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Energy Law

Energy Law. Topic: State Strategies for Promoting Renewable Energy. Joel Roberson jroberson@kentlaw.edu Spring 2007. Reducing Dependency Through Promotion of Renewable Energy. Renewable Portfolio Standards Grant Programs Loan Programs Personal and Corporate Tax Incentives

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Energy Law

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  1. Energy Law Topic:State Strategies for Promoting Renewable Energy Joel Roberson jroberson@kentlaw.edu Spring 2007

  2. Reducing Dependency Through Promotion of Renewable Energy • Renewable Portfolio Standards • Grant Programs • Loan Programs • Personal and Corporate Tax Incentives • Mandatory Government Procurement Rules • Government-funded research

  3. Top Seven Energy Consuming States • Texas • California • Florida • New York • Ohio • Pennsylvania • Illinois Source: Energy Information Administration – State Energy Data 2003

  4. 1. TEXAS • Total Energy Consumption: 12,369.8 trillion Btu • #1 Residential Energy Consumer • #3 Commercial Sector Consumer • #1 Industrial Sector Consumer • #2 Transportation Sector Consumer Source: Energy Information Administration – State Energy Data 2003

  5. Texas Renewable Energy Mandate • In 1999, the Public Utility Commission of Texas adopted three new rules: • Renewable Portfolio Standard (RPS) • Renewable Energy Credit (REC) Trading Program • Renewable Energy Purchase Requirements

  6. Texas Renewable Portfolio Standard • Enacted: December, 1999 • Effective: January, 2000 • Original Requirement: • 2,000 renewable Megawatts (MW) by 2009 • Acceleration in August, 2005: • 2,280 MW by 2007 • 3,272 MW by 2009 • 4,264 MW by 2011 • 5,256 MW by 2013 • 5,880 MW by 2015 (min. 500 MW from sources other than wind) • 10,000 MW by 2025

  7. Texas Renewable Energy Credit Trading Program • Enacted: December, 1999 • Effective: July, 2001 • Procedures: • Each credit = 1 Megawatt-hour • Each utility provider is assigned a portion of the annual RPS goal according to a Capacity Conversion Factor (CCF) • A utility provider that fails to meet the assigned RPS standards must purchase credits or face penalties.

  8. 2. CALIFORNIA • Total Energy Consumption: 8,130.3 trillion Btu • #2 Residential Energy Consumer • #1 Commercial Sector Consumer • #3 Industrial Sector Consumer • #1 Transportation Sector Consumer Source: Energy Information Administration – State Energy Data 2003

  9. California Emerging Renewables Program • Initiated: 1998 • Part of the broader Renewable Energy Program • Rebate Program: • Wind: • $2.50 per watt for the first 7.5 kW • $1.50 per watt between 7.5 kW and 30 kW • Fuel Cell: • $3.00 per watt • Funding Level: $118 mil from 2002-2006

  10. California’s Renewable Portfolio Standard (RPS) Program • Initiated: 2002 • RPS Requirement: • Required 20% renewable energy by 2017 • Acceleration of RPS Program: • In 2003, the RPS 20% RPS deadline was accelerated to 2010. • In 2004, Governor Schwarzenegger recommended a further acceleration of the RPS system requiring 33% renewable energy by 2020.

  11. California Self-Generation Incentive Program (SGIP) • Initiated: 2001 • Includes: • Wind Turbines • Fuel Cells • Microturbines • Internal Combustion Engines • Gas Turbines • Incentive Payments: • $1.00 to $4.50 depending on technology

  12. California Leading the Way on Wind Energy Generation Source: Windustry – January 2006

  13. California Solar Initiative • Enacted: January, 2006 • Rebates Begin: January, 2007 • Rebate Payment Schedule: • Units under 100 kW (one-time payment): • Residential and Commercial: $2.50 per watt • Government: $3.25 per watt • Units 100 kW and larger (monthly for 5 years): • Taxable Entity: $0.39 per kilowatt-hour • Government/Nonprofit: $0.50 per kilowatt-hour • Funding Level: $2.9 billion from 2007-2017

  14. 3. FLORIDA • Total Energy Consumption: 4,287.8 trillion Btu • #3 Residential Energy Consumer • #4 Commercial Sector Consumer • #16 Industrial Sector Consumer • #3 Transportation Sector Consumer Source: Energy Information Administration – State Energy Data 2003

  15. Florida Solar Energy System Incentive Program • Enacted: June, 2006 • Effective: July, 2006 • Expires: June, 2010 • Incentive: • Photovoltaics: $4.00 per watt (Max: $20K residential; $100K non-residential) • Solar Water Heater: $500 residential; $15 per 1,000 BTU non-residential/multi-family (Max: $5K) • Solar Thermal Pool Heaters: $100 per installation • Funding Level: $2.5 million for FY 06-07

  16. Florida Renewable Energy Technologies Grants Program • Enacted: June, 2006 • Effective: Immediate • Eligibility: • In-state entity • Involved in demonstration, commercialization, research, or development for a qualifying activity • Qualifying Activity: • “electrical, mechanical, or thermal energy produced . . . [using] hydrogen, biomass, solar energy, geothermal energy, wind energy, waste heat, or hydroelectric power.” • Funding Level: $15 million for FY 06-07

  17. Florida Renewable Technologies Investment Corporate Tax Credit • Enacted: June, 2006 • Effective: July, 2006 • Expiration: June, 2010 • Benefits: • 75% of capital costs, operation, maintenance, research and development • Qualifying Activities: • Hydrogen-Powered Vehicles and Fueling Station • Commercial Stationary Hydrogen Fuel Cells • Biodiesel and Ethanol Production, Storage, and Distribution • Cannot be combined with the Investment Tax Credit

  18. Florida Renewable Energy Production Corporate Tax Credit • Enacted: June, 2006 • Effective: January, 2007 • Expiration: June, 2010 • Benefit: • $0.01 per Kilowatt-hour (Max: $5 million) • Qualifying Activity: • “electrical, mechanical, or thermal energy produced . . . [using] hydrogen, biomass, solar energy, geothermal energy, wind energy, waste heat, or hydroelectric power.”

  19. 4. NEW YORK • Total Energy Consumption: 4,220.6 trillion Btu • #4 Residential Energy Consumer • #2 Commercial Sector Consumer • #18 Industrial Sector Consumer • #4 Transportation Sector Consumer Source: Energy Information Administration – State Energy Data 2003

  20. New York Solar and Fuel Cell Tax Credit • Enacted: August, 1997 • Solar Energy: • Effective: January, 1998 • 25% of the cost of equipment and installation • Capped at $5,000 credit • Residential equipment that utilizes solar power for heating, cooling, hot water, or electricity • Non-recreational applications • Fuel Cell Energy: • Effective: January, 2003 • 20% tax credit (Max: $1,500) • Max rated baseload capacity: 25 kW • Utilizes proton exchange membrane (PEM)

  21. New York Green Building Tax Credit Program • Enacted: May, 2000 • Effective: January, 2001 • Expiration: December, 2009 • Qualifying Credits: • Whole Building Credit • Base Building Credit • Tenant Space Credit • Fuel Cell Credit • Photovoltaic Module Credit • Green Refrigerant Credit • Available to corporations and individuals • Funding Level: $25 million 2005-2009

  22. New York Renewable Power Procurement Policy • Executive Order: June, 2001 • Effective: Immediately • Applicability: • All state agencies under the control of the Governor • Requirement: • 10% of state purchased energy must be from renewable sources by 2005 • 20% of state purchased energy must be from renewable sources by 2010

  23. New York Renewable Portfolio Standard • Enacted: September, 2004 • Effective: Immediately • Requirement: • 25% of renewable energy by 2013 • NY State Energy Research and Development Authority encourage the development of new renewable energy resources • Incentive Funding: $45 million through 2009 • 30.7% supports PV technology • 10% supports small wind • 24.9% supports fuel cells • 24.4% supports anaerobic digestion • 10% discretionary

  24. New York Solar Sales Tax Exemption • Enacted: July, 2005 • Effective: September, 2005 • Expires: December, 2009 • Benefit: • Sale and installation of solar-energy systems is free from NY state tax • Locality can also exempt taxes on this transaction • Requirement: • Solar energy must be used for heating, cooling, hot water, and/or electricity • Non-recreational

  25. 5. OHIO • Total Energy Consumption: 3,986.2 trillion Btu • #7 Residential Energy Consumer • #7 Commercial Sector Consumer • #5 Industrial Sector Consumer • #6 Transportation Sector Consumer Source: Energy Information Administration – State Energy Data 2003

  26. Ohio Energy Conversion Facilities Corporate Tax Exemption • Real property used in energy conversion are exempt from property taxation and are not considered an improvement • Applicable technologies: • Solar-thermal systems • Photovoltaic systems • Wind • Biomass • Landfill gas • Waste-recovery systems

  27. Ohio Energy Loan Fund (ELF) Grant Program • Enacted: 1999 • Benefit: • Various grants up to $150K • Qualifying Projects: • Distributed Energy Resources • Non-residential Renewable Energy • Residential Renewable Energy • New Solar Homes Incentive • Manufacturing Energy Efficiency Incentives • Small Business Energy Savers Incentive

  28. Ohio Wind Production & Manufacturing Incentive Program • Effective: February, 2007 • Wind-energy Generation: • An incentive of $0.01 per kilowatt-hour • Available for up to five years • Must be operational before December, 2008 • Ohio Manufactured Turbines • An incentive of $0.012 per kilowatt-hour • Turbine parts are made in Ohio or assembled by Ohio employees.

  29. 6. PENNSYLVANIA • Total Energy Consumption: 3,972.7 trillion Btu • #5 Residential Energy Consumer • #6 Commercial Sector Consumer • #6 Industrial Sector Consumer • #5 Transportation Sector Consumer Source: Energy Information Administration – State Energy Data 2003

  30. Pennsylvania Energy Development Authority (PEDA) Grants • Enacted: December, 1982 • Grant Funding: • PEDA provides grants to provide financial incentives towards the creation of clean, alternative-energy projects and investment in the Pennsylvania energy sector • Funding Levels: • $5 million in 2006 • Max of $1 million per grant

  31. Pennsylvania Alternative Energy Portfolio Standard • Enacted: November, 2004 • Effective: February, 2005 • Requirement: • 8% of electricity must be generated by Tier I sources (solar, wind, geothermal, fuel cells, etc) by 2021 • 10% of electricity must be generated by Tier II sources (waste coal, solid waste, wood byproducts, etc) by 2021 • Pennsylvania was the first state to include waste coal, coal-mine methane and coal gasification

  32. Pennsylvania Wind-Energy System Exemption • Enacted: November, 2006 • Effective: January, 2007 • Benefit: • Wind turbines and related equipment are not assessed for property tax purposes • Instead, real property used for wind energy are assessed using income capitalization approach

  33. 7. ILLINOIS • Total Energy Consumption: 3,918.3 trillion Btu • #6 Residential Energy Consumer • #5 Commercial Sector Consumer • #7 Industrial Sector Consumer • #7 Transportation Sector Consumer Source: Energy Information Administration – State Energy Data 2003

  34. Illinois Sustainable Energy Plan • 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

  35. Illinois Renewable Portfolio Standard (RPS) • Enacted: June, 2001 • Effective: July, 2001 • Renewable Portfolio Requirements: • 2% of retail load to be renewable in 2007 • Increase 1% each year reaching 8% in 2013. • 75% of the renewable energy used to meet the RPS must come from wind power. • 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.

  36. Illinois Manufacturing Energy Efficiency Program (MEEP) • Eligibility: • Illinois manufacturers • Rebate Program • 50% of the of qualifying expenses • Max of $10,000 • Qualifying Expenses • Development an energy efficiency action plan • Technical assistance for energy efficient technology.

  37. Illinois Renewable Energy Resources Program (RERP) Rebates • Enacted: December, 1997 • Effective: Immediately • Benefit: • 30% of qualifying expense • Max of $10K • Qualifying Expense • New solar-energy technology with a design capacity greater than 800 watts

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