Renewable Energy Legislative Update 2015

9/13/2016

Introduction

Wind turbines at sunset.Renewable energy production grew rapidly in 2015. The U.S. Energy Information Administration reported that renewable energy sources generated approximately 13 percent of U.S. electricity. According to the International Energy Agency, this growth is expected to continue, with renewable energy projected to represent the largest single source of electricity growth over the next five years.

In the 2015 session, legislatures considered nearly 1,250 bills on renewable energy with approximately 42 states, Washington, D.C. and Puerto Rico enacting at least 185 bills.
 
These bills covered a variety of areas, including:
  • Renewable portfolio standards
  • Renewable energy certificates
  • Net metering
  • Siting and permitting requirements for renewable energy facilities
  • Green jobs
  • Financing
  • Tax incentives

Presented below is an overview of the state renewable energy policy landscape for the 2015 legislative session. View the 2014 Renewable Energy Legislative Update.

Renewable Portfolio Standards and Renewable Energy Certificates

Wind turbines and solar panels.Renewable Portfolio Standards (RPS) require a specific quantity of the electricity sold by utilities to be from renewable sources. Currently, 29 states, three territories and Washington, D.C. have set RPS requirements, while eight states and one territory have voluntary renewable energy targets. Renewable Energy Certificates (RECs), also known as Renewable Energy Credits, are earned by renewable energy producers for electrical generation from renewable energy sources. These certificates represent the environmental attributes of renewable generation and are used to meet renewable energy requirements, such as RPS policies.

During the 2015 session, several states enacted legislation pertaining to RPS and RECs including: California (S.B 350 and S.B. 697) | Colorado (H.B. 1377S.B. 46 and S.B. 254) | Connecticut | Hawaii (H.B. 623 and S.B. 1050) | Kansas | New Jersey (A.B. 3455 and S.B. 2016) | New Mexico (H.B. 263 and S.B. 249) | Oklahoma | VermontWest Virginia

Examples of Enacted Legislation Include

  • Legislation in California (S.B. 350) made amendments to the state’s RPS program which, among other provisions, increased the amount of renewable energy that utilities are required to sell, from 33 percent by 2020 to 50 percent by 2030. The bill also doubled the state’s energy efficiency standard by 2030.
  • Hawaii enacted legislation (H.B. 623) increasing the state’s RPS from 40 percent of sales by 2030 to 100 percent by 2045, creating the most ambitious RPS in the country. The bill outlines an incremental RPS increase: 30 percent of sales by 2020, 40 percent by 2030, 70 percent by 2040 and 100 percent by 2045.
  • A Kansas bill (S.B. 91) converted the state’s RPS requirement of 20 percent of peak demand capacity from renewable energy sales—which most utilities had already met—to a voluntary goal of 20 percent of 2020. Through enacting this legislation, Kansas became the first state to reduce its RPS to a voluntary goal. Additionally, the bill placed a 10-year limitation on a formerly-permanent renewable energy property tax exemption.
  • A bill in New Mexico (H.B. 263) added geothermal energy sources to the state’s renewable energy certificates program. The bill allowed renewable energy certificates to be issued for the use of thermal energy produced by geothermal energy sources (minimum value of 3,412 BTU per renewable energy certificate).
  • Legislation in Vermont (H.B. 40) created Vermont’s Renewable Energy Standard (RES), a mandatory renewable portfolio standard. The state had previously established a voluntary renewable energy goal. The bill requires 75 percent of annual retail electricity sales to be from renewable resources by 2032, and includes a 10 percent carve-out for distributed energy sources greater than five megawatts. Additionally, the bill requires retail electricity providers to support “energy transformation projects” equal to 2 percent of their annual retail electricity sales by 2017. Energy transformation projects are defined as projects that produce energy-related goods and result in a reduction in fossil fuel consumption and greenhouse gas emissions, such as home weatherization, geothermal heat pumps and electric vehicles.
  • A West Virginia bill (H.B. 2001) repealed the state’s non-binding Alternative and Renewable Energy Portfolio Standard of 25 percent by 2025. Through enacting this legislation West Virginia became the first state in the nation to repeal a renewable energy target.

Net Metering

Solar panels on a roof.To facilitate small-scale renewable energy growth, states have implemented net metering policies that allow for on-site, or distributed, electricity generation resources. Net metering policies allow distributed generation customers to sell excess electricity to a utility at a retail rate and receive credit on their utility bill. Currently, at least 41 states, Washington, D.C., and four territories have authorized net metering, and utilities in two additional states—Idaho and Texas—have implemented net metering programs. As distributed solar generation grows, net metering policies are presenting an increasingly complex challenge for state legislatures as they seek to balance customer demand for distributed generation and the unintended impact of these policies.

At least 16 states enacted legislation concerning net energy metering, including: Arkansas | Colorado (H.B. 1284 and H.B. 1377) | Connecticut | Georgia | Hawaii | Iowa | Maine (H.P. 863 and H.P. 888) | Maryland (H.B. 1087 and S.B. 398) | Minnesota (H.B. 3a and S.B. 1218) | Montana | New Jersey | Oregon | Rhode Island (H.B. 5199 and S.B. 81) | Utah | Virginia (H.B. 1950 and S.B. 1395) | West Virginia (H.B. 2001 and H.B. 2201). 

Notable Legislation Includes

  • A Colorado bill (H.B. 1377) revised net metering regulations for cooperative electric associations. Electric generation facilities can qualify for net metering and a cooperative’s RPS distributed generation requirement if they are 2 megawatts or less, serve customers in a cooperative’s service territory and meet minimum subscriber requirements. Legislation authorizes cooperatives to adopt their own programmatic and metering rules.
  • Legislation in Connecticut (S.B. 928) established a shared clean energy facility pilot program. The bill requires the Department of Energy and Environmental Protection (DEEP) to create a two-year pilot program to support the development of shared clean energy facilities. Eligible facilities include solar, wind, biomass, tidal and ocean thermal technologies. Facilities must have a capacity of 4 megawatts or less and consist of at least two subscribers. At the end of the pilot program, DEEP is required to submit a report analyzing the success of the program and provide recommendations on whether the program should be made permanent. 
  • Hawaii enacted legislation (S.B. 1050) that requires electric utilities to propose community-based renewable energy tariffs to the Public Utility Commission for approval. The tariffs—an alternative to net metering—are designed to be in the interest of both participating and nonparticipating customers. Proposed projects can be owned by any entity.
  • Legislation enacted in Maine (H.P. 863) revised the state’s net energy billing policy. The legislation required the Public Utility Commission (PUC) to convene stakeholders to develop an alternative policy to net energy billing. Additionally, the PUC is required to ensure that the alternative policy includes fixed, long-term payment mechanisms for distributed generation; allows customers receive the best price for distributed energy; and provides opportunities for increased participation by customers and other entities in residential, commercial, industrial, community and grid-scale solar distributed generation. Findings must be reported to the legislature.
  • Companion bills in Maryland (H.B. 1087 and S.B. 398) required the Public Service Commission to create a three-year community solar pilot program. The community solar energy generating systems are required to have at least two subscribers and are limited to a maximum capacity of 2 megawatts. The bill requires electric companies to compensate subscribers under a tariff structure and caps the credits for subscribers at 200 percent of their baseline annual usage. The bill also allows for third party ownership and operation of systems. Additionally, the Public Service Commission is required to conduct a study of the program and present findings and recommendations to the legislature.
  • Montana enacted legislation (S.J.R. 12) that required a study of the benefits and costs of net metering systems to public utilities, rural electric cooperatives and customers who do not net meter. The study must also analyze the general impacts of net metering, the cost-effectiveness of net metering systems, the impacts of net metering on electric supply resources, the stability of net metering systems and related subsidies including tax credits, deductions and grant or loan programs. Results and findings of the study will be reported to the legislature.
  • West Virginia enacted legislation (H.B. 2001) that repealed the state's net metering statutes. Subsequent legislation (H.B. 2201) adopted revised net metering legislation. The bill placed a 3 percent cap on net metering for utilities and 0.5 percent minimum requirement for residential customers. Additionally, the bill requires the Public Service Commission to study the state’s net metering and interconnection policies, focusing on preventing cost shifts from customers participating in net metering to customers who do not.

Siting and Permitting

State siting and permitting policies are an essential component of renewable energy policy and can either expedite or impede the expansion of new generation. These policies can determine noise limits and setback requirements for wind energy development; project siting standards; permitting processes for solar, wind, ocean and other renewable energy systems; and interconnection processes and requirements.

Legislation has been enacted in at least 11 states, including: Alabama (H.B. 629 and S.B. 459) | California (A.B. 1034 and A.B. 1527) | Hawaii | Illinois (H.B. 3523 and S.B. 920) | Maryland | Maine (H.P. 562, H.P. 631 and S.P. 449) | Nebraska | Oklahoma | Oregon | Texas | Vermont | Virginia (H.B. 1950 and S.B. 1395). 

Examples of Enacted Legislation Include

  • Companion bills in Alabama (H.B. 629 and S.B. 459) created the state’s first provisions for wind siting and permitting. The bills required customers in DeKalb County to obtain a permit before installing, constructing or operating wind energy systems. To obtain a permit, installers are required to submit a reclamation plan, a visual simulation of the proposed system, and a plan of the plot mapping out the location. The bill also limits the noise levels (measured at the property line of the property on which the system is installed) to 40 decibels, creates setback requirements of 2,500 feet to the nearest edge of the property, requires installers to post a “high voltage” sign and anti-climbing devices at the base of all systems, and requires conversion systems to be equipped with manual and automatic overspeed controls.
  • A bill in California (A.B. 1034) allowed for renewable energy development on mine lands. The bill establishes that solar photovoltaic, solar thermal (under 50 megawatts) and wind energy facilities can be placed on minded lands, provided that the facilities do not prevent the reclamation of the mined lands.
  • Hawaii enacted legislation (H.B. 1273) allowing hydroelectric facilities with a generating capacity of 6,500 kilowatts or less to be used on agricultural land if they serve as tools in agricultural activities and do not have adverse effects on land or ground water used for irrigation.
  • A Maine bill (H.P. 631) alters the state’s laws on visual and scenic assessments for proposed wind energy projects. The bill requires siting authorities to consider the scenic impact of wind energy development during the day and night and mandates that all applicants for expedited development conduct a visual impact assessment if the development is located within eight miles of a scenic resource of state or national significance.
  • Legislation in Oregon (S.B. 319) created new definitions regarding ocean renewable energy and established permitting provisions for ocean renewable energy facilities. The bill established that a permit is required for constructing and operating ocean renewable energy facilities in Oregon’s territorial seas and required that the Department of State Lands verifies that the facility complies with the criteria in the Territorial Sea Plan before issuing a permit.
  • Companion bills in Virginia (H.B. 1950 and S.B. 1395) made amendments to the state’s permitting provisions for net metering. Specifically, the bills increase the capacity limits for nonresidential customers from 500 kilowatts to 1 megawatt and require the capacity of all newly installed generation facilities to be less than expected annual energy consumption. The bill determines a maximum timeframe for interconnection of new net metering systems: 30 days for residential systems and 60 days for nonresidential for nonresidential systems. 

Green Jobs and Economic Development

Worker installing solar panels with a wind turbine in the background.Green jobs policies are one of the approaches used to encourage in-state renewable energy and energy-efficient manufacturing and workforce development.

In the 2015 legislative session, at least four states enacted legislation related to green jobs including: Connecticut | Louisiana | Oregon | Virginia (H.B. 1843, H.B. 2267 and S.B. 1037). 

Notable Legislation Includes

  • A Connecticut bill (H.B. 6838) made amendments regarding the Connecticut Green Bank which, among other provisions, encourages the creation of Connecticut-based solar jobs and workforce development opportunities. The increases performance-based incentives (tiered based on ownership model and capacity) for major solar energy system components manufactured or assembled in Connecticut by up to 5 percent. The bill increases the incentive by an additional 5 percent if the components are manufactured or assembled in a distressed municipality or targeted investment community.
  • Companion bills in Virginia (H.B 1843 and S.B. 1037) extended the sunset on tax credits for each new green job created through 2018, allowing for a $500 credit for each new green job created with an annual salary of $50,000 or more. Entities can receive credits for up to 350 green jobs.

Financing

Renewable energy financing strategies, such as Property Assessed Clean Energy (PACE) programs and state energy or green banks, help to reduce upfront costs to promote adoption.

In the 2015 legislative session, numerous states enacted legislation related to renewable energy financing including: Alabama | Arkansas | Connecticut | Georgia | Hawaii (H.B. 139, H.B. 500 and S.B. 1096) | Illinois | Kentucky | Nevada | New Hampshire | North Carolina | Oregon | Rhode Island | Texas | Virginia (H.B. 1446 and S.B. 801). 

Enacted Legislation of Particular Interest Includes

  • Legislation in both Alabama (S.B. 220) and Kentucky (H.B. 100) authorized PACE financing for commercial properties or residences with more than five units. Eligible projects in Alabama include energy efficiency and community resilience to storm-related events, such as winds and flooding. Kentucky defines eligible projects to include energy and water efficiency and renewable energy projects.
  • Connecticut legislation (H.B. 6991) authorized the participation of third-party capital providers in commercial PACE programs, allowing entities other than banks to provide loans directly to PACE participants. Connecticut has one of the nation’s largest and most sophisticated PACE programs, which is managed by the Connecticut Green Bank, the first state energy bank established in the U.S. In 2014, the bank successfully achieved securitization of a portion of its commercial PACE loan portfolio.
  • A Georgia bill (H.B. 57) allows retail electric customers to receive financing for the installation and operation solar technologies through third party leasing. The bill specifies that residential solar technologies (under 10 kilowatts) and commercial solar technologies (under 100 kilowatts) are eligible for financing. The bill also provides guidelines on properties with multiple premises and clarifies that interconnection expenses must be paid for by retail customers or the third party financer.
  • Nevada legislation (S.B. 360) requires the legislature’s energy committee to conduct an interim study on the viability of forming a state green energy bank to finance renewable energy and energy efficiency projects for residential and commercial buildings.
  • Companion bills in Virginia (H.B. 1446 and S.B. 801) made amendments to PACE programs. Among other provisions, the bills allow municipalities to contract with third parties to administer PACE financing programs and charge an administrative fee to lienholders. The bills also establish the conditions for priority lien status of commercial PACE loans and enforcement authority for local jurisdictions. Lastly, the bills tasked the state Department of Mines, Minerals and Energy with developing underwriting criteria for loans by the end of the year. 

Tax Incentives

Through providing tax incentives, states can reduce the upfront costs of new wind and solar energy installations. Incentives range from personal and corporate, to sales and property tax incentives, to production and investment tax credits. Examples of incentives include property tax exemptions for renewable energy systems, sales tax exemptions for purchasing new systems and equipment, and corporate tax credits for green jobs. In the 2015 legislative session, at least 25 bills were enacted regarding tax incentives for renewable energy.

Legislation was enacted in: Arizona | California | Colorado | Florida | Hawaii | Iowa | Louisiana (H.B. 629 and H.B. 749) | Nebraska (L.B. 424 and L.B. 538) | New York | North Carolina (H.B. 41 and S.B. 372) | North Dakota (H.B. 1228 and S.B. 2037) | Ohio | Oregon (H.B. 2171 and H.B. 3492) | South Dakota | Texas | Utah (S.B. 13 and S.B. 14) | Virginia (H.B. 1297, H.B. 1843 and S.B. 1037). 

Examples of Passed Legislation Include

  • A Colorado bill (H.B. 1219) established that taxpayers can receive refunds on renewable energy investments. Taxpayers who invest in renewable energy are allowed to receive an 80 percent refund as an investment tax credit. Taxpayers receive the full refund in the first year if 80 percent of the credit is $750,000 or less. If the amount is over $750,000, they receive up to $750,000 in rebates per income tax year until the total amount refunded reaches 80 percent of the investment tax credit. Finally, the bill expands the definition of renewable energy investment to include all eligible energy resources that comply with Colorado’s renewable energy standard.
  • Nebraska enacted legislation (L.B. 424) that expanded property tax exemptions to include a larger variety of renewable energy sources. Previously only wind energy generation facilities were exempt from property tax. This bill established exemptions for solar, biomass or landfill gas for electricity generation.
  • Legislation in New York (A.B. 3009) expanded state and local sales and use tax exemptions for solar energy. The bill included exemptions for third party-owned solar energy systems that provide solar electricity to both residential and commercial customers, and included exemptions for equipment used in solar energy production. Finally, the bill allowed local governments of counties and cities (with a population of at least 1 million) to expand local sales tax exemptions to include solar energy equipment.
  • North Carolina enacted two pieces of legislation regarding tax incentives. The first bill (H.B. 41) established that taxpayers can receive a credit equal to 35 percent of the cost of constructed, purchased or leased renewable energy. The second bill (S.B. 372) extended the tax credit for renewable energy property by one year for all renewable projects that are substantially completed by the beginning of 2016.
  • Bills in North Dakota and Ohio extended tax incentives for renewable energy systems. The North Dakota bill (H.B. 1228) extended the carryover period for excess tax credits from wind energy devices an additional 10 years, for a total of 30 taxable years. The Ohio bill (H.B. 64), among other provisions, extended tax exemptions for renewable energy projects through 2021 if certain conditions are met.
  • A Virginia bill (H. B. 1297) created a new tax classification for machinery and tools, including repair and replacement parts, used in renewable energy production. The bill allowed counties and cities to establish a different tax rate for renewable energy production equipment, however it specified that the rate must be lower than that for the general class of machinery and tools. 

Solar Energy

Solar panelsAccording to the U.S. Energy Information Administration, both utility-scale and distributed solar experienced significant growth in generation capacity in 2015. Solar ranked second in new energy production capacity added, after wind and before natural gas, making up 29.5 percent of added capacity. California, Nevada and North Carolina were among the states to add the most solar generation capacity. In the 2015 session, legislatures in at least 14 states, Puerto Rico, and Washington D.C. enacted solar energy related bills.

Legislation was enacted in: Arizona | California (A.B. 693, S.B. 489 and S.J.R. 10) | Colorado (H.B. 1284, S.B. 46 and S.B. 254) | Connecticut | Georgia | Iowa | Illinois | Louisiana (H.B. 749 and H.B. 779) | Maryland (H.B. 1087, S.B. 353 and S.B. 398) | Nebraska (L.B. 424 and L.B. 525) | New York | Oregon (H.B. 2941 and H.B. 3492) | Texas (H.B. 706, H.B. 745, S.B. 991 and S.B. 1626) | Utah | Virginia (H.B. 2237, H.B. 2267 and S.B. 1009) | Vermont | Puerto Rico | Washington, D.C. (Bill 454 and Proposed Resolution 392). These bills address topics including solar panel recycling and disposal, third party ownership of rooftop solar systems, community net metering programs and tax exemptions for solar energy systems and equipment. 
 

Notable Enacted Legislation Includes

  • California enacted legislation (S.B. 489) concerning solar panel recycling and disposal, making it the first state to enact legislation regarding solar photovoltaic (PV) module disposal. The bill initiated a process for the reuse, recycling and disposal of end-of-life PV modules, however it did not specifically develop a recycling program. By allowing the Department of Toxic Substances Control to designate PV modules as universal waste, instead of hazardous waste, the bill permitted other entities to develop recycling and disposal programs for PV modules. The legislation placed the responsibility of end-of-life management on solar panel manufacturers and the solar industry. Finally, the bill encouraged solar manufacturers to design modules that have longer lifetimes.
  • A bill in Georgia (H.B. 57) authorizes third-party ownership (TPO) and financing of rooftop solar systems, allowing homes and businesses to install solar without any upfront costs. All residential solar technologies (under 10 kilowatts) and commercial solar technologies (a generation capacity less than 125 percent of the property’s annual peak demand) are eligible for third-party financing. Additionally, the bill provides guidelines on properties with multiple premises; clarifies that interconnection expenses must be paid for by retail customers or the third party financer; and addresses liability.
  • Legislation in Illinois (S.B. 1312) amended the Public Utilities Act to require the Illinois Commerce Commission to include information on solar energy in its annual report, including a summary of residential and small business solar photovoltaic adoption. The bill also requires the Commission to outline the financing, installation and valuation barriers to solar photovoltaic system adoption encountered by these customer classes.
  • A Maryland bill (S.B. 398) required the Public Service Commission to establish the Community Solar Energy Generating System Pilot Program, a virtual net metering pilot program. The bill defined program terms, established qualifications for community solar energy and a virtual net metering pilot program. The bill defined program terms, established qualifications for community solar energy generating systems and mandated that a study be conducted at the end of the program in 2019.
  • Virginia legislation (H.B. 2267) created the Virginia Solar Energy Development Authority, and tasked the authority with facilitating the development of the solar industry in the state. Working with investor-owned utilities, the authority will facilitate the deployment of at least 400 megawatts of solar energy projects by 2020. Additionally, the authority will create programs to increase financing opportunities for solar energy, establish public-private partnerships to increase the number of solar energy generation systems and also provide cost sharing opportunities for the installation and operation of solar facilities through partnerships.
  • Washington, D.C. enacted legislation (Bill 454) that established a multiyear contract with a commercial-scale solar provider to develop on-site solar generation systems for at least 34 Washington, D.C. government buildings and authorized a solar power purchase agreement for 20 years. 

Wind Energy

Wind turbines.According to the U.S. Energy Information Administration, the wind energy industry added the most electric generation capacity in 2015, making up 35 percent of added capacity and surpassing both solar and natural gas. States in the central region of the country—Oklahoma, Kansas and Iowa—added the most capacity after Texas, which accounted for 42 percent of total wind additions. During the 2015 legislative session, legislatures enacted at least 20 bills related to wind energy. These bills, among other provisions, made amendments to existing wind energy agreements, established power purchase agreements, revised taxation of wind energy production and production facilities, and concerned regulations for wind energy permitting and siting.

Approximately 11 states and Washington, D.C. enacted legislation including: Alabama (H.B. 629 and S.B. 459) | Colorado | Illinois (H.B. 3523 and S.B. 920) | Maine (H.P. 562, H.P. 631, S.P. 449 and S.P. 546) | Montana | New Jersey (S.J.R. 112) | Nebraska (L.B. 412 and L.B. 525) | North Dakota (S.B. 2037 and S.B. 2055) | Oklahoma | South Dakota (H.B. 1034 and S.B. 180) | Texas (H.B. 706 and S.B. 991). 

Enacted Legislation of Particular Interest Includes

  • Legislation in Colorado (H.B. 1121) made amendments to statutes on wind energy agreements between landowners and developers. Among other provisions, this bill requires wind energy agreements to be recorded in the Office of the County Clerk and Recorder before they are considered binding by parties other than those directly engaged in the wind energy agreement, and requires wind energy developers to record a release of the wind energy agreement after it has expired or been terminated. The bill also established that a wind energy agreement expires if no wind energy development or generation occurs for a continuous 15-year period.
  • Illinois enacted legislation (H.B. 3523) concerning agricultural land impacted by commercial wind energy facility construction and removal. The act requires commercial wind energy operators of facilities located on private property to include an agricultural impact mitigation agreement as a part of the permit application or extension process.
  • A bill in Maine (S.P. 449) requires small-scale wind energy development projects to obtain a permit before beginning construction. To obtain a permit, applicants must demonstrate that the proposed project will be constructed to include sufficient public safety measures, that it will be constructed in a manner that reduces the harmful effects on endangered and threatened species and essential wildlife habitat, and that the project will not significantly compromise the state’s scenic resources.
  • Legislation in Washington, D.C. (Bill 21) established a 20-year wind power purchase agreement with South Chestnut LLC to provide the District’s government building with wind power. 

Additional Legislation of Interest

In addition to the categories listed above, states enacted legislation in several other policy areas listed below.

  • Bills in Missouri, Nevada, New Hampshire and Rhode Island required studies to be conducted on renewable energy development.
  • States enacted a number of bills concerning renewable energy storage (Oregon and Washington) and renewable energy resources including geothermal (Idaho and Oregon), anaerobic digestion (Connecticut and Maine) and biomass (Indiana, Minnesota S.B. 5 and S.B. 698,and Oregon).
  • Several states enacted legislation appropriating funds, as well as establishing benefits programs or grants for renewable energy projects and research and development. States include: Florida, Hawaii (H.B. 1513 and S.B. 521), Maryland, Montana, Nevada, South Carolina and Washington.
  • Legislation related to renewable energy installations in state buildings and on state lands was enacted in several states. Examples include a bill in Alaska allowing renewable energy development in Arctic National Wildlife Refuge region, legislation in Georgia allowing renewable energy systems in schools, a bill in Illinois that created a task force to consider renewable energy development on state-owned properties, a Puerto Rico bill that allowed renewable energy projects on state lands and legislation in Vermont allowing state-owned property at a correctional facility to be leased for solar projects.

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