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Incentives, Mandates, and Federal / State Policies for Promoting Renewable Energy

Incentives, Mandates, and Federal / State Policies for Promoting Renewable Energy. Forrest Stegelin Extension Agribusiness Economist University of Georgia. Renewable Energy Concept.

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Incentives, Mandates, and Federal / State Policies for Promoting Renewable Energy

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  1. Incentives, Mandates, and Federal / State Policies for Promoting Renewable Energy Forrest Stegelin Extension Agribusiness Economist University of Georgia

  2. Renewable Energy Concept • Renewable energy is derived from resources that are generally not depleted by human use, such as the sun, wind, and water movement. These primary sources of energy can be converted into heat, electricity, and mechanical energy in several ways. • For federal, state, and local policies (incentives, grants, standards) for renewable energy, see Database for Incentives for Renewable Energy at [http://www.dsireusa.org/].

  3. Renewable Portfolio Standard (RPS) – for retail electricity suppliers, and RPS sets a minimum requirement (often a percentage) for electricity production from renewable energy resources or for the purchase of tradable credits that represent an equivalent amount of production. • Renewable Energy Production Tax Credit (PTC) and Renewable Energy Production Incentive (REPI) • Renewable Fuel Standard – minimum production increases in renewable fuels (ethanol, biodiesel, and natural gas produced from landfills, sewage treatment plants, and certain other sources, i.e., crops) • Renewable Hydrogen – focuses on producing hydrogen energy from renewable energy and renewable fuels

  4. Residential Tax Credit – an investment tax credit or tax deduction for homeowners who purchase photovoltaics, wind energy, or solar water heating equipment • Renewables Tax Revenue Effect – estimated 10-year revenue effect of renewable energy tax provisions: residential solar tax credit - $0.018 billion; net total, all tax provisions - $8.090 billion; renewables share of total – 0.2% • Other Renewables Provisions – see Congressional Research Service (CRS) Report RL32860, Energy Efficiency and Renewable Energy Legislation in the 109th Congress

  5. Current Federal Policies Supporting Renewable Energy • Production Tax Credit - • 1.8 cents/kWh for 10 years • Only accrues to corporate entities • Extended through Dec 31, 2007 (part of Energy Policy Act of 2005 • Supports utility scale wind • 2002 Farm Bill – 9006 Program • Allocates $22-23 million/year through 2007 to cost-share renewable energy production for farms and rural small businesses • Awards from $10,000 to $500,000 per project, up to 25% cost share • Also, EQIP and CSP (in conservation title) are possible funding sources for wind and other renewable energy sources

  6. Current State-Level Policies Supporting Renewable Energy • Renewable energy standards – 22 states plus D.C. • Mandate utilities to purchase a certain percentage of energy from renewable sources • Supports utility scale renewable production • Net metering – 40 states (supports small wind and solar) • Grant/loan/rebate programs – 26 states Helps to offset cost of installation, can pair with federal programs

  7. DSIRE: www.dsireusa.org May 2006 Renewables PortfolioStandards MN: 10% by 2015 Goal + Xcel mandate of 1,125 MW wind by 2010 VT: RE meets load growth by 2012 ME: 30% by 2000 MT: 15% by 2015 WI: requirement varies by utility; 10% by 2015 Goal MA: 4% by 2009 + 1% annual increase RI: 15% by 2020 CT: 10% by 2010 CA: 20% by 2010 IA: 105 MW • NY: 24% by 2013 • NJ: 22.5% by 2021 IL: 8% by 2013 • NV: 20% by 2015 • CO: 10% by 2015 • PA: 18%¹ by 2020 *MD: 7.5% by 2019 *DE: 10% by 2019 • AZ: 1.1% by 2007 • DC: 11% by 2022 *NM: 10% by 2011 TX: 5,880 MW by 2015 HI: 20% by 2020 State RPS • Minimum solar or customer-sited requirement * Increased credit for solar • ¹PA: 8% Tier I, 10% Tier II (includes non-renewable sources) State Goal 22 + DC states

  8. Net Metering Rules www.dsireusa.org June 2006 25 kW 100 kW 50 kW 100 VT: 15/150 100 * * NH: 25 50 100 MA: 60 * 40 25 30 * 10/400 RI: 25 * 20 * 25/100 CT: 100 * 25 * varies NJ: 2,000 500 no limit * * 40 * * DE: 25 30 * * 2,000 10 MD: 500 25 * 1,000 VA: 10 /500 15 * 20/100 DC: 100 * * 100 25/100 10 10/100 10 * 50 25/100 10 50 Net metering is available in 40 states + D.C. State-wide net metering for all utility types * State-wide net metering for certain utility types (e.g., IOUs only) Net metering offered by one or more individual utilities #s indicate system size limit (kW); in some cases limits are different for residential and commercial as shown

  9. 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

  10. Loan Programs for Renewables DSIRE: www.dsireusa.org March 2006 D.C. State & utility/local programs 30 states State program Utility or local programs

  11. Grants for Renewable Energy Technologies www.dsireusa.org March 2006 * * * * * * * * D.C. * State offers at least one grant program 23 states * Private, utility and/or local program

  12. Rebate Programs for Renewable Energy Technologies DSIRE: www.dsireusa.org March 2006 25 kW D.C. Both state & utility/other programs available State programs available 27 States Utility/other programs available

  13. USDA announces $17.5 million investment in renewable energy and energy efficiency, 8/30/06 • Ag Secretary Mike Johanns announced award of $17.5 million in Section 9006 Renewable Energy and Energy Efficiency Program Grants to 375 recipients in 36 states. “These grants will directly promote energy savings and increased energy production in rural America.” • 2002 Farm Bill authorized the Renewable Energy Systems and Energy Efficiency Improvements program. Rural development grant funds can be used to pay up to 25% of the eligible project costs. The program provides loan guarantees up to $10 million to fund up to 50% of eligible projects. $4.6 million in federal funds have been allocated in loan guarantees and grants earlier this year.

  14. Eligible projects include those that derive energy from a wind, solar, biomass, or geothermal source, or hydrogen driven from biomass or water using wind, solar, or geothermal energy sources. Awards are made on a competitive basis for the purchase of renewable energy systems and to make energy improvements. • 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, NJ, NY, OH, OK, OR, PA, SC, SD, TN, VT, WS, WV, and WY. • Oklahoma’s recipients: Splatters Paintball & Specialties, $48,563, new hvac, double pane storefront glazing & windows, standard double glazed skylights, & insulation. House of Flowers, $9,396, new hvac, awning, storefront framing & glazing. Fritsche Rental Properties, $10,603, new hvac, roof insulation, glazing of windows, awning. James Johnston, $11,900, windows & glazing, new hvac, roof insulation. Broadway Square LLC, $15,688, replace 102 windows. Shawnee Beauty College, $12,500, replacing windows & doors, lighting fixtures, pitched insulated roof. Merle Norman, $2,113, new hvac, awning.

  15. Alternative Fuels Data Center: Oklahoma • Alternative Fuel Vehicle (AFV) Acquisition Requirements (Oklahoma Statutes Section 74-130.3) • Ethanol Production Tax Credit (House Bill 1556, 2005 and Oklahoma Statutes Section 68-2357.77) • Ethanol Fuel Retailer Tax Credit (House Bill 1556, 2005 and Oklahoma Statutes Section 68-500.10-1) • Alternative Fuel Vehicle and Refueling Infrastructure Loans • Alternative Fuel Vehicle Technician Training (Oklahoma Statutes Sections 74-130.11 through 74-130.24) • Alternative Fuel Labeling Requirement (Oklahoma Statutes Section 68-723) • Neighborhood Electric Vehicle (NEV) Access to Roadways (Oklahoma Statutes Section 47-11-805.1) • Alternative Fuel Vehicle Loans • Alternative Fuel Vehicle Tax Credit (Oklahoma Statutes Section 68-2357.22) • Alternative Fuel Vehicle and Refueling Infrastructure Tax Credit (Oklahoma Statutes Section 68-2357.22) • Alternative Fuels Commission (Oklahoma Statutes Section 2-1950.10) • Biodiesel Production Facility Tax Credit (Oklahoma Statutes Section 68-2357.67)

  16. Interstate Renewable Energy Council (IREC) State and Utility Net-Metering Rules and Programs: Oklahoma • System Size Limit / Customer Classes Eligible: 100 kW or 25,000 kWh/year (whichever is less) / Commercial, Industrial, Residential/Agricultural • Eligible Technologies: solar, wind, biomass, hydro, geothermal, municipal solid waste, CHP • Limit on Total Capacity: none • Treatment of Net Excess Generation (NEG): granted to utility monthly or credited to customer’s next bill at utility’s avoided-cost rate (varies by utility) • Interconnection Standards for Net-Metering: no • Utilities Involved: investor-owned utilities, municipal utilities

  17. One thing is certain: the topic of renewable energy will not disappear. • Must make individual management decisions according to one’s own objectives, resources, and risk philosophies. • “Benjamin Franklin may have discovered electricity, but it was the man who invented the meter who made the money.” – Earl Wilson, American newspaper columnist

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