Incentives

Incentives overview
Federal incentives
State incentives
Incentives future
Energy Policy Act of 2005

State Incentives

There are a wealth of state programs and incentives to promote renewables. Some of these, such as Renewable Portfolio Standards, promote renewables through regulatory requirements. Others such as state tax credits promote renewables by making them more financially viable. Some states – notably California – have made available impressive amounts of money to support renewables, but have at the same time made it somewhat challenging to actually access these funds due to frequently changing policies, programs, and funding. It is no trivial task to sort out and stay current on these various incentives. As noted above, the best single source for state-by-state information on these various incentives is the DSIRE database.

Renewable Portfolio Standards

Currently, 23 states have Renewable Portfolio Standards requirements or state goals requiring electricity providers to obtain a minimum amount of renewables. These are: Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, Montana, Nevada, New Jersey, New Mexico, Pennsylvania, Rhode Island, Texas, Vermont, Washington and Wisconsin. Other states are considering them as well.

Nevada's RPS requires that utilities obtain at least 20 percent of their electricity from renewables by 2015. Solar technologies must supply 5 percent of this requirement. The Nevada standard specifically excludes rural electric cooperatives. See the Public Utilities Commission Web site for more information.

Arizona's RPS is called an Environmental Portfolio Standard; it requires electricity retailers to obtain an increasing percentage of their electricity from renewables. This percentage began at 0.2 percent in 2001, and increases to 1.1 percent by 2007. Half of the required renewables must come from solar electric technologies. The enabling regulations also have an explicit funding mechanism – a monthly surcharge on customers' bills. For more details, see the regulations.

California's RPS was passed in September 2002. It requires California's investor-owned utilities to increase their use of renewable electricity by 1 percent per year, until it reaches 20 percent. The above-market costs of these renewables will be covered by funds from the systems benefit charge – however there are provisions allowing some of these costs to be rate-based instead. See the RPS docket .

Net Metering

Thirty-nine states (including all the western states) have net metering rules, which allow customers to use their own electricity generation to offset purchased electricity. Rather than selling all their self-generated electricity to their electricity provider, customers use it directly and purchase electricity only when their demand exceeds their self-generation capacity. See the CEC website for a detailed explanation of California's net metering rules. Note that, as of September 2002, legislation amending California's net metering rules was under consideration. Some of these changes related to the how the rules apply to municipal utilities. See the Calfornia Solar Center for updates.

Public Benefits Funds

Fifteen states, including California and Oregon, have established public benefits funds (also called system benefits charges). These funds are essentially taxes on electricity consumption, with the resulting revenue used to support various energy-related public goals including efficiency, low-income energy provision, research and development, and renewables. See a summary of all state incentives.

California funds much of its renewables support through its public benefits fund. This fund, first established as part of California's restructuring legislation in 1996, requires California's investor-owned utilities (Pacific Gas & Electric, Sempra, and Southern California Edison) to collect $135 million annually to be used to support renewables. This money is then made available to renewable electricity generators through a variety of channels. For an overview of how the money is organized and made available, start at the CEC's Renewable Energy Programs Overview.

One California program of particular relevance to municipal utilities is the 'Emerging Renewables Program,' funded by that state's public benefits fund. Photovoltaic, solar-thermal, wind turbines with up to 50 kW of capacity, and fuel cells are eligible. This program is intended for self-generation systems, so total generation of the system can't exceed twice the on-site electricity consumption. Although this program was originally intended primarily for customers of the three large investor-owned utilities, the program also included some funding for customers of municipal utilities.

Oregon's public benefits funds provide $9 million annually for renewables. Much of this money is managed by the Energy Trust. The Trust has several renewables-related programs, including a solar water heating program, a wind program, and an open solicitation program.

Other State-Level Financial Tools

There are a scattering of additional state-level financial incentives worth investigating. These include:

• State-By-State Incentives for Photovoltaics Projects
  
  
• California offers a 15 percent tax credit for solar and wind generation system of up to 200 kW capacity. This tax credit is available to both individuals and corporations.
  
  
• Washington state exempts renewable generating systems from sales taxes.
  
  
• Washington state offers a limited number of rebates for PV systems. These rebates are for up to 20 percent of the first costs.
  
  
• Oregon offers a business tax credit covering 35 percent of the first costs of certain energy projects, including renewable generation.
  
  
• Oregon also offers consumers up to $1500, in the form of a tax credit, for qualifying wind and photovoltaic systems.
  
  
• Nevada has a 50 percent property tax exemption for businesses with renewable energy systems.
  
  
• Arizona offers a 25 percent tax credit for residential solar systems.