are is derived from resources that are generally not depleted by human use, such as the sun, generally not depleted by human use, such as the sun, wind, and water movement. These primary sources of wind, and water movement. These primary sources of energy can be converted into heat, electricity, and energy can be converted into heat, electricity, and mechanical energy in several ways.mechanical energy in several ways.

For federal, state, and local policies (incentives, grants, For federal, state, and local policies (incentives, grants, standards) for renewable energy, see Database for standards) for renewable energy, see Database for Incentives for Renewable Energy at Incentives for Renewable Energy at [http://www.dsireusa.org/].[http://www.dsireusa.org/].

Renewable Portfolio Standard (RPS)Renewable Portfolio Standard (RPS) – – for retail for retail electricity suppliers, and RPS sets a minimum requirement electricity suppliers, and RPS sets a minimum requirement (often a percentage) for electricity production from renewable (often a percentage) for electricity production from renewable energy resources or for the purchase of tradable credits that energy resources or for the purchase of tradable credits that represent an equivalent amount of production.represent an equivalent amount of production.

Renewable Energy Production Tax Credit (PTC) Renewable Energy Production Tax Credit (PTC) and Renewable Energy Production Incentive and Renewable Energy Production Incentive (REPI)(REPI)

Renewable Fuel StandardRenewable Fuel Standard – minimum production – minimum production increases in renewable fuels (ethanol, biodiesel, and natural increases in renewable fuels (ethanol, biodiesel, and natural gas produced from landfills, sewage treatment plants, and gas produced from landfills, sewage treatment plants, and certain other sources, i.e., crops)certain other sources, i.e., crops)

Renewable HydrogenRenewable Hydrogen – focuses on producing – focuses on producing hydrogen energy from renewable energy and renewable fuelshydrogen energy from renewable energy and renewable fuels

Residential Tax CreditResidential Tax Credit – an investment tax credit or – an investment tax credit or tax deduction for homeowners who purchase photovoltaics, tax deduction for homeowners who purchase photovoltaics, wind energy, or solar water heating equipmentwind energy, or solar water heating equipment

Renewables Tax Revenue EffectRenewables Tax Revenue Effect – estimated 10- – estimated 10-year revenue effect of renewable energy tax provisions: year revenue effect of renewable energy tax provisions: residential solar tax credit - $0.018 billion; net total, all tax residential solar tax credit - $0.018 billion; net total, all tax provisions - $8.090 billion; renewables share of total – provisions - $8.090 billion; renewables share of total – 0.2%0.2%

Other Renewables ProvisionsOther Renewables Provisions – see Congressional – see Congressional Research Service (CRS) Report RL32860, Research Service (CRS) Report RL32860, Energy Energy Efficiency and Renewable Energy Legislation in the 109Efficiency and Renewable Energy Legislation in the 109thth CongressCongress

Current Federal Policies Current Federal Policies Supporting Renewable EnergySupporting Renewable Energy

Production Tax CreditProduction Tax Credit - - – 1.8 cents/kWh for 10 years1.8 cents/kWh for 10 years– Only accrues to corporate entitiesOnly accrues to corporate entities– Extended through Dec 31, 2007 (part of Energy Policy Act of 2005Extended through Dec 31, 2007 (part of Energy Policy Act of 2005– Supports utility scale windSupports utility scale wind

2002 Farm Bill – 9006 Program2002 Farm Bill – 9006 Program– Allocates $22-23 million/year through 2007 to cost-share renewable Allocates $22-23 million/year through 2007 to cost-share renewable

energy production for farms and rural small businessesenergy production for farms and rural small businesses– Awards from $10,000 to $500,000 per project, up to 25% cost Awards from $10,000 to $500,000 per project, up to 25% cost

shareshare– Also, EQIP and CSP (in conservation title) are possible funding Also, EQIP and CSP (in conservation title) are possible funding

sources for wind and other renewable energy sourcessources for wind and other renewable energy sources

Current State-Level Policies Current State-Level Policies Supporting Renewable EnergySupporting Renewable Energy

Renewable energy standardsRenewable energy standards – 22 states plus – 22 states plus D.CD.C.. – Mandate utilities to purchase a certain percentage of energy from renewable sourcesMandate utilities to purchase a certain percentage of energy from renewable sources– Supports utility scale renewable productionSupports utility scale renewable production

Net meteringNet metering – 40 states – 40 states (supports small wind and solar) (supports small wind and solar)

Grant/loan/rebate programsGrant/loan/rebate programs – 26 states – 26 statesHelps to offset cost of installation, can pair with federal programsHelps to offset cost of installation, can pair with federal programs

Renewables Portfolio Standards

State Goal

☼ PA: 18%¹ by 2020

☼ NJ: 22.5% by 2021

CT: 10% by 2010

MA: 4% by 2009 + 1% annual increase

WI: requirement varies by utility; 10% by 2015 Goal

IA: 105 MW

MN: 10% by 2015 Goal +Xcel mandate of

1,125 MW wind by 2010

TX: 5,880 MW by 2015

*NM: 10% by 2011

☼ AZ: 1.1% by 2007

CA: 20% by 2010

☼ NV: 20% by 2015

ME: 30% by 2000

State RPS

*MD: 7.5% by 2019

☼ Minimum solar or customer-sited requirement* Increased credit for solar

¹PA: 8% Tier I, 10% Tier II (includes non-renewable sources)

HI: 20% by 2020

RI: 15% by 2020

☼ CO: 10% by 2015

☼ DC: 11% by 2022

DSIRE: www.dsireusa.org May 2006

☼ NY: 24% by 2013

MT: 15% by 2015

*DE: 10% by 2019

IL: 8% by 2013

VT: RE meets load growth by 2012

22 + DC states

Net Metering Rules

State-wide net metering for certain utility types (e.g., IOUs only)

Net metering offered by one or more individual utilities

Net metering is available in

40 states + D.C.

25 kW

NH: 25

50 kW

100 kW

50

www.dsireusa.org June 2006

10

100

100

1,000

MA: 60 25 RI: 25 *

DC: 100

DE: 25

50

100

402025/100

2,00040 30

10/100

25 no limit

25/100

25/100

10

500

VT: 15/150

10/400

NJ: 2,000

15

10

100

MD: 50025

50

varies

10

30

* CT: 100

State-wide net metering for all utility types

* *

*

*

**

*

*

*

**

**

**

*

#s indicate system size limit (kW); in some cases limits are different for residential and commercial as shown

VA: 10 /500

*

20/100

*

State Loan/Grant/Rebate Programs

• Support installation of a number of small-scale renewable technologies

• Low-cost or zero-percent loans• State grants to pair with federal dollars-some

states up to 50%• Rebates on installed technologies

• Primary incentive for farm/business/residential renewable energy

30 states

Loan Programs for Renewables

DSIRE: www.dsireusa.org March 2006

State & utility/local programs

State program

Utility or local programs

D.C.

Grants for Renewable Energy Technologies

Private, utility and/or local program

www.dsireusa.org March 2006

State offers at least one grant program

**

**

**

*

D.C.

*

*

*

23 states

Rebate Programs for Renewable Energy Technologies

25 kW

DSIRE: www.dsireusa.org March 2006

D.C.

Both state & utility/other programs available

State programs available

Utility/other programs available27 States

USDA announces $17.5 million investment in USDA announces $17.5 million investment in renewable energy and energy efficiency, 8/30/06renewable energy and energy efficiency, 8/30/06

Ag Secretary Mike Johanns announced award of $17.5 Ag Secretary Mike Johanns announced award of $17.5 million in Section 9006 Renewable Energy and Energy million in Section 9006 Renewable Energy and Energy Efficiency Program Grants to 375 recipients in 36 states. Efficiency Program Grants to 375 recipients in 36 states. “These grants will directly promote energy savings and “These grants will directly promote energy savings and increased energy production in rural America.”increased energy production in rural America.”

2002 Farm Bill authorized the Renewable Energy Systems 2002 Farm Bill authorized the Renewable Energy Systems and Energy Efficiency Improvements program. Rural and Energy Efficiency Improvements program. Rural development grant funds can be used to pay up to 25% of development grant funds can be used to pay up to 25% of the eligible project costs. The program provides loan the eligible project costs. The program provides loan guarantees up to $10 million to fund up to 50% of eligible guarantees up to $10 million to fund up to 50% of eligible projects. $4.6 million in federal funds have been allocated projects. $4.6 million in federal funds have been allocated in loan guarantees and grants earlier this year.in loan guarantees and grants earlier this year.

Eligible projects include those that derive energy from a wind, Eligible projects include those that derive energy from a wind, solar, biomass, or geothermal source, or hydrogen driven from solar, biomass, or geothermal source, or hydrogen driven from biomass or water using wind, solar, or geothermal energy biomass or water using wind, solar, or geothermal energy sources. Awards are made on a competitive basis for the sources. Awards are made on a competitive basis for the purchase of renewable energy systems and to make energy purchase of renewable energy systems and to make energy improvements.improvements.

States receiving funding were AK, AL, AZ, CA, CO, FL, HI, ID, States receiving funding were AK, AL, AZ, CA, CO, FL, HI, ID, IA, IL, IN, KS, MA, ME, MI, MN, MO, MS, MT, NC, NB, NH, IA, IL, IN, KS, MA, ME, MI, MN, MO, MS, MT, NC, NB, NH, NJ, NY, OH, NJ, NY, OH, OKOK, OR, PA, SC, SD, TN, VT, WS, WV, and WY., OR, PA, SC, SD, TN, VT, WS, WV, and WY.

Oklahoma’s recipients:Oklahoma’s recipients: Splatters Paintball & Specialties Splatters Paintball & Specialties, $48,563, new , $48,563, new hvac, double pane storefront glazing & windows, standard double glazed hvac, double pane storefront glazing & windows, standard double glazed skylights, & insulation. skylights, & insulation. House of FlowersHouse of Flowers, $9,396, new hvac, awning, , $9,396, new hvac, awning, storefront framing & glazing. storefront framing & glazing. Fritsche Rental PropertiesFritsche Rental Properties, $10,603, new , $10,603, new hvac, roof insulation, glazing of windows, awning. hvac, roof insulation, glazing of windows, awning. James JohnstonJames Johnston, , $11,900, windows & glazing, new hvac, roof insulation. $11,900, windows & glazing, new hvac, roof insulation. Broadway Square Broadway Square LLCLLC, $15,688, replace 102 windows. , $15,688, replace 102 windows. Shawnee Beauty CollegeShawnee Beauty College, $12,500, , $12,500, replacing windows & doors, lighting fixtures, pitched insulated roof. replacing windows & doors, lighting fixtures, pitched insulated roof. Merle Merle NormanNorman, $2,113, new hvac, awning., $2,113, new hvac, awning.

Alternative Fuels Data Center: OklahomaAlternative Fuels Data Center: Oklahoma Alternative Fuel Vehicle (AFV) Acquisition Requirements (Alternative Fuel Vehicle (AFV) Acquisition Requirements (Oklahoma Oklahoma

StatutesStatutes Section 74-130.3) Section 74-130.3) Ethanol Production Tax Credit (Ethanol Production Tax Credit (House BillHouse Bill 1556, 2005 and 1556, 2005 and Oklahoma Oklahoma

StatutesStatutes Section 68-2357.77) Section 68-2357.77) Ethanol Fuel Retailer Tax Credit (Ethanol Fuel Retailer Tax Credit (House BillHouse Bill 1556, 2005 and 1556, 2005 and Oklahoma Oklahoma

StatutesStatutes Section 68-500.10-1) Section 68-500.10-1) Alternative Fuel Vehicle and Refueling Infrastructure LoansAlternative Fuel Vehicle and Refueling Infrastructure Loans Alternative Fuel Vehicle Technician Training (Alternative Fuel Vehicle Technician Training (Oklahoma StatutesOklahoma Statutes Sections Sections

74-130.11 through 74-130.24)74-130.11 through 74-130.24) Alternative Fuel Labeling Requirement (Alternative Fuel Labeling Requirement (Oklahoma StatutesOklahoma Statutes Section 68-723) Section 68-723) Neighborhood Electric Vehicle (NEV) Access to Roadways (Neighborhood Electric Vehicle (NEV) Access to Roadways (Oklahoma Oklahoma

StatutesStatutes Section 47-11-805.1) Section 47-11-805.1) Alternative Fuel Vehicle LoansAlternative Fuel Vehicle Loans Alternative Fuel Vehicle Tax Credit (Alternative Fuel Vehicle Tax Credit (Oklahoma StatutesOklahoma Statutes Section 68-2357.22) Section 68-2357.22) Alternative Fuel Vehicle and Refueling Infrastructure Tax Credit (Alternative Fuel Vehicle and Refueling Infrastructure Tax Credit (Oklahoma Oklahoma

StatutesStatutes Section 68-2357.22) Section 68-2357.22) Alternative Fuels Commission Alternative Fuels Commission (Oklahoma Statutes(Oklahoma Statutes Section 2-1950.10) Section 2-1950.10) Biodiesel Production Facility Tax Credit (Biodiesel Production Facility Tax Credit (Oklahoma StatutesOklahoma Statutes Section 68- Section 68-

2357.67)2357.67)

Interstate Renewable Energy Council Interstate Renewable Energy Council (IREC) State and Utility Net-Metering Rules (IREC) State and Utility Net-Metering Rules

and Programs: and Programs: OklahomaOklahoma

System Size Limit / Customer Classes Eligible:System Size Limit / Customer Classes Eligible: 100 kW or 100 kW or 25,000 kWh/year (whichever is less) / Commercial, 25,000 kWh/year (whichever is less) / Commercial, Industrial, Residential/AgriculturalIndustrial, Residential/Agricultural

Eligible Technologies:Eligible Technologies: solar, wind, biomass, hydro, solar, wind, biomass, hydro, geothermal, municipal solid waste, CHPgeothermal, municipal solid waste, CHP

Limit on Total Capacity:Limit on Total Capacity: none none Treatment of Net Excess Generation (NEG):Treatment of Net Excess Generation (NEG): granted to granted to

utility monthly or credited to customer’s next bill at utility’s utility monthly or credited to customer’s next bill at utility’s avoided-cost rate (varies by utility)avoided-cost rate (varies by utility)

Interconnection Standards for Net-Metering:Interconnection Standards for Net-Metering: no no Utilities Involved:Utilities Involved: investor-owned utilities, municipal utilities investor-owned utilities, municipal utilities

One thing is certain: the topic of One thing is certain: the topic of renewable energy will not disappear.renewable energy will not disappear.

Must make individual management decisions according to Must make individual management decisions according to one’s own objectives, resources, and risk philosophies.one’s own objectives, resources, and risk philosophies.

““Benjamin Franklin may have discovered electricity, but it Benjamin Franklin may have discovered electricity, but it was the man who invented the meter who made the was the man who invented the meter who made the money.” – Earl Wilson, American newspaper columnistmoney.” – Earl Wilson, American newspaper columnist