Renewable Energy Legislative Update: 2014

10/27/2014

solar panelsUpdated January 2, 2015

In the 2014 legislative session, states considered nearly 1,350 bills related to renewable energy, approximately half of which were carried over from the 2013 legislative session.

Legislatures in at least 37 states, Washington D.C., Puerto Rico and the U.S. Virgin Islands enacted more than 150 bills related to net metering; renewable portfolio standards and renewable energy credits; financing; siting, permitting and land use; and additional policy areas.

Net Metering

Net metering policies have facilitated the expansion of renewable energy through on-site generation, also known as distributed generation. Currently, 43 states, Washington, D.C., and four territories have authorized net metering, and utilities in three additional states have implemented net metering programs. In the 2014 session, numerous state legislatures debated the best way to balance customer demand for distributed generation with the impacts new technologies have on the electric power grid, including exploring ways to assess the actual costs and benefits to the utility.

Legislation has been enacted in at least 14 states, including California, Colorado, Connecticut (House Bill 5115 and Senate Bill 357), Hawaii, Indiana, Kansas, Maine, New Hampshire, Oklahoma, Oregon, Rhode Island (House Bill 7727 and companion Senate Bill 2690, and House Bill 8010 and companion Senate Bill 2915), South Carolina, Utah (Senate Bill 208 and Senate Joint Resolution 20) and Vermont (House Bill 702 and House Bill 884). Examples of enacted legislation include:

  • Legislation in California authorized Department of Corrections and Rehabilitation facilities to participate in net metering programs up to eight megawatts in capacity, so long as facilities do not export more than 1.35 megawatts of electricity generated by wind technologies to the electrical grid at any time.
  • A Kansas bill established a yearly expiration date for net metering credits for systems installed before July 1, 2014 and established three tiers of net metering capacity limits for net metering systems installed after July 1, 2014, including for residential customers, schools and for commercial, industrial, religious institutions, agricultural, industrial, local, state and federal customer generators. The legislation authorized utilities to develop new rate classes or tariffs for distributed generation customers with systems installed after July 1, 2014. The bill made additional revisions to net metering policies beginning in 2030.
  • Legislation in Maine established the Maine Solar Energy Act that, among other provisions, required the Public Utilities Commission to determine the value of distributed solar energy generation and submit a report of their findings to the legislature in January 2015. Legislation also established state solar energy generation goals.
  • Oklahoma legislation authorized utilities to develop a new rate class for distributed generation customers to cover infrastructure costs. The measure will take effect in November 2014 and does not apply to customers with distributed generation installed by that date. The new rate class and any associated tariffs must be created by the end of 2015 and approved by the Oklahoma Corporation Commission.
  • Rhode Island bills (H.B. 7727/S.B. 2690) established a tariff-based renewable energy distributed generation financing program, which will finance the development, construction and operation of renewable energy distributed generation projects over five years through a performance based incentive system with specified megawatt targets. Another pair of bills (H.B. 8010/S.B. 2915) revised definitions of municipal and public entities to incorporate additional state facilities as eligible net metering participants.
  • South Carolina became the most recent state to authorize net metering. Legislation established net metering capacity limits based on customer type, established a voluntary distributed energy resource program and created a renewable energy leasing program. The bill also tasked the South Carolina Public Service Commission with developing net metering rates.
  • A bill in Utah (S.B. 208) amended the current net metering policy, requiring the Public Service Commission and electric cooperatives to seek public comments on and to determine the costs and benefits of net metering programs. These entities may then impose a charge, credit or ratemaking structure (including new or existing tariffs) for distributed generation, based on their findings.
  • Vermont legislation (H.B. 702) revised the formula for net metering credits, including specific provisions for solar energy systems. The bill increased net metering caps to 15 percent of a distribution company’s peak demand during 1996 and expanded net metering policies for solar energy systems. The bill also authorized a net metering pilot program for electric cooperatives.

 

Renewable Portfolio Standards and RECS

wind turbinTwenty-nine states, Washington, D.C. and two territories have requirements for utilities to sell a specified percentage or amount of renewable electricity—known as renewable portfolio standards (RPS)—and another eight states and two territories have established voluntary targets for utilities. Renewable energy producers earn renewable energy credits (RECs) for electrical generation from renewable energy sources. REC ownership can be important in meeting RPS goals, whether the requirements are for distributed generation users, or utilities and cooperatives. In the 2014 legislative session at least 14 states and Washington, D.C. enacted legislation concerning RPS or REC policies, including California, Connecticut, Illinois, Maryland, Massachusetts, New Hampshire, New Mexico (House Bill 232 and companion Senate Bill 49), Ohio, Oregon (House Bill 4126 and Senate Bill 1520), Rhode Island (House Bill 8200 and companion Senate Bill 2692), Utah, Virginia (House Bill 822 and companion Senate Bill 498), Vermont, Washington (House Bill 2708 and House Bill 2733), Wisconsin (Assembly Bill 594 and Assembly Bill 596) and Washington, D.C. Additionally, the U.S. Virgin Islands enacted legislation related to feed in tariffs.

  • Illinois legislation amended the Illinois Power Agency Renewable Energy Resources Fund to establish a supplemental procurement process for RECs from new or existing photovoltaics, including distributed photovoltaic generation. The bill also stipulates that new photovoltaics must be installed by a qualified person and defines the qualifications and technical background that installers must have.
  • A Massachusetts bill authorized renewable thermal technologies to qualify for alternative energy credits under the state Alternative Portfolio Standard. Legislation includes renewable thermal technologies such as solar heating and cooling, biofuels, wood pellets, wood chips, renewable natural gas, and geothermal and air source heat pumps.
  • Legislation in Ohio suspended the state’s Alternative Energy and Energy Efficiency Resource Standards—the first of such legislation that has been enacted for a renewable energy standard. The suspension creates a two-year freeze on the state’s requirement for utilities to purchase 12.5 percent of their electricity from renewable energy sources by 2025 and a requirement for investor-owned utilities to reduce electricity demand 22 percent by 2025, while a panel studies the costs and benefits of the requirement.
  • An Oregon bill (H.B. 4126) directed the state Public Utility Commission to investigate the feasibility of allowing utilities to sell renewable energy to non-residential customers under a green tariff. The bill also allowed consumer-owned utilities to meet a percentage of their renewable energy requirement with unbundled renewable energy certificates generated by existing wind and solar farms.
  • Utah legislation amended the definition of “renewable energy” to require that a renewable energy source be located in the state to qualify for renewable energy contracts. The state currently has a renewables portfolio goal that seeks to have 20 percent of electricity sales come from renewable energy sources by 2025.
  • Legislation in Washington (H.B. 2733) revised several definitions within the state Renewable Energy Standard, allowing for additional instances of hydroelectric generation to qualify as an eligible renewable resource including generation facilities located in irrigation pipes and canals, municipal water pipes and certain wastewater pipes. Another enacted bill (H.B. 2708) revised definitions of the qualified alternative energy sources that utilities must offer to residential consumers to voluntarily purchase to include energy generated from facilities fueled by biomass energy based on liquid organic fuels from wood, forest or field residues.
  • Wisconsin enacted legislation (A.B. 594) that provides an exception for electric utilities and cooperatives in the state Renewable Portfolio Standard, affecting at least four small utilities in the state. If an electricity provider has both a baseline renewable percentage that is greater than 12 percent and a renewable energy percentage that is at least 14 percent of total sales in 2014, providers will maintain a renewable energy percentage that is two percentage points above its baseline in 2015 and subsequent years. Previously the requirement was six percentage points above the provider’s baseline. Another bill (A.B. 596) altered existing policy that allows electricity providers to create renewable resource credits from non-electric forms of renewable energy that displace the use of electricity derived from conventional sources. Credits can now be generated for these resources regardless of when the source was put in place.
  • Although a different model from a Renewable Portfolio Standard, the U.S. Virgin Islands enacted legislation creating a feed in tariff for renewable energy. The legislation authorized entities to generate electricity from renewable energy sources and sell the electricity to the Virgin Islands Water and Power Authority through power purchase agreements. Rates will be determined by the Public Service Commission. Legislation also established caps on net metering capacity.

 

Financing

wind and solarFinancing programs help eliminate upfront cost barriers by allowing consumers to install small-scale renewable energy projects and pay installation and technology costs over a longer time frame. Property Assessed Clean Energy (PACE) financing, energy performance contracting, “green” infrastructure or resiliency banks, loans, bonds and rebates are some of the vehicles states are using to achieve this. At least 11 states have enacted legislation relating to renewable energy financing, including California (Assembly Bill 1883 and Assembly Bill 2597), Colorado (House Bill 1222, Senate Bill 186 and Senate Bill 202), Connecticut, Delaware, Hawaii, Maryland (House Bill 202 and companion Senate Bill 186, and Senate Bill 985), Minnesota (House File 2834 and House File 3172), New Hampshire, Oregon, Tennessee and Virginia.

  • California enacted two bills related to PACE financing this session. The first (A.B. 1883) revised information included in PACE contracts to allow a system owner to include a specified covenant and warranty in its contract with the property owner, providing that the system will not be removed for the term of the contract. Legislation also authorized a public agency to transfer its right, title, and interest in any voluntary contractual assessments if bonds have not been issued, subject to a transfer period less than three years. Additional legislation (A.B. 2597) required the California Alternative Energy and Advanced Transportation Financing Authority to consider whether a PACE financing program provides financial assistance that is less than 15 percent of the value of the property, for up to the first $700,000, and less than 10 percentof the remaining value of the property above $700,000, and whether the PACE financing program limits the total mortgage-related debt and PACE financing from exceeding the value of the property.
  • Colorado legislation (S.B. 202) modified the School Energy Loan Program to authorize third party ownership of renewable energy projects. Additional enacted legislation allowed for the aggregation of renewable energy or energy efficiency projects in small or rural communities to better attract private sector financing through energy service companies.
  • A Connecticut omnibus energy bill renamed the Clean Energy Finance and Investment Authority as the Connecticut Green Bank and expanded its commercial property assessed clean energy program to include microgrids.
  • Legislation in Maryland required the state Clean Energy Center, in collaboration with the Energy Administration, to conduct a study of green banks and clean bank financing initiatives. The legislation required the Clean Energy Center to consult with specific entities and requires a report be submitted to the legislature before December 2015.
  • Oregon also enacted legislation concerning PACE programs, requiring all property owners provide written notification to all mortgagees of intent to enter into a loan agreement. Property owners must receive written consent before entering into a loan agreement.

 

Tax Incentives

States offer a variety of tax incentives to residents and businesses helping reduce upfront cost burdens for new installations. Incentives can include personal or corporate, sales and property tax incentives. Numerous states enacted legislation creating or modifying tax incentives for renewable energy, including Arizona (House Bill 2403, House Bill 2415 and Senate Bill 1484), California, Colorado (House Bill 1101 and House Bill 1159), Iowa (House Bill 2473, Senate Bill 2340, Senate Bill 2342, Senate Bill 2343. Senate Bill 2344 and Senate Resolution 103). Indiana, Louisiana, Minnesota, Nebraska, New York (Senate Bill 7026 and Senate Bill 7464). South Carolina, Utah (Senate Bill 224 and Senate Bill 242); Virginia (House Bill 1239 and Senate Bill 418), Vermont (House Bill 884 and Senate Bill 221) and Washington. Examples of passed legislation include:

  • An Arizona bill (H.B. 2403) required the Department of Revenue to establish the full cash value of taxable renewable energy equipment. The legislation also concerned the valuation of property with abandoned renewable energy equipment on the premises.
  • Colorado legislation (H.B. 1101) established a partial business and personal property tax exemption for community solar gardens. The exemption applies to residential and government subscribers, as well as certain specified organizations.
  • Several bills in Iowa concerned tax incentives for renewable energy. Legislation (S.B. 2340) raised the state solar energy tax credit by 10 percent. The bill also established parameters for receiving the credit and a ceiling for the cumulative value from multiple credits. Additionally, a resolution (S.R. 103) supporting extending the federal production tax credit for wind energy was enacted.
  • Legislation in Louisiana addressed tax credit fraud by solar electric or solar thermal contractors by establishing criminal penalties for contractors who fail to meet specific contractual obligations.
  • A bill in New York (S.B. 7026) extended an existing property tax exemption for solar and wind energy systems and farm waste-to-energy systems. Legislation also clarifies when the tax exemption can be applied and extended a provision on contracts for payments in lieu of taxes to apply to taxing jurisdictions.
  • South Carolina designated their Renewable Energy Tax Credit Incentive Program as the state Clean Energy Tax Incentive Program; extended the credit to additional forms of energy production and operations; decreased investment thresholds; and decreased job creation thresholds for qualifying for the credit. The legislature also extended the income tax credit for corn-based ethanol or soy-based biodiesel production to all liquid fuels derived from renewable sources.

 

Siting, Permitting and Land Use

wind generatorsState policies can determine project siting; setback requirements for renewable technology, such as wind turbines; ownership rights of surface property; renewable energy zones; and the relationship local communities or homeowners’ associations have over renewable energy projects. In the 2014 session, legislatures in at least 10 states and Washington, D.C. enacted bills on these topics. Legislation was enacted in Alabama (Senate Bill 402 and Senate Bill 403), Arizona, California, Hawaii (Senate Bill 2658 and Senate Bill 2775), Maryland (Senate Bill 2 and Senate Bill 259), New Hampshire (House Bill 532, House Bill 1312, House Bill 1602 and Senate Bill 245), Ohio, Pennsylvania, Rhode Island (House Bill 8172 and companion Senate Bill 3088), Virginia (Senate Bill 222 and Senate Bill 643) and Washington, D.C. Notable legislation includes:

  • Legislation in Hawaii (S.B. 2658) addressed concerns of renewable energy development on agricultural lands by establishing conditions for solar energy projects on agricultural lands with the overall productivity ratings of A, B or C. Legislation (S.B. 2775) permitted solar installations on agricultural lands with an A rating if the land where the facility is located has a valid agricultural conservation easement or county tax dedication status, among other provisions; installations are permitted on B and C rating lands so long as they do not exceed either 10 percent or 20 acres of land, with additional stipulations.
  • A Maryland bill (S.B. 259) authorized landowners to request approval from the Maryland Agricultural Land Preservation Fund for renewable energy projects on easements if no more than five percent or five acres of the land is used for installations. Installations must adhere to height restrictions and must not interfere with radar for a specific naval air station.
  • New Hampshire legislation (S.B. 245) amended siting provisions to revise timelines for siting applications and require that the elements of and financial assurances for a facility decommissioning plan be included in siting applications. Legislation also revised requirements for public notice and stipulated that a public hearing must be held in the county where a facility is proposed. Legislation (H.B. 1312) also established a committee to study offshore wind energy and other ocean power technology.
  • Ohio enacted legislation that alters the state’s wind siting provisions. In particular, the legislation amends turbine setback requirements for large wind farms, mandating that turbines now be at least 1.1 times the height of a turbine and at least 1,125 feet from a property line—rather than the nearest habitable structure, as was previously established.
  • A bill in Rhode Island created a military facilities protection program to address encroachment, mission sustainment and base retention through best practices for renewable energy and energy efficiency projects, among other avenues.
  • The Virginia legislature enacted a bill (S.B. 222) clarifying a community association's authority to prohibit or restrict the installation of solar power devices. Legislation prohibits a community association from barring a property owner from installing a solar energy collection device on the owner's property unless the community association's recorded declaration establishes such a prohibition.

 

Additional Legislation

solar panelsIn addition to the categories listed above, states enacted legislation in additional topic areas.

 

Sources:

National Conference of State Legislatures Energy and Environment Legislative Database, 2014.

The Center for the New Energy Economy, 2014 Year in Review of State Advanced Energy Legislation. Colorado State University, December 12, 2014.