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

U.S. Photovoltaic Markets: PV Policies Leading the Way. Justin Barnes N.C. Solar Center N.C. State University ASES 2009 Buffalo, New York May 13, 2009. The DSIRE Project. Database of State Incentives for Renewables & Efficiency. Created in 1995 Funded by U.S. DOE

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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 Justin Barnes N.C. Solar Center N.C. State University ASES 2009 Buffalo, New York May 13, 2009

  2. The DSIRE Project Database of State Incentives for Renewables & Efficiency • Created in 1995 • Funded by U.S. DOE • Managed by NCSU; works closely with IREC • Project Scope: policies/programs that promote RE/EE • Breakdown of Data: ~2,000 total records~850 solar records~770 PV records www.dsireusa.org

  3. DSIRE SOLAR!! • Interactive Policy Map: Provides quick access to state specific solar information • Solar Policy Guide: Offers descriptions of various state and local policy types for promoting solar; status and trends of individual policies; specific policy examples; and links to additional resources • Summary Maps: Provide a geographical overview of incentives across the country • Solar Policy Comparison Tables: Highlight individual elements of state rebate and tax credit programs • Search Function: Allows users to create a custom list of programs by solar technology, incentive type, eligible sector, or other criteria.

  4. Leading Policy Approaches Financial Incentives Solar Portfolio Standards Simplified Grid Connection Net Metering  i.e., Three of the Solar Alliance “Four Pillars of Solar” Coordinated Policies for Sustainable Markets • Rate Design & Revenue Policies • REC/SREC Market Access • Third-party Ownership (i.e., legality of PPA’s) • Solar Access Laws • Industry Recruitment & Support • Solar in Public Buildings • Workforce Development • Local Codes & Standards • Education & Marketing

  5. State Financial Incentives for PV ASES 2008 ASES 2009 • Direct Incentives 25 29 Rebates Grants Production Incentives • Tax Credits & Deductions 22 23 • Low-Interest Loans 23 24 • Sales Tax Exemptions 18 21 • Property Tax Incentives 2629 # of states

  6. 10-20% up to $75K 50% up to $10K Varies by project $2K - $10K $10K - $50K $60K - $1M Direct Incentives for PV, 1997 www.dsireusa.org

  7. State Rebates & PBIs for PV www.dsireusa.orgMay 2009 ME: $2K max 15 - 54¢/kWh • 20 state rebate (+ DC) program & PBIs* • 26 state grant programs (not shown on map) • 31 non-state PBIs (not shown on map) • 77 utility rebate programs (not shown on map) $2-2.25/W VT: $1.75-3.50/W NH: $3/W NY: $2-5/W $1-2.25/W MA: $1-4.40/W ≤35% 50%, $3k max CT: $2.50-4/W $2.30-4.60/W 30% NJ: $1-1.75/W SRECs: ~$0.46/kWh ≤$3.50/W DE: ≤35% ≤$3.25/W ≤50¢/kWh, 5 yrs. MD: $2.50/W DC: $1-3/W $2-3/W $4/W * Includes RPS-inspired utility rebate programs in AZ, CO & NV

  8. VT: 30% (C) 35% 15% $3/W (R) 50% (C) 25% (R) MA: 15% (R) 100% Deduct. (R) RI: 25% 25% (R) 10% (C) $500 (R) $1K (C) 35% 25% (R) 10% (Non-Corp.) ~2.7¢/kWh 10 yrs. (C) 10% (NR) 25% 35% 50% 10% Deduct. (C) 35% P.R.: 75% www.dsireusa.orgMay 2009 State Tax Incentives for PV • Credits in 18 states + P.R. • Range: 10% - 75% • FL, IA, MD, OK have small PTCs (not shown on map) (R) Residential; (C) Commercial; (NR) Non-Residential

  9. 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 Financial Incentives: Best Practices

  10. RPS Policies with Solar/DG Provisions www.dsireusa.org / May 2009 WA: double credit for DG NH: 0.3% solar-electric by 2014 MA: TBD MI: triple credit for solar NV: 1% solar by 2015; 2.4 to 2.45 multiplier for PV NY: 0.1542% customer-sitedby 2013 CO: 0.8% solar-electric by 2020 OH: 0.5% solarby 2025 NJ: 2.12% solar-electric by 2021 UT: 2.4 multiplier for solar PA: 0.5% solar PV by 2020 MO: 0.3% solar-electric by 2021 DE: 2.005% solar PV by 2019; triple credit for PV AZ: 4.5% DG by 2025 NC: 0.2% solarby 2018 MD: 2% solar-electric in 2022 DC: 0.4% solar by 2020; 1.1 multiplier for solar NM: 4% solar-electric by 2020 0.6% DG by 2020 TX: double credit for non-wind(Non-wind goal: 500 MW) 14 states & DChave an RPS with solar/DG provisions State renewable portfolio standard with solar / distributed generation (DG) provision State renewable portfolio goal with solar / distributed generation provision Solar water heating counts toward solar provision

  11. Largest RPS Markets for Solar (2009): AZ, NJ, NV, and CO Source: LBNL Environmental Energy Technologies Division / Energy Analysis Department

  12. 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) (e.g., NJ – Transparent SREC trading platform) Impose a monetary penalty or include an alternative compliance payment provision for electricity suppliers that do not meet solar generation requirements (e.g., PA – ACP 200% SREC market value) Require long-term power-purchase or SREC contracts to ensure project developers can access financing (e.g., MD – Requires 15-year contracts, up-front payment for 10 kW or less) Encourage small-scale, distributed systems (e.g., AZ – 4.5% DG carve out with 50% for residential) Promoting Solar through RPS Policies

  13. Allows customers to store any excess electricity generated, usually in the form of a kWh credit, on the grid for later use. Available “statewide” in 40 states. State policies vary dramatically. Net Metering Freeing the Grid 2008: www.newenergychoices.org IREC model: www.irecusa.org/index.php?id=88

  14. Net Metering www.dsireusa.org / May 2009 WA: 100 ME: 100 MT: 50* ND: 100* VT: 250 NH: 100 OR: 25/2,000* MN: 40 MI: 20* MA: 60/1,000/2,000* WY: 25* WI: 20* RI: 1,650/2,250/3,500* IA: 500* IN: 10* CT: 2,000* CO: 2,000co-ops & munis: 10/25 NV: 1,000* NY: 25/500/2,000* OH: no limit* IL: 40* PA: 50/3,000/5,000* UT: 25/2,000* WV: 25 MO: 100 NJ: 2,000* KY: 30* CA: 1,000* NC: 1,000* DE: 25/500/2,000* NM: 80,000* OK: 100* MD: 2,000 AZ: no limit* AR: 25/300 DC: 1,000 GA: 10/100 VA: 20/500* LA: 25/300 HI: 100KIUC: 50 FL: 2,000* 40 states & DChave adopted a net metering policy State policy Voluntary utility program(s) only * State policy applies to certain utility types only (e.g., investor-owned utilities) Note: Numbers indicate system capacity limit in kW. Some state limits vary by customer type, technology and/or system application. Other limits might also apply.

  15. 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

  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. Freeing the Grid 2008: www.newenergychoices.org IREC model: www.irecusa.org/index.php?id=88

  17. Interconnection Standards www.dsireusa.org / May 2009 WA: 20,000 NH: 100* MT: 50* MN: 10,000 VT: no limit MA: no limit CT: 20,000 OR: 25/2,000* MI: no limit NY: 2,000 WI: 15,000 PA: no limit NJ: 2,000* WY: 25* IN: no limit MD: 10,000 NV: 20,000 IL: 10,000 OH: 20,000 DE: varies* CO: 10,000 DC: 10,000 CA: no limit UT: 25/2,000* MO: 100* KY: 30* VA: 10/500* NC: no limit SC: 20/100* AR: 25/300* NM: 80,000 GA: 10/100* 35 states + DC & PR have adopted an interconnection policy LA: 25/300* TX: 10,000 HI: no limit FL: 2,000* State policy * Standard only applies to net-metered systems PR: no limit Notes: Numbers indicate system capacity limit in kW. Some state limits vary by customer type (e.g., residential/non-residential).“No limit” means that there is no stated maximum size for individual systems. Other limits may apply. Generally, state interconnection standards apply only to investor-owned utilities.

  18. 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

  19. The “Whole” Picture

  20. 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

  21. Third-party ownership allows a site owner to install PV, but avoid typical problems of: - high up-front costs - lack of adequate tax liability (e.g., government buildings) - need to finance, build, and maintain system BUT… Issues related to the regulation of “public utilities” and traditional utility monopoly rights can pose problems in otherwise favorable markets. - The Oregon PUC has ruled that solar and wind providers cannot be considered public utilities AND determined that they are not subject to PUC regulation as “electric service suppliers”. Net metering regulations that imply that the net metering customer and the system owner are the same “person” may also inhibit adoption. - The Michigan PSC revised its proposed net metering rules in response to comments during the rulemaking process, replacing the word “owns” with “uses” in the definition “customer-generator”. Third-Party Ownership/PPA Model

  22. Solar Access Laws • 17 states limit or prohibit restrictions that neighborhood covenants and/or local ordinances may impose on the use of solar-energy systems. • Solar easements (31 states) allow for the rights to existing solar access on the part of one property owner to be secured from another property owner whose property could be developed in such a way as to restrict the solar resource. Transferred with property title. • 14 states have provisions for both types of policy. DC Solar Easements and Solar Rights Provisions Solar Easements Provision Solar Rights Provision • Example Contents* • Apply law to a comprehensive list of instruments. [Hawaii - deeds, covenant, lease, restriction, and others; provides that “no person shall be prevented…from installing a solar energy device…”] • Define the type of solar energy equipment protected by the law [New Mexico – includes solar electric, solar thermal, passive solar construction, etc.] • Define the types of structures covered by the law [California – applies to both residential and commercial structures] • Provide for enforcement outside of the legal system [New Jersey – law may be enforced by Department of Community Affairs, possibly avoiding the need for litigation] • Award costs and reasonable attorneys' fees to prevailing party in civil action arising from disputes with HOAs.[Arizona] *See A Comprehensive Review of Solar Access Law in the United States (http://www.solarabcs.org/solaraccess/Solaraccess-full.pdf) by Colleen Kettles.

  23. 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/Loan Guarantees • PA – $35,000 per job created within 3 years at 5% interest rate (April 2009). Also offers option of a loan guarantee of up to $30 M structured as a grant to be used in the event of a default. • NJ – Loans for up to $3 M at 0% interest over 10 years for Class I renewables to assist them in becoming competitive with traditional generation (grants also available) • Grants • NYSERDA Manufacturing & Incentive Program - facility/site characterization; pre-production development; and incentive payment based on product sales. $1.5M/project; $10M for program through 2011 • 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, New Jersey (rules under development)

  24. Green building or efficiency standards for new state facilities (29 + DC) Goals to reduce energy usage (23) Requirements for evaluation/use of on-site use of renewable energy generation (7) Derive specified % of energy for state facilities from RE – purchase green power or install RE systems (9) 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 Managers must supply 2% of a building's total energy use with on-site wind and solar power or supply a full cost and carbon analysis explaining why renewables would not be cost effective- Minnesota Lead by Example: Solar in Public Buildings (# of states)

  25. Feed-in Tariffs – When and where? National RPS, solar carve-out? Accelerating state RPS requirements. Local initiatives gain ground. What is the next “Berkeley Model”? Next generation renewables funding What will this presentation look like next year??

  26. Leading Policy Approaches Financial Incentives Solar Portfolio Standards Simplified Grid Connection Net Metering  i.e., Three of the Solar Alliance “Four Pillars of Solar” Coordinated Policies for Sustainable Markets • Rate Design & Revenue Policies • REC/SREC Market Access • Third-party Ownership (i.e., legality of PPA’s) • Solar Access Laws • Industry Recruitment & Support • Solar in Public Buildings • Workforce Development • Local Codes & Standards • Education & Marketing

  27. QUESTIONS?? CONTACT: Justin Barnes N.C. Solar Center N.C. State University justin_barnes@ncsu.edu DSIRE: www.dsireusa.org

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