Energy Law Joel Roberson Spring 2007 State Strategies for Promoting Renewable Energy Topic: State Strategies for Promoting Renewable Energy

Reducing Dependency Through Promotion of Renewable Energy Renewable Portfolio Standards Renewable Portfolio Standards Grant Programs Grant Programs Loan Programs Loan Programs Personal and Corporate Tax Incentives Personal and Corporate Tax Incentives Mandatory Government Procurement Rules Mandatory Government Procurement Rules Government-funded research Government-funded research

Top Seven Energy Consuming States 1. Texas 2. California 3. Florida 4. New York 5. Ohio 6. Pennsylvania 7. Illinois Source: Energy Information Administration – State Energy Data 2003

1. TEXAS Total Energy Consumption: 12,369.8 trillion Btu Total Energy Consumption: 12,369.8 trillion Btu #1 Residential Energy Consumer #1 Residential Energy Consumer #3 Commercial Sector Consumer #3 Commercial Sector Consumer #1 Industrial Sector Consumer #1 Industrial Sector Consumer #2 Transportation Sector Consumer #2 Transportation Sector Consumer Source: Energy Information Administration – State Energy Data 2003

Texas Renewable Energy Mandate In 1999, the Public Utility Commission of Texas adopted three new rules: In 1999, the Public Utility Commission of Texas adopted three new rules: –Renewable Portfolio Standard (RPS) –Renewable Energy Credit (REC) Trading Program –Renewable Energy Purchase Requirements

Texas Renewable Portfolio Standard Enacted: December, 1999 Enacted: December, 1999 Effective: January, 2000 Effective: January, 2000 Original Requirement: Original Requirement: –2,000 renewable Megawatts (MW) by 2009 Acceleration in August, 2005: Acceleration in August, 2005: –2,280 MW by 2007 –3,272 MW by 2009 –4,264 MW by 2011 –5,256 MW by 2013 –5,880 MW by 2015 (min. 500 MW from sources other than wind) –10,000 MW by 2025

Texas Renewable Energy Credit Trading Program Enacted: December, 1999 Enacted: December, 1999 Effective: July, 2001 Effective: July, 2001 Procedures: Procedures: –Each credit = 1 Megawatt-hour –Each utility provider is assigned a portion of the annual RPS goal according to a Capacity Conversion Factor (CCF) –A utility provider that fails to meet the assigned RPS standards must purchase credits or face penalties.

2. CALIFORNIA Total Energy Consumption: 8,130.3 trillion Btu Total Energy Consumption: 8,130.3 trillion Btu #2 Residential Energy Consumer #2 Residential Energy Consumer #1 Commercial Sector Consumer #1 Commercial Sector Consumer #3 Industrial Sector Consumer #3 Industrial Sector Consumer #1 Transportation Sector Consumer #1 Transportation Sector Consumer Source: Energy Information Administration – State Energy Data 2003

California Emerging Renewables Program Initiated: 1998 Initiated: 1998 –Part of the broader Renewable Energy Program Rebate Program: Rebate Program: –Wind: $2.50 per watt for the first 7.5 kW $2.50 per watt for the first 7.5 kW $1.50 per watt between 7.5 kW and 30 kW $1.50 per watt between 7.5 kW and 30 kW –Fuel Cell: $3.00 per watt $3.00 per watt Funding Level: $118 mil from Funding Level: $118 mil from

California’s Renewable Portfolio Standard (RPS) Program Initiated: 2002 Initiated: 2002 RPS Requirement: RPS Requirement: –Required 20% renewable energy by 2017 Acceleration of RPS Program: Acceleration of RPS Program: –In 2003, the RPS 20% RPS deadline was accelerated to –In 2004, Governor Schwarzenegger recommended a further acceleration of the RPS system requiring 33% renewable energy by 2020.

California Self-Generation Incentive Program (SGIP) Initiated: 2001 Initiated: 2001 Includes: Includes: –Wind Turbines –Fuel Cells –Microturbines –Internal Combustion Engines –Gas Turbines Incentive Payments: Incentive Payments: –$1.00 to $4.50 depending on technology

California Leading the Way on Wind Energy Generation Source: Windustry – January 2006

California Solar Initiative Enacted: January, 2006 Enacted: January, 2006 Rebates Begin: January, 2007 Rebates Begin: January, 2007 Rebate Payment Schedule: Rebate Payment Schedule: –Units under 100 kW (one-time payment): Residential and Commercial: $2.50 per watt Residential and Commercial: $2.50 per watt Government: $3.25 per watt Government: $3.25 per watt –Units 100 kW and larger (monthly for 5 years): Taxable Entity: $0.39 per kilowatt-hour Taxable Entity: $0.39 per kilowatt-hour Government/Nonprofit: $0.50 per kilowatt-hour Government/Nonprofit: $0.50 per kilowatt-hour Funding Level: $2.9 billion from Funding Level: $2.9 billion from

3. FLORIDA Total Energy Consumption: 4,287.8 trillion Btu Total Energy Consumption: 4,287.8 trillion Btu #3 Residential Energy Consumer #3 Residential Energy Consumer #4 Commercial Sector Consumer #4 Commercial Sector Consumer #16 Industrial Sector Consumer #16 Industrial Sector Consumer #3 Transportation Sector Consumer #3 Transportation Sector Consumer Source: Energy Information Administration – State Energy Data 2003

Florida Solar Energy System Incentive Program Enacted: June, 2006 Enacted: June, 2006 Effective: July, 2006 Effective: July, 2006 Expires: June, 2010 Expires: June, 2010 Incentive: Incentive: –Photovoltaics: $4.00 per watt (Max: $20K residential; $100K non-residential) –Solar Water Heater: $500 residential; $15 per 1,000 BTU non-residential/multi-family (Max: $5K) –Solar Thermal Pool Heaters: $100 per installation Funding Level: $2.5 million for FY Funding Level: $2.5 million for FY 06-07

Florida Renewable Energy Technologies Grants Program Enacted: June, 2006 Enacted: June, 2006 Effective: Immediate Effective: Immediate Eligibility: Eligibility: –In-state entity –Involved in demonstration, commercialization, research, or development for a qualifying activity Qualifying Activity: Qualifying Activity: –“electrical, mechanical, or thermal energy produced... [using] hydrogen, biomass, solar energy, geothermal energy, wind energy, waste heat, or hydroelectric power.” Funding Level: $15 million for FY Funding Level: $15 million for FY 06-07

Florida Renewable Technologies Investment Corporate Tax Credit Enacted: June, 2006 Enacted: June, 2006 Effective: July, 2006 Effective: July, 2006 Expiration: June, 2010 Expiration: June, 2010 Benefits: Benefits: –75% of capital costs, operation, maintenance, research and development Qualifying Activities: Qualifying Activities: –Hydrogen-Powered Vehicles and Fueling Station –Commercial Stationary Hydrogen Fuel Cells –Biodiesel and Ethanol Production, Storage, and Distribution Cannot be combined with the Investment Tax Credit Cannot be combined with the Investment Tax Credit

Florida Renewable Energy Production Corporate Tax Credit Enacted: June, 2006 Enacted: June, 2006 Effective: January, 2007 Effective: January, 2007 Expiration: June, 2010 Expiration: June, 2010 Benefit: Benefit: –$0.01 per Kilowatt-hour (Max: $5 million) Qualifying Activity: Qualifying Activity: –“electrical, mechanical, or thermal energy produced... [using] hydrogen, biomass, solar energy, geothermal energy, wind energy, waste heat, or hydroelectric power.”

4. NEW YORK Total Energy Consumption: 4,220.6 trillion Btu Total Energy Consumption: 4,220.6 trillion Btu #4 Residential Energy Consumer #4 Residential Energy Consumer #2 Commercial Sector Consumer #2 Commercial Sector Consumer #18 Industrial Sector Consumer #18 Industrial Sector Consumer #4 Transportation Sector Consumer #4 Transportation Sector Consumer Source: Energy Information Administration – State Energy Data 2003

New York Solar and Fuel Cell Tax Credit Enacted: August, 1997 Enacted: August, 1997 Solar Energy: Solar Energy: –Effective: January, 1998 –25% of the cost of equipment and installation –Capped at $5,000 credit –Residential equipment that utilizes solar power for heating, cooling, hot water, or electricity –Non-recreational applications Fuel Cell Energy: Fuel Cell Energy: –Effective: January, 2003 –20% tax credit (Max: $1,500) –Max rated baseload capacity: 25 kW –Utilizes proton exchange membrane (PEM)

New York Green Building Tax Credit Program Enacted: May, 2000 Enacted: May, 2000 Effective: January, 2001 Effective: January, 2001 Expiration: December, 2009 Expiration: December, 2009 Qualifying Credits: Qualifying Credits: –Whole Building Credit –Base Building Credit –Tenant Space Credit –Fuel Cell Credit –Photovoltaic Module Credit –Green Refrigerant Credit Available to corporations and individuals Available to corporations and individuals Funding Level: $25 million Funding Level: $25 million

New York Renewable Power Procurement Policy Executive Order: June, 2001 Executive Order: June, 2001 Effective: Immediately Effective: Immediately Applicability: Applicability: –All state agencies under the control of the Governor Requirement: Requirement: –10% of state purchased energy must be from renewable sources by 2005 –20% of state purchased energy must be from renewable sources by 2010

New York Renewable Portfolio Standard Enacted: September, 2004 Enacted: September, 2004 Effective: Immediately Effective: Immediately Requirement: Requirement: –25% of renewable energy by 2013 NY State Energy Research and Development Authority encourage the development of new renewable energy resources NY State Energy Research and Development Authority encourage the development of new renewable energy resources Incentive Funding: $45 million through 2009 Incentive Funding: $45 million through 2009 –30.7% supports PV technology –10% supports small wind –24.9% supports fuel cells –24.4% supports anaerobic digestion –10% discretionary

New York Solar Sales Tax Exemption Enacted: July, 2005 Enacted: July, 2005 Effective: September, 2005 Effective: September, 2005 Expires: December, 2009 Expires: December, 2009 Benefit: Benefit: –Sale and installation of solar-energy systems is free from NY state tax –Locality can also exempt taxes on this transaction Requirement: Requirement: –Solar energy must be used for heating, cooling, hot water, and/or electricity –Non-recreational

5. OHIO Total Energy Consumption: 3,986.2 trillion Btu Total Energy Consumption: 3,986.2 trillion Btu #7 Residential Energy Consumer #7 Residential Energy Consumer #7 Commercial Sector Consumer #7 Commercial Sector Consumer #5 Industrial Sector Consumer #5 Industrial Sector Consumer #6 Transportation Sector Consumer #6 Transportation Sector Consumer Source: Energy Information Administration – State Energy Data 2003

Ohio Energy Conversion Facilities Corporate Tax Exemption Real property used in energy conversion are exempt from property taxation and are not considered an improvement Real property used in energy conversion are exempt from property taxation and are not considered an improvement Applicable technologies: Applicable technologies: –Solar-thermal systems –Photovoltaic systems –Wind –Biomass –Landfill gas –Waste-recovery systems

Ohio Energy Loan Fund (ELF) Grant Program Enacted: 1999 Enacted: 1999 Benefit: Benefit: –Various grants up to $150K Qualifying Projects: Qualifying Projects: –Distributed Energy Resources –Non-residential Renewable Energy –Residential Renewable Energy –New Solar Homes Incentive –Manufacturing Energy Efficiency Incentives –Small Business Energy Savers Incentive

Ohio Wind Production & Manufacturing Incentive Program Effective: February, 2007 Effective: February, 2007 Wind-energy Generation: Wind-energy Generation: –An incentive of $0.01 per kilowatt-hour –Available for up to five years –Must be operational before December, 2008 Ohio Manufactured Turbines Ohio Manufactured Turbines –An incentive of $0.012 per kilowatt-hour –Turbine parts are made in Ohio or assembled by Ohio employees.

6. PENNSYLVANIA Total Energy Consumption: 3,972.7 trillion Btu Total Energy Consumption: 3,972.7 trillion Btu #5 Residential Energy Consumer #5 Residential Energy Consumer #6 Commercial Sector Consumer #6 Commercial Sector Consumer #6 Industrial Sector Consumer #6 Industrial Sector Consumer #5 Transportation Sector Consumer #5 Transportation Sector Consumer Source: Energy Information Administration – State Energy Data 2003

Pennsylvania Energy Development Authority (PEDA) Grants Enacted: December, 1982 Enacted: December, 1982 Grant Funding: Grant Funding: –PEDA provides grants to provide financial incentives towards the creation of clean, alternative-energy projects and investment in the Pennsylvania energy sector Funding Levels: Funding Levels: –$5 million in 2006 –Max of $1 million per grant

Pennsylvania Alternative Energy Portfolio Standard Enacted: November, 2004 Enacted: November, 2004 Effective: February, 2005 Effective: February, 2005 Requirement: Requirement: –8% of electricity must be generated by Tier I sources (solar, wind, geothermal, fuel cells, etc) by 2021 –10% of electricity must be generated by Tier II sources (waste coal, solid waste, wood byproducts, etc) by 2021 Pennsylvania was the first state to include waste coal, coal-mine methane and coal gasification Pennsylvania was the first state to include waste coal, coal-mine methane and coal gasification

Pennsylvania Wind-Energy System Exemption Enacted: November, 2006 Enacted: November, 2006 Effective: January, 2007 Effective: January, 2007 Benefit: Benefit: –Wind turbines and related equipment are not assessed for property tax purposes –Instead, real property used for wind energy are assessed using income capitalization approach

7. ILLINOIS Total Energy Consumption: 3,918.3 trillion Btu Total Energy Consumption: 3,918.3 trillion Btu #6 Residential Energy Consumer #6 Residential Energy Consumer #5 Commercial Sector Consumer #5 Commercial Sector Consumer #7 Industrial Sector Consumer #7 Industrial Sector Consumer #7 Transportation Sector Consumer #7 Transportation Sector Consumer Source: Energy Information Administration – State Energy Data 2003

Illinois Sustainable Energy Plan Sustainable energy is defined as: Sustainable energy is defined as: – –Wind – –Solar thermal energy, – –Photovoltaic cells and panels, – –Agricultural products and organic biomass – –Methane recovered from landfills, – –Hydropower from existing dams

Illinois Renewable Portfolio Standard (RPS) Enacted: June, 2001 Enacted: June, 2001 Effective: July, 2001 Effective: July, 2001 Renewable Portfolio Requirements: Renewable Portfolio Requirements: –2% of retail load to be renewable in 2007 –Increase 1% each year reaching 8% in –75% of the renewable energy used to meet the RPS must come from wind power. Energy Efficiency Portfolio Goal: Energy Efficiency Portfolio Goal: – –10% reduction in projected load growth in years , – –15% reduction in years , – –20% reduction in years , and – –25% reduction in years

Illinois Manufacturing Energy Efficiency Program (MEEP) Eligibility: Eligibility: –Illinois manufacturers Rebate Program Rebate Program –50% of the of qualifying expenses –Max of $10,000 Qualifying Expenses Qualifying Expenses –Development an energy efficiency action plan –Technical assistance for energy efficient technology.

Illinois Renewable Energy Resources Program (RERP) Rebates Enacted: December, 1997 Enacted: December, 1997 Effective: Immediately Effective: Immediately Benefit: Benefit: –30% of qualifying expense –Max of $10K Qualifying Expense Qualifying Expense –New solar-energy technology with a design capacity greater than 800 watts