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U.S. Photovoltaic Markets: PV Policies Leading the Way

U.S. Photovoltaic Markets: PV Policies Leading the Way. Susan Gouchoe North Carolina Solar Center NC State University ASES 2008 San Diego, California May 6, 2008. Leading Policy Approaches. Financial Incentives Solar Portfolio Standards Simplified Grid Connection Net Metering.

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U.S. Photovoltaic Markets: PV Policies Leading the Way

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  1. U.S. Photovoltaic Markets:PV Policies Leading the Way Susan Gouchoe North Carolina Solar Center NC State University ASES 2008 San Diego, California May 6, 2008

  2. Leading Policy Approaches • Financial Incentives • Solar Portfolio Standards • Simplified Grid Connection • Net Metering Coordinated Policies for Sustainable Markets • Rate Design & Revenue Policies • Solar Access Laws • Solar in Public Buildings • Industry Recruitment & Support • Workforce Development • Local Codes & Standards • Education & Marketing 2

  3. Financial Incentives for PV • Direct Incentives (25) • Rebates • Grants • Production Incentives • Tax Credits & Deductions (22) • Low-Interest Loans (23) • Sales Tax Exemptions (18) • Property Tax Incentives (26) • Local Permit Fee Waivers (# of states) 4

  4. Direct Incentives for PV: State Programs ME: ≤$3/W 15 - 54¢/kWh VT: $1.75-3.50/W $2-2.25/W MA: $2-5.50/W NY: $3-5/W $1-2.50/W ≤35% CT: $4.30-5/W 50% $2.50-5/W NJ: SRECs 30% DE: 50% ≤$4.50/W MD: 20% ≤$2.50/W ≤37¢/kWh, 5 yrs. • 25 state programs • Other direct incentives: • 12 states - grants • >80 utilities - rebates/PBIs • 9 states - non-profit REC purchases or grants 40% $2-3/W $4/W 5

  5. Direct Incentives for Solar PV (1997) 10-20% up to $75K 50% up to $10K Varies by project $2K - $10K $10K - $50K $60K - $1M 6

  6. Public Benefit Funds for Renewables www.dsireusa.org April 2008 MT: $750,000 in 2008 $8.3M from 1999-2009 ME: voluntary contributions $411,000 from 2002-2008 VT: $6.6M in 2008 $34M from 2004-2011 MN: $16M in 2008 $264M from 1999-2017* MA: $25M in 2008 $525M from 1998-2017* MI: $1.7M in 2008 $25M from 2001-2017* OR: $12M in 2008 $182M from 2001-2017** RI: $2.2M in 2008 $38M from 1997-2017* NY: $9.5M in 2008 $114M from 1999-2011 WI: $5.5M in 2008 $97M from 2001-2017* CT: $24M in 2008 $435M from 2000-2017* IL: $5.5M in 2008 $99M from 1998-2015 NJ: $102M in 2008 $637M from 2001-2012 OH: $3.2M in 2008 $63M from 2001-2010 CA: $331M in 2008 $4,149M from 1998-2016 PA: $950,000 in 2008 $63M from 1999-2010 DE: $3.5M in 2008 $49M from 1999-2017* D.C.: $400,000 in 2008 $5.1M from 2004-2017* 16 state funds + DC $6.8B by 2017 (est.) * Denotes funds that do not have defined expiration dates and do not require future reauthorization or budgetary approval in order to continue operations. (These funds are not scheduled to expire in 2017.) 11 ** The Oregon Energy Trust is scheduled to expire in 2025.

  7. Financial Incentives: Best Practices • Stable, long-term incentive, declining over time • Reasonably easy application process • Administrative flexibility to modify program • Cost-effective quality assurance mechanism • Track program usage details and share data • Partnerships with banks, installers, nonprofits • Education & outreach 8

  8. State Tax Credits & Deductions for PV $500 (R) 30% (C) 35% (C) 15% 15% (R) $3/W (R) 50% (C) 25% (R) 100% Deduction (R) 25% 25% (R) 10% (C) Varies (C) 35% 25% (R) 10% (C) 25% 30% (Non-Corp.) ~2.7¢/kWh 10 yrs. (C) • Tax Credits - 15 states • Tax Deductions - 2 states • Range: 10% - 50% • FL, IA, NE, OK, MD - small PTCs (not shown on map) 10% Deduction (C) 50% (R) 35% (R) Residential; (C) Commercial 7

  9. DSIRE: www.dsireusa.org May 2008 Renewables PortfolioStandards ME: 30% by 2000 10% by 2017 - new RE MN: 25% by 2025 (Xcel: 30% by 2020) VT: (1) RE meets any increase in retail sales by 2012; (2) 20% by 2017 MT: 15% by 2015 *WA: 15% by 2020 • NH: 23.8% in 2025 WI: requirement varies by utility; 10% by 2015 goal MA: 4% by 2009 + 1% annual increase ND: 10% by 2015 OR: 25% by 2025(large utilities) 5% - 10% by 2025 (smaller utilities) RI: 16% by 2020 SD: 10% by 2015 ☼ OH: 12.5% by 2025 CT: 23% by 2020 • *NV: 20% by 2015 IA: 105 MW *UT: 20% by 2025 • NY: 24% by 2013 IL: 25% by 2025 • NJ: 22.5% by 2021 • CO: 20% by 2020(IOUs) *10% by 2020 (co-ops & large munis) *VA: 12% by 2022 CA: 20% by 2010 • PA: 18%¹ by 2020 MO: 11% by 2020 • MD: 20% in 2022 • NC: 12.5% by 2021(IOUs) 10% by 2018 (co-ops & munis) • AZ: 15% by 2025 • *DE: 20% by 2019 • *DC: 11% by 2022 • NM: 20% by 2020(IOUs) • 10% by 2020 (co-ops) TX: 5,880 MW by 2015 HI: 20% by 2020 State RPS (25) State Goal (6) • Minimum solar or customer-sited RE requirement * Increased credit for solar or customer-sited RE • ¹PA: 8% Tier I / 10% Tier II (includes non-renewables)

  10. May 2008 New RPS Policies & Goals 9states since May 2007 ME: 10% by 2017 NH: 23.8% in 2025 SD: 10% by 2015 0.3% solar electric by 2014 OR: 25% by 2025 (lg. utilities) 5% - 10% by 2025 (sm. utilities) OH: 12.5% by 2025 IL: 25% by 2025 0.5% solar electric by 2025 UT: 20% by 2025 2.4 solar mulitplier MO: 11% by 2020 NC: 12.5% by 2021 (IOUs) 10% by 2018 (co-ops & munis) 0.2% solar by 2018 State Standard State Goal 18

  11. May 2008 Increased/Expanded RPS Policies5 states since May 2007 CT: 23% by 2020 MD: 20% in 2022 2% solar electric DE: 20% by 2019 AZ: 15% by 2025 2% solar PV 4.5% DG NM: 20% by 2020 (IOUs) 10% by 2020 (co-ops) 4% solar electric by 2020; 0.6% DG by 2015 19

  12. May 2008 Solar/DG Provisions in RPS Policies (~7,000 MW solar if targets are met) WA: 2x multiplier for DG NH: 0.3% solar electric by 2014 NY: 0.1542% customer-sited by 2013 OH: 0.5% solar electric by 2025 NJ: 2.12% solar electric by 2021 NV: 1% solar by 2015; 2.4 to 2.45x multiplier for PV PA: 0.5% solar PV by 2020 UT: 2.4x multiplier for solar DE: 2.005% solar PV by 2019; CO: 0.8% solar electric by 2020 3x multiplier for solar for munis & co-ops before July 2015 MD: 2% solar electric in 2022 DC: 0.386% solar electric by 2022 1.1x multiplier for solar 2007-09 NM: 4% solar electric by 2020 0.6% DG by 2015 AZ: 4.5% DG by 2025 NC: 0.2% solar by 2018 State Standard State Goal 15 DG: Distributed Generation

  13. Solar* Capacity Required to Meet Solar/DG Set-Asides *Solar PV and Solar Thermal Source: R. Wiser and G. Barbose, Renewables Portfolio Standards in the United States, April 2008, LBNL (http://eetd.lbl.gov/ea/ems/reports/lbnl-154e.pdf)

  14. Largest RPS Markets for Solar in Near-Term: NJ, AZ, NM, NV, NC, CO Source: LBNL Environmental Energy Technologies Division / Energy Analysis Department 16

  15. Promoting Solar through RPS Policies • Establish an explicit solar set-aside in the RPS that ramps up over time. • Develop a mechanism for tracking, verifying and trading solar renewable energy certificates (SRECs). • Impose a monetary penalty or include an alternative compliance payment provision for electricity suppliers that do not meet solar generation requirements. • Require long-term power-purchase or SREC contracts to ensure project developers can access financing. • Encourage small-scale, distributed systems. 12

  16. Interconnection Standards • Technical issues include safety, power quality, system impacts. Technical issues largely resolved. • Policy issues include legal and procedural considerations. State approaches vary widely. Best policies adopted by NJ, OR, CO.* IREC model: www.irecusa.org/index.php?id=87 * Freeing the Grid 2007: www.newenergychoices.org/uploads/FreeingTheGrid2007_report.pdf 21

  17. Interconnection Standards: Best Practices • Establish state-wide policies that are uniform, transparent, detailed, and public • Set fees and technical requirements proportional to a project’s size • Process applications quickly; set timetable • Standardize and simplify forms • No redundant safety requirements – external disconnect switch • No additional insurance requirements for small systems

  18. Net Metering • Net metering allows customers to generate their own electricity and store any excess electricity, usually in the form of a kWh credit, on the grid for later use. • Net metering available “statewide” in 39 states. • State policies vary dramatically. Best policies adopted by CO, NJ, PA, MD, CA.* IREC model: www.irecusa.org/index.php?id=87 * Freeing the Grid 2007: www.newenergychoices.org/uploads/FreeingTheGrid2007_report.pdf 22

  19. Net Metering DSIRE: www.dsireusa.org April 2008 100 VT: 250 NH: 100 MA: 60* RI: 1,000/1,650* CT: 2,000* 100 * * 50 100 * 25/2,000 40 20 * 25/100 * 30 * NY: 10/25/125/400 PA: 50/3,000/5,000* NJ: 2,000* DE: 25/500/2,000* MD: 2,000 DC: 100 VA: 10/500* 25 * no limit 500 * 1,000 * * 10/25/2,000 40 25 10 * * 25/2,000 1,000 100 15 * 20/100 * * varies 80,000 100 25/300 * 10/100 * 50 25/100 100 FL: 2,000* (KIUC: 50) Best Practices Net metering is available in 42 states + D.C. State-wide net metering for all utility types * State-wide net metering for certain utility types only (e.g., investor-owned utilities) Net metering offered voluntarily by one or more individual utilities XXX: Individual system size limit in kW. Some states’ limits vary by customer type and/or technology

  20. Net Metering: Best Practices • Maximum system capacity ≥ 2 MW • All renewables eligible • All utilities must participate • All customer classes eligible • Limit on aggregate capacity ≥ 5% • Annual reconciliation of NEG, or no expiration • No application fee • No special charges, fees or tariff change • Customer owns RECs 24

  21. Utility Revenue Policies & Rate Design • Utility Revenue Policy • Many states implementing or considering decoupling • Remove disincentive for EE and DG, by removing the link between electricity sales and profits. • Reward utilities for achieving specific EE/DG targets • Electricity Rate Design • Minimize Fixed Monthly Charges & Demand Charges • Develop Time-of-Use Energy Rates • Give Customers Rate Choice

  22. Solar Access Laws • Solar easements allow for the rights to existing solar access on the part of one property owner to be secured from an owner whose property could be developed in such a way as to restrict that resource.Most common type of solar access law. • 13 states limit or prohibit restrictions that neighborhood covenants and/or local ordinances may impose on the use of solar equipment. 26

  23. Prohibiting Unreasonable Restrictions by HOAs and Local Governments • Define the type of solar energy equipment protected by the law • i.e., solar electric, solar thermal, passive solar construction, etc. [New Mexico] • Provide a clear and quantifiable standard for what constitutes an unreasonable restriction on solar energy systems • i.e., changes for aesthetic reasons cannot increase installation costs >10% [Hawaii] • Define the types of structures covered by the law • i.e., residential, commercial. [California] • Award costs and reasonable attorneys' fees to the prevailing party in any civil action arising from disputes with HOAs. [Arizona] • Model statute under development • US DOE Solar America Board for Codes & Standards (http://www.solarabcs.org)

  24. Lead by Example: Solar in Public Buildings • Green building or efficiency standards for new state facilities (21) • Goals to reduce energy usage (18) • Evaluate or conduct life-cycle cost analysis to include solar or renewables, if feasible, in new state facilities (8) • Derive specified % of energy for state facilities from RE – purchase green power or install RE systems (11) – Ex.: MA use of CREBs • Install solar by 1/1/09 on any public facility, new or existing, if cost-effective over the life of the system – California • Invest in solar at a level of at least 1.5% of the total contract price for new state projects – Oregon (# of states)

  25. Industry Recruitment & Development • Tax Credits • OR - 50% of the construction costs of facility for manufacturing RE equipment • NM - 5% of the cost alternative energy manufacturing equipment • Loans • MA Business Expansion Initiative - $500K - $3M loans to support RE companies entering or expanding the manufacturing stage of commercial development. • Grants • NYSERDA Manufacturing & Incentive Program - facility/site characterization; pre-production development; and incentive payment based on product sales. $1.5M/project; $10M for program • Property Tax Abatement • MT - new RE production facilities, new RE mfg. facilities, and RE R&D assessed at 50% of taxable value for property tax purposes. 35% tax credit also available. • Higher Incentives for Using Components Manufactured In-State • Washington State, Massachusetts

  26. Leading Policy Approaches • Financial Incentives • Solar Portfolio Standards • Simplified Grid Connection • Net Metering Coordinated Policies for Sustainable Markets • Rate Design & Revenue Policies • Solar Access Laws • Solar in Public Buildings • Industry Recruitment & Support • Workforce Development • Local Codes & Standards • Education & Marketing 2

  27. www.pandorasboxoc.com Dreaming Sun Tapestry Wall Hanging

  28. The DSIRE Project www.dsireusa.org Database of State Incentives for Renewables & Efficiency • Created in 1995 • Managed by NC Solar Center in partnership with IREC • Funded by U.S. DOE • ~1,800 RE & EE financial incentives & regulatory policies • Federal, State, Local, Utility • 170,000 “unique visitors”/month 3

  29. Contact Information Susan Gouchoe N.C. Solar Center N.C. State University susan_gouchoe@ncsu.edu DSIRE: www.dsireusa.org

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