POWER May 2012 - 34

States Promote Clean
Energy Programs
hile the proposed federal renewable portfolio standards
(RPS) continue to be caught in Washington gridlock,
a number of states are aggressively enacting programs
that promote renewable energy, such as wind and solar power.
W
States Move Ahead with Renewables Initiatives
Lori Bird, senior analyst at the National Renewable Energy Laboratory,
told POWER in March that RPS policies currently exist in
29 states and the District of Columbia, and seven more states
have nonbinding clean energy goals. In February, Bird presented
a webinar titled " State Renewables Policies-Lessons Learned After
a Decade of Success. "
An RPS is a requirement that retail electric providers supply a
minimum percentage or amount of their retail load with eligible
sources of renewable energy, Bird explained. Typically, an RPS is
backed with penalties of some form and is often accompanied by a
tradable renewable energy certificates (REC) program to facilitate
compliance. Most policies have been established through state
legislation, but some initially were implemented through regulatory
actions (New York and Arizona) or ballot initiatives (Colorado,
Missouri, and Washington). Currently, California represents the
largest RPS market since it increased its RPS goal to 33% by 2020.
(However, Maine's RPS percentage goal is higher, sooner, at 40% by
2017, and Alaska's nonbinding goal is the highest: 50% by 2025.)
In contrast, at the federal level there is a strong possibility
that Congress will allow the federal Production Tax Credit (PTC)
to expire at the end of the year, which is causing anxiety among
renewable energy proponents, such as the American Wind Energy
Association. Under current law, the PTC is an income tax credit
of 2.2 cents/kWh that is allowed for the production of electricity
from utility-scale renewable energy facilities. Many PTC opponents
argue that the federal government should not subsidize renewables,
but rather force them to compete on their own merits
in the private sector.
Setting up State Clean Energy Programs
Some states have more than a decade of implementation experience
with RPS policies, while others are just beginning implementation.
Bird pointed out that " even though the enactment of
new RPS policies is now waning somewhat, many states continue
to hone existing RPS policies. "
In their presentation at the 2011 National Summit on RPS
titled " The State of the States: Update on the Implementation
of U.S. Renewables Portfolio Standards, " Ryan Wiser and Galen
Barbose of the Lawrence Berkeley National Laboratory explained
how state RPS policies often have significant design differences.
Examples include, but are not limited to: renewable purchase targets
and timeframes, the eligibility of different renewable technologies,
the treatment of out-of-state generators, methods of
enforcing compliance, contracting requirements and the degree
of regulatory oversight, the allowance for RECs and REC definitions,
and the role of state funding mechanisms.
34
State RPS policies are being designed to support resource diversity
and often use specific mechanisms to help achieve that
goal. For example, some RPS standards use set-asides, which are
requirements that some portion of the RPS come from certain
technologies, technology types, or applications. Another tool is
the use of credit multipliers that mean selected technologies or
applications can qualify for more credit than other forms of generation
as far as meeting the RPS. In addition, some RPS policies
use resource-specific contracting targets, which are requirements
that regulated utilities enter into long-term contracts for minimum
quantities of specific renewable resource types. Currently,
16 states and D.C. have solar or distributed generation set-asides,
which in some instances are combined with credit multipliers.
Not surprisingly, many state RPS programs face a variety of implementation
challenges. These include obstacles such as rate impacts
and cost concerns; transmission access for remote renewable facilities;
problems related to siting projects; procurement and viability
issues; project financing that involves the need for long-term contracts,
particularly in restructured markets; and REC price volatility.
Positive Developments
State RPS programs appear to be motivating substantial renewable
capacity development. Though not an ideal metric for RPS's
impact, 61% of the 44 GW of non-hydro renewable additions from
1998 to 2010 (27 GW) have occurred in states with active or
impending RPS compliance obligations, according to Wiser and
Barbose.
Despite the slow U.S. economy and other obstacles, the
states-and not the federal government-are becoming leading
catalysts in promoting the development and deployment of
renewable energy technologies. " Total state RPS demand in the
U.S. is set to increase from approximately 55,000 GWh in 2010 to
more than 250,000 GWh in 2020, " Bird said.
The National Governors Association recently released a report
titled " Clean State Energy Actions: 2011 Update " showing that in
2011, 28 states developed policies and made investments to advance
green economic development, including clean electricity.
For example, Michigan and local governments in that state offer
tax credits, property tax exemptions, and payroll credits to businesses
that participate in NextEnergy, a comprehensive economic-development
plan to position Michigan as a world leader in the
research, development, commercialization, and manufacture of
alternative-energy technologies, including renewables. Likewise,
since 2010, Arizona has budgeted $70 million per year for tax
incentives to attract renewable energy companies to Arizona.
State officials are becoming increasingly focused on the intersection
of policy, energy technology, and business economics.
Many of these officials are motivated because they see the
attractive economic and environmental benefits that new clean
energy projects are bringing to their states, often as part of state
economic recovery strategies. ■
-Angela Neville, JD, is POWER's senior editor.
www.powermag.com
POWER | May 2012
http://www.powermag.com
POWER May 2012

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