Justin Barnes N.C. Solar Center N.C. State University ASES 2009 Buffalo, New York May 13, 2009 U.S. Photovoltaic Markets: PV Policies Leading the Way.

Justin BarnesN.C. Solar Center

N.C. State University

ASES 2009 Buffalo, New York

May 13, 2009

U.S. Photovoltaic Markets:

PV Policies Leading the Way

The DSIRE ProjectDatabase 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

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.

Leading Policy Approaches Financial Incentives Solar Portfolio Standards Simplified Grid Connection Net Metering

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

i.e., Three of the Solar Alliance “Four Pillars of

Solar”

State Financial Incentives for PV

ASES 2008 ASES 2009

• Direct Incentives 25 29 Rebates GrantsProduction Incentives

• Tax Credits & Deductions 22 23• Low-Interest Loans 23 24 • Sales Tax Exemptions 18 21 • Property Tax Incentives 26 29

# of states

Varies by project

$10K - $50K

10-20% up to $75K

$60K - $1M

$2K - $10K

50% up to $10K

Direct Incentives for PV, 1997www.dsireusa.org

State Rebates & PBIs for PVwww.dsireusa.org May 2009

• 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)

DE: ≤35%

$4/W

VT: $1.75-3.50/W

MD: $2.50/W

$2-2.25/W

50%, $3k max

≤35%

30%

NY: $2-5/W

$2-3/W

≤$3.50/W

$2.30-4.60/W

ME: $2K max

NH: $3/W

NJ: $1-1.75/WSRECs:

~$0.46/kWh

CT: $2.50-4/W

MA: $1-4.40/W

* Includes RPS-inspired utility rebate programs in AZ, CO & NV

15 - 54¢/kWh

$1-2.25/W

≤$3.25/W

≤50¢/kWh, 5 yrs.

DC: $1-3/W

(R) Residential; (C) Commercial; (NR) Non-Residential

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)

www.dsireusa.org May 2009

35%

10% (Non-Corp.)

~2.7¢/kWh 10 yrs. (C)

$3/W (R)50% (C)

10% (NR)25% (R)

25% (R) MA: 15% (R)

15%

35%

100% Deduct.

(R)

25% (R)10% (C)

50%

RI: 25%

25%

VT: 30% (C)

35%

$500 (R)

$1K (C)

35%

P.R.: 75%

10% Deduct. (C)

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

RPS Policies with Solar/DG Provisions

State renewable portfolio standard with solar / distributed generation (DG) provision

State renewable portfolio goal with solar / distributed generation provision

www.dsireusa.org / May 2009

Solar water heating counts toward solar provision

WA: double credit for DG

NV: 1% solar by 2015;

2.4 to 2.45 multiplier for PV

UT: 2.4 multiplierfor solar

AZ: 4.5% DG by 2025

NM: 4% solar-electric by 2020

0.6% DG by 2020

TX: double credit for non-wind

(Non-wind goal: 500 MW)

CO: 0.8% solar-electric by 2020

MO: 0.3% solar-electric by 2021

MI: triple credit for solar

OH: 0.5% solar

by 2025

NC: 0.2% solar

by 2018

MD: 2% solar-electric in 2022 DC: 0.4% solar by 2020; 1.1 multiplier for solar

NY: 0.1542% customer-sitedby 2013

DE: 2.005% solar PV by 2019;

triple credit for PV

NH: 0.3% solar-electric by 2014

NJ: 2.12% solar-electric by 2021PA: 0.5% solar PV by 2020

MA: TBD

14 states &

DC have an RPS with

solar/DG provisions

Source: LBNL Environmental Energy Technologies Division / Energy Analysis Department

Largest RPS Markets for Solar (2009): AZ, NJ, NV, and CO

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Annual Capacity (right axis)

Cumulative Capacity (left axis)

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

• 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

Net Metering

State policy

Voluntary utility program(s) only

www.dsireusa.org / May 2009

*State policy applies to certain utility types only (e.g., investor-owned utilities)

WA: 100

OR: 25/2,000*

CA: 1,000*

MT: 50*

NV: 1,000*

UT: 25/2,000*

AZ: no limit*

ND: 100*

NM: 80,000*

WY: 25*

HI: 100KIUC: 50

CO: 2,000co-ops & munis:

10/25

OK: 100*

MN: 40

LA: 25/300

AR: 25/300

MI: 20*

WI: 20*

MO: 100

IA: 500* IN: 10*

IL: 40*

FL: 2,000*

KY: 30*

OH: no limit*

GA: 10/100

WV: 25

NC: 1,000*

ME: 100

VT: 250

VA: 20/500*

NH: 100

MA: 60/1,000/2,000*

RI: 1,650/2,250/3,500*

CT: 2,000*

NY: 25/500/2,000*

PA: 50/3,000/5,000*

NJ: 2,000*

DE: 25/500/2,000*

MD: 2,000

DC: 1,000

40 states &

DC have adopted a

net metering policyNote: Numbers indicate system capacity limit in kW. Some state limits vary by customer type, technology and/or system application. Other limits might also apply.

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

Interconnection Standards

Freeing the Grid 2008: www.newenergychoices.org

• Technical issues include safety, power quality, system impacts. Technical issues largely resolved.• Policy issues include legal and procedural considerations. State approaches vary widely.

IREC model: www.irecusa.org/index.php?id=88

Interconnection Standards

State policy

www.dsireusa.org / May 2009

*Standard only applies to net-metered systems

WA: 20,000

OR: 25/2,000*

CA: no limit

MT: 50*

NV: 20,000

UT: 25/2,000*

NM: 80,000

WY: 25*

HI: no limit

CO: 10,000

MN: 10,000

LA: 25/300*

AR: 25/300*

MI: no limit

WI: 15,000

MO: 100*

IN: no limit

IL: 10,000

FL: 2,000*

KY: 30*

OH: 20,000

NC: no limit

VT: no limit

NH: 100*

MA: no limit

35 states + DC & PR

have adopted an interconnection

policy

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.

CT: 20,000

PA: no limit

NJ: 2,000*

DC: 10,000

MD: 10,000

NY: 2,000

VA: 10/500*

SC: 20/100*

GA: 10/100*

PR: no limit

DE: varies*

TX: 10,000

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

The “Whole” Picture

  State Rebate/PBI

Tax Incenti

ve Solar/DG RPSInterconnection

(+C)Net Metering

(+B) Total

1 Massachusetts 1 1 1 1 1 5

2 Arizona 1 1 1 1 1 5

3 New York 1 1 1 1 1 5

4 Colorado 1 0 1 1 1 4

5 Maryland 1 0 1 1 1 4

6 New Jersey 1 0 1 1 1 4

7 Oregon 1 1  0 1 1 4

8 Pennsylvania  0 1 1 1 1 4

9 Nevada 1 0 1 1 1 4

10 Vermont 1 1 0 1 1 4

11 New Mexico 0 1 1 1 1 4

12 California 1 0 0.5 1 1 3.5

13 Illinois 1 0 0 1 1 3

14 Delaware 1 0 1 0 1 3

15 Texas 0 1 0.5 1 0 2.5

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

Third-Party Ownership/PPA Model 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”.

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.

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.

DC

Solar Easements Provision Solar Rights Provision Solar Easements and Solar Rights Provisions

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)

Industry Recruitment & Development

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)

What will this presentation look like next year??

• 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

Leading Policy Approaches Financial Incentives Solar Portfolio Standards Simplified Grid Connection Net Metering

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

i.e., Three of the Solar Alliance “Four Pillars of

Solar”

QUESTIONS??

CONTACT:

Justin BarnesN.C. Solar Center

N.C. State [email protected]

DSIRE: www.dsireusa.org