The 2009 federal stimulus package
The American Recovery and Reinvestment Act of 2009 (ARRA), designed to stimulate the national economy, provides $16.8 billion for renewable energy and energy efficiency, allocates another $3.5 billion for smart-grid investments and provides $4 billion of loan guarantees for renewable energy projects. Naturally, only a small portion of these amounts have been spent, but there are signs that these funds will have a significant impact on investment in the very near future.
Cap-and-trade legislation (Waxman- Markey) was passed by the house in June 2009 , albeit with too weak a 2020 target and other problematic provisions that included subsidies for coal.
The U.S. EPA is establishing changes to the Renewable Fuels Standard Program, which will increase the share of renewable sources in transportation fuel. The total renewable fuel requirement will increase to 8.25 percent of transportation fuel or 12.95 billion gallons in 2010 (from 9 billion gallons in 2008). This amount is to rise to 36 billion gallons by 2022. Last month, the Senate passed a bill reinstating a biodiesel blenders' tax credit that expired at the end of 2009 but final passage is uncertain. Also, to expired at the end of 2009 but final passage is uncertain.
Property-Assessed Clean Energy (PACE) financing
PACE programs allow low-interest funding of renewable energy installations by property owners, usually to be repaid through additional property tax assessments. At last count, the laws of nineteen states allowed local governments to form PACE programs to facilitate and encourage renewable energy installations in their municipalities.
Renewable portfolio standards
Three additional states implemented an RPS in 2008 (MI, MO, and OH) and one in 2009 (KS), for a total of 29 states plus the District of Columbia with some form of a renewable portfolio standard.A larger number of states, six in 2008 and seven in 2009, modified existing RPS provisions, mostly expanding targets and carving out a larger role for solar.
Many states are making special provisions for solar and distributed generation within RPS mandates. Nine states and DC made new provisions specific to solar in 2009.11 One of these states is Nevada, which raised its RPS from 20 percent in 2020 to 25 percent in 2025, but also modestly increased the solar share to 1.5% of total sales by 2025 and added a credit multiplier for solar generation. As of April 2010, 16 states and DC have special provisions for solar and distributed generation, sometimes combined with credit multipliers. So far, RPS programs predominantly drive wind power development while other sources (solar, biomass and geothermal) are expected to gain ground.
Investment incentives (such as direct rebates, tax credits or rebates, and loans)
As noted above, Federal stimulus money helped boost incentive programs for renewables and energy efficiency. Still, some states did not increase available funding or even reduced funding due to budget constraints. In 2009, about forty new solar programs were launched at the state level. Significant new incentive programs included the Alaska Energy Authority Renewable Energy Grant Program and the Pennsylvania Sunshine Solar Rebate Program, each topping $100 million in funding for 2009. Many states increased tax incentives in various ways, such as increasing caps on tax credits, increasing the size of systems eligible for consideration, expanding programs to include additional renewable technologies, or extending program duration. Only two states, Hawaii and Vermont, placed new restrictions on their tax incentives.
Production incentives (such as FITs and REC purchase programs)
As of late 2009, there were 39 production-based incentives in 28 states, with 15 new programs created last year.12 But many of those are utility-based programs rather than state or municipal policies. Many states are considering FITs and a handful have enacted legislation. One municipality in Florida (Gainesville) has its own FIT, effective March 2009, with a variable rate and a 20-year contract requirement.
According to the Interstate Renewable Energy Council, it is the relative “maturity” of the U.S. solar market that is now driving states to consider more production-based incentives rather than relying only on rebates and other investment-based incentives, with 15 new production-based incentives created last year.
It is perhaps a sign of that perceived maturity, or more simply, the fact that system costs have declined significantly, that some states lowered their incentive payments, per watt installed or per watthour produced, or by reducing the cap on each incentive payment. This does not mean that overall program budgets always declined. Only three states appear to have reduced program funding last year, mostly to cover state budget deficits.
Two states, Kansas and Nebraska, implemented net metering last year, for a total of 42 states with net metering programs. Twenty states modified their net metering rules last year. Some of these changes address concerns such as the treatment of excess generation, namely whether to credit at retail rates or average avoided cost and whether to allow monthly or indefinite rollover of excess. Some utilities remain concerned that self-generating customers are unduly compensated at anything above average avoided cost but the regulators and legislators seem to be increasingly convinced that the value of distributed renewable generation is indeed higher, and that this value should be no lower than the retail rate. Net metering program caps relative to peak load have also been increased in some states as well as system capacity limits. For example, some states have no system size limits as long as the system reflects the customer’s average annual demand.
A number of states now have incentives for renewable heating in place, particularly water heating and geothermal heat pumps. In June 2008, Hawaii was the first state to enact mandates in this area, requiring that all new homes be outfitted with solar water heating systems. The law prohibits the issuing of building permits for single-family homes that do not have solar water heaters starting January 1, 2010.
Notable at the state level
The State of Maine has set an 8,000-MW wind power goal by 2030, with 3,000 MW to come from off-shore resources. The Maine Public Utilities Commission is expected to get started this year by issuing a request for proposals for 25 MW of deepwater floating turbines as well as 5 MW of tidal power. In early 2010, the Obama administration approved the first American offshore wind farm—Cape Wind in Nantucket Sound. These 130 turbines will provide 420 megawatts of energy, or three quarters of the electricity for Cape Cod, Martha’s Vineyard and Nantucket. And California continues to lead the way at the state level, with its progressive climate change policies.