The U.S. added more than 27 gigawatts (GW) of electricity generating capacity in 2016. Approximately 16.4 GW, or 60 percent, of these additions were utility-scale wind and solar. According to the U.S. Energy Information Administration (EIA), 2016 marked the third consecutive year of renewable technologies accounting for more than half of new generating capacity additions.
In total, renewable energy sources provided roughly 15 percent of U.S. electricity in 2016. Hydro power made up about 7 percent of generation, wind provided almost 6 percent, biomass accounted for approximately 2 percent, solar accounted for about 1 percent and geothermal power accounted for less than 1 percent of electricity generation.
During the 2016 session, legislatures in 31 states, Washington, D.C. and Puerto Rico enacted more than 140 renewable energy related bills. The bills enacted covered a broad range of topics, including:
- Consumer protection
- Energy storage
- Green jobs
- Siting and permitting requirements for renewable energy facilities
- Net metering and rate design
- Renewable portfolio standards
- Tax incentives
Presented below is an overview of the state renewable energy policy landscape for the 2016 legislative session. The 2015 Renewable Energy Legislative Update and the 2014 Renewable Energy Legislative Update provide information on previous sessions.
Omnibus Renewable Energy Bills
Several states enacted comprehensive legislation that included multiple renewable energy provisions. The bills spanned a broad swath of renewable energy topics, ranging from Renewable Portfolio Standards (RPS) and net metering policies, to shared renewable energy programs and Property Assessed Clean Energy (PACE) financing. While several of these bills contained other important energy provisions, this section will focus on those specific to renewable energy.
Renewable Energy Omnibus Bills Include:
- An Illinois bill (S.B. 2814) included provisions related to the state’s RPS policy and established new programs. The bill made changes to the state’s RPS policy, streamlining funding for RPS compliance projects and placing the state' utilities at the center of the payment stream. The legislation retained state’s current RPS requirement of 25 percent by 2025. The bill also includes provisions to ensure that a mix of utility-scale wind and solar, community solar and rooftop solar will be used to meet the RPS target. It requires utilities to procure the equivalent of approximately 3 gigawatts (GW) of solar and 1.3 GW of wind from new projects. Within the solar new-build requirement, the legislation contains carve-outs for community, rooftop, utility-scale and brownfield solar. Senate Bill 2814 also authorized virtual net metering for shared renewables projects and required utilities to allow virtual net metering customers to participate in net metering. The bill also preserved net metering for rooftop solar projects, allowing retail-rate net metering for solar customers to continue until capacity reaches the original cap of 5 percent of utility’s peak demand. Once solar energy adoption reaches that point, the bill directs state regulators to launch a stakeholder process to evaluate the costs and benefits of rooftop solar and initiate a new process for compensating distributed generation customers. Furthermore, the bill established the “Illinois Solar for All” program, which will provide solar deployment and job training opportunities for low-income communities.
- Legislation enacted in Massachusetts (H.B. 4568) included provisions related to the procurement of solar, off- and on-shore wind, hydroelectric and energy storage resources and expanded the state’s PACE financing program. The bill requires distribution companies to solicit proposals for offshore wind and enter into long-term contracts for 1.6 gigawatts (GW) of offshore wind by June 2027. The bill also requires distribution companies to solicit approximately 1,200 MW of hydropower or other renewable energy resources including on-shore wind and solar. Additionally, the bill requires the Massachusetts Department of Energy Resources to determine whether to set targets for electric companies to procure energy storage systems. Finally, the bill significantly expanded statutory language on commercial Property Assessed Clean Energy (PACE) financing. While the state had previously enabled commercial PACE financing, House Bill 4568 adopted specific commercial PACE language and established a sustainable energy program to begin launching programs in the state.
- Two bills (S.B. 437 and S.B. 438) enacted in Michigan included several provisions related to renewable energy. First, the bills increased the state’s Renewable Energy Standard from 10 percent to 15 percent renewable energy by 2021. Additionally, the bills set a nonbinding goal to meet 35 percent of the state’s power needs through a combination of renewable energy and energy conservation by 2025. The bills also direct the Michigan Public Service Commission to establish a distributed generation tariff process.
- Rhode Island enacted a bill (H.B. 8354) that, among other provisions, authorized several policies, made changes to the state’s net metering program and amended the state’s tax incentives for renewable energy systems. The bill authorized third-party financing and allowed third party-owned systems to be eligible for the state’s net metering policy. It also increased the capacity limit for net metered systems from 5 MW to 10 MW. Additionally, the bill authorized virtual net metering for shared renewable energy projects. Participating projects are capped at 10 MW and must have a minimum of three participants or at least one low- or moderate-income customer. The bill capped the total amount of community net metering at 30 MW until the end of 2018, after which the state’s public utilities commission will decide whether to expand or modify the statewide cap. Finally, the bill also included tax provisions that exempt qualifying renewable energy systems and associated equipment used in the residential and manufacturing sector from property taxes.
Renewable Portfolio Standards and Renewable Energy Certificates
Renewable portfolio standards (RPS) and goals require utilities to sell a specified percentage or amount of energy from renewable sources, such as wind and solar. At least 29 states have renewable portfolio standards. Renewable energy certificates or credits (RECs) represent the environmental attributes of electricity generation through qualifying renewable energy resources. RECs are earned by renewable energy producers for electricity generated from renewable energy sources. These certificates are important to meeting state renewable portfolio standards, either for distributed generation carve-outs or broader utility requirements. In the 2016 legislative session, at least six states and Washington, D.C. enacted legislation related to RPS and RECs including: California (S.B. 840, S.B. 859 and A.B. 1937), Illinois (S.B. 2522 and S.B. 2814), Michigan (S.B. 437 and S.B. 438 ), New Hampshire, Oregon, Rhode Island (H.B. 7413 and S.B. 2185) and Washington, D.C.
Enacted legislation of particular interest includes:
- Legislation in Oregon (S.B. 1547) made several amendments to the state’s RPS and REC programs, among other provisions. The bill increased the state’s RPS requirement to 50 percent by 2040 and established a carve-out of 8 percent by 2025 for small-scale, community renewable energy projects (20 MW or less). It also amended provisions related to banking and carrying forward renewable energy credits. Additionally, the bill authorized biomass facilities that generate thermal energy for a secondary purpose to receive renewable energy certificates (1 megawatt-hour is equal to 3,412,000 BTU).
- A Rhode Island bill (H.B. 7413) extended the state’s Renewable Energy Standard (RES) to 2035 and required the RES to increase by 1.5 percent annually. The bill raised the amount of retail electricity sales required to come from renewable energy sources to 38.5 percent by 2035.
- Washington, D.C. legislation (Bill 650) increased the District’s RPS to 50 percent by 2032 and increased the carve-out for solar energy to 5 percent. The bill also added heating and cooling systems using wastewater to the list of Tier 1 renewable sources.
Net Metering and Rate Design
Net metering policies allow distributed generation customers to sell excess electricity to the utility at the retail rate and receive credit on their utility bill. Currently, at least 37 states offer net metering. At the policy’s height, 44 states, Washington, D.C. and several territories offered net metering. As distributed generation continues to grow, legislatures in many states are debating the best way to balance customer demand for distributed generation with the impacts that new technologies have on the electric power grid. Recently, several states have made or considered changes to their net metering policies or have adopted alternative compensation methods for distributed energy resources. Legislation related to net metering and rate design was enacted in at least seven states and Washington, D.C. in 2016, including: California (A.B. 1637, A.B. 1773, A.B. 1979, S.B. 840 and S.B. 859), Connecticut (H.B. 5242, H.B. 5427, H.B. 5496 and S.B. 394), Illinois, Massachusetts, Michigan (S.B. 437 and S.B. 438), New Hampshire (H.B. 1116 and S.B. 378), Rhode Island and Washington, D.C. (Bill 812 and Bill 669). These bills include provisions related to state net metering and shared renewables policies, renewable feed-in tariffs and rate design.
Notable legislation includes:
- Connecticut enacted two pieces of legislation related to the state’s virtual net metering policy. One bill (H.B. 5242) authorized agricultural customers to lease or enter into long-term contracts for agricultural virtual net metering facilities. The second bill (H.B. 5496) requires virtual net metering facilities to be operational within 18 months of the date that the Department of Energy and Environmental Protection issues the final permit to operate.
- Legislation in Massachusetts (S.B. 1979) increased the aggregate net metering capacity limit to 7 percent of a utility’s peak load for private entities and 8 percent of the utility’s peak load for municipalities or governmental entities. The bill also authorized utilities to adopt a minimum reliability contribution, or minimum bill, for net metered customers—subject to approval by the Department of Public Utilities (DPU)—once the state has reached 1,600 MW in aggregate solar capacity. The bill authorizes the DPU to exempt or modify these requirements for low-income customers.
- A New Hampshire bill (H.B. 1116) amended the state’s net metering policy by increasing the aggregate capacity limit from 50 MW to 100 MW. The bill also required each utility to set aside 80 percent of their share of aggregate capacity for facilities with a capacity of less than 100 kW and 20 percent of their share for facilities with a capacity between 100 kW and 1 MW. Additionally, the bill directs the Public Utilities Commission to initiate a proceeding to develop new alternative net metering tariffs and to issue an order initially approving the tariffs within 10 months of the bill’s effective date.
- Two bills (Bill 812 and Bill 669) enacted in Washington, D.C. amended the credit rate for community renewable energy facilities. The bills restored the full retail rate credit to residential customer subscribers for power sent back to the grid from community renewable energy facilities.
Siting, Permitting and Interconnection
State siting, permitting and interconnection policies are essential components of state renewable energy policy and can alter the barriers to the expansion of new renewable energy projects. Siting and permitting policies can determine setback requirements, project siting standards and affect the interconnection process. Interconnection policies govern the process of connecting renewable energy systems to the electric grid. A streamlined interconnection processes can reduce project delays and additional costs while expediting a project’s return-on-investment.
Legislation related to siting, permitting and interconnection for renewable energy facilities was enacted in at least 10 states in 2016, including: Arizona, California (A.B. 1932 and A.B. 2861), Hawaii (H.B. 1170 and H.B. 2077), Massachusetts (H.B. 4565 and H.B. 4412), Maryland (H.B. 440 and S.B. 811), Minnesota, Nebraska, Rhode Island, Utah and Vermont.
Notable Legislation Includes:
- A Hawaii bill (H.B. 2077) authorized small hydroelectric facilities, such as pumped hydro storage facilities, to be located on agricultural lands provided that they do not affect the use of agricultural land or water availability.
- Legislation enacted in Massachusetts (H.B. 4565) permitted renewable energy generating sources to be sited on land primarily used for agriculture or horticulture. The renewable energy facility must produce energy for use on the land, farm or adjacent properties belonging to the same owner. Renewable energy facility production is limited to 125 percent of the annual energy needs of the land or farm.
- Maryland companion bills (H.B. 440 and S.B. 811) require the Public Service Commission (PSC) to implement expedited processes for connecting new solar photovoltaic systems to the electric grid, however they allow the PSC some flexibility. The bills require utilities to issue final approval to operate within 20 business days of the completion of the installation process. Utilities must have at least a 90 percent compliance rate.
- A Rhode Island bill (H.B. 8180) requires the Office of Regulatory Reform to establish a task force to prepare a report with recommendations for a statewide permitting process for small residential and small commercial rooftop solar projects. By Jan. 31, 2017, the task force is required to submit proposed legislation to the governor, senate president and speaker of the house that would establish a statewide solar permitting process as recommended in the report.
- Utah passed legislation (H.B. 330) amending the state fire code. The bill incorporated the 2015 edition of the International Fire Code and included modifications to solar PV system requirements that allow for a reduction in roof pathways and clear access width if the modifications are approved by the fire code official.
- Legislation enacted in Vermont (S.B. 260) made changes to the state’s energy siting process and provides for the development of renewable energy resources and the identification of locations for renewable energy generation. The bill also created a one-year pilot program that sets aside a portion of the state’s existing standard offer program for renewable energy projects sited in “preferred locations,” such as brownfields and landfills.
Financing programs can reduce the amount of up-front capital required for investment in renewable energy technologies and increase adoption of renewable energy systems. Financing mechanisms include loans, Property Assessed Clean Energy (PACE), on-bill financing and state green energy banks. Additionally, to increase access to renewable energy for low- and moderate-income (LMI) customers some states have created innovative financing programs that include provisions for LMI customers, such as those that lower credit score requirements or eliminate the need for upfront capital investments.
During the 2016 legislative session, at least 10 states enacted legislation related to financing for renewable energy, including: Alaska, California (A.B. 2693 and A.B. 2618), Colorado, Connecticut, Hawaii (H.B. 801 and H.B. 2593), Louisiana, Massachusetts (H.B. 4565 and H.B. 4568), Maryland (H.B. 105, H.B. 387, S.B. 173, S.B. 726 and S.B. 912), Nebraska and Utah.
Examples of Enacted Legislation Include:
- California passed legislation (A.B. 2693) that established a statewide consumer protection framework for residential Property Assessed Clean Energy (PACE) financing. The bill established that property owners may cancel their PACE contracts within three business days. Prior to signing any contractual paperwork, property owners are provided a document with financing estimates, similar to federal mortgage lending practices. The bill also restricts parties from declaring specific monetary or percentage estimates on property value changes.
- A Louisiana bill (H.B. 766) repealed their PACE statutes, ending the state’s Sustainable Energy Financing Districts program. Louisiana’s PACE program authorized local governments to establish programs that allowed commercial property owners to borrow money for energy improvements, including renewable energy, and repay the amount through a special assessment on their property.
- Maryland enacted companion bills (H.B. 105 and S.B. 173) that removed the size limitation on renewable energy projects that property owners can finance through local clean energy loan programs. Previously, Maryland prohibited commercial renewable energy projects larger than 100 kW from participating in local clean energy loan programs. Another set of companion bills (H.B. 387 and S.B. 912) requires the Maryland Clean Energy Center to conduct a study to determine optimal design and implementation strategies for the state’s Clean Energy Loan Program and report study findings to the legislature.
- A Nebraska bill (L.B. 1012) authorized PACE financing in the state. The bill allows municipalities to create clean energy assessment districts and enter into contracts with qualifying property owners and third parties to provide financing for energy upgrades, including renewable energy projects, on qualifying properties. The program caps single PACE bonds at $5 million and financing is limited to privately-owned buildings, however municipalities are allowed to fund projects greater than $5 million and can extend financing to publicly-owned buildings if approved by a public vote. Both commercial and residential properties are eligible, however residential properties are required to adopt subordinate liens.
- Enacted legislation in Utah (H.B. 244) expanded the state’s options for third-party financing by exempting third party providers from regulation as public utilities. Additionally, the bill includes consumer protection provisions that require third party agreement contracts to include certain information.
Tax incentives are a common type of financial incentive for renewable energy projects. These incentives reduce the cost of installing systems by reducing tax liability, mitigating or eliminating any post-installation increases in property value, or providing exemptions from or refunds of sales taxes. During the 2016 legislative session, at least 17 states enacted legislation related to tax incentives for renewable energy, including: Alaska, Arizona, Delaware, Florida (H.J.R. 193 and H.B. 195), Hawaii, Idaho, Iowa (H.F. 2468 and S.F. 2309), Illinois, Louisiana, Maryland, Missouri, New York, Rhode Island (H.B. 7454 and H.B. 8354), South Carolina, South Dakota, Vermont and Virginia (H.B. 80 and H.B. 1305).
Examples of Enacted Legislation Include:
- An Idaho bill (H.B. 534) restructured the state’s method of taxation on commercial solar energy systems by exempting solar energy systems from property tax and levying a tax on production. Producers will now be taxed at 3.5 percent of gross solar energy earnings.
- South Carolina enacted legislation (H.B. 3874) that expanded the state’s personal tax credit for certain renewable energy systems to include geothermal energy projects. Taxpayers who install a geothermal energy project between Jan. 1, 2016 and Jan. 1, 2019 can claim a credit of 25 percent of the costs of purchasing and installing the project.
- A South Dakota bill (H.B. 1177) extended the state’s alternative tax to apply to solar facilities that are 5 MW and larger. Solar facilities are required to pay an annual tax of $0.00090 per kilowatt hour of electricity produced and an annual tax equal to $3 per kilowatt of capacity of the facility. This tax replaces all other property taxes levied on solar facilities.
- Legislation enacted in Virginia (H.B. 1305) modified the tax exemption for solar facilities to allow projects with a capacity of 20 MW or less that have filed interconnection requests before Dec. 31, 2018 to qualify for a full property tax exemption. The bill also allowed solar facilities greater than 20 MW that begin construction before Jan. 1, 2024 to qualify for an 80 percent property tax exemption. The credit expires June 30, 2027.
Renewable energy generation grew significantly in 2016. The wind energy industry added more than 8,200 MW of new capacity, bringing the country’s cumulative total of installed wind capacity to more than 82 gigawatts (GW). Similarly, solar experienced explosive growth in 2016 by nearly doubling in its annual record for installations—with 14,800 MW of new solar PV installed. Solar also represented 39 percent of new capacity additions for all fuel types in 2016. In total, 42.4 GW of solar capacity had been installed in the U.S. by the end of 2016. Last year, there was also increased activity around an emerging technology: offshore wind. In 2016, the first U.S. offshore wind farm—Deepwater Wind’s Block Island Wind Farm—came online, and several states enacted legislation related to offshore wind during the 2016 legislative session.
During the 2016 legislative session, at least 15 states and Washington, D.C. enacted technology-specific legislation for biomass, solar, trash-to-energy or wind resources including: Arizona, California (A.B. 1637 and S.B. 859), Delaware, Florida (H.B. 195 and H.J.R. 193), Illinois, Louisiana, Massachusetts (H.B. 4568 and S.B. 1979), Maine, Minnesota (H.F. 2749, H.F. 3353 and S.F. 3018), Oregon (H.B. 4037 and S.B. 1547), Rhode Island, South Dakota, Utah (H.B. 330 and S.B. 115), Virginia (H.B. 1305 and S.B. 743), Washington and Washington, D.C. (Bill 650, Bill 758 and Resolution 773).
Notable enacted legislation includes:
- California enacted legislation (S.B. 859) requiring electric utilities to enter into five-year contracts for 125 megawatts of biomass capacity. At least 80 percent of the biomass for eligible facilities is required to come from sustainable forestry management, which includes the removal of dead and dying trees from high fire hazard zones. The bill also established a working group to expand woody biomass markets and make recommendations to the legislature on further action.
- A Connecticut bill (S.B. 334) modified the state’s public procurement of renewable energy requirements. The bill removed the requirement that 60 percent of the electric generation supplied by Class II renewable energy sources be from trash-to-energy facilities.
- A bill enacted in Massachusetts (H.B. 4568), among other provisions, required distribution companies to solicit proposals for offshore wind and enter into long-term contracts for 1.6 gigawatts (GW) of offshore wind by June 2027.
- Oregon enacted legislation (H.B. 4037) that creates a Solar Incentivization Fund to provide a $0.005 per kilowatt-hour (kWh) production incentive for utility-scale solar generation with a capacity of between two and 10 megawatts (MW). Projects must be in service within the first year of receiving the incentive to earn full credit, and the incentives will continue for five years. Applications to participate in the program will be accepted through early January 2017 or until 150 MW is approved. Another bill (H.B. 1547) established Oregon’s community solar program. The bill required the Oregon Public Utilities Commission to determine a value of solar and establish rules and requirements for community solar programs by July 1, 2017. The bill mandated that 10 percent of the program’s total generating capacity must be reserved for low- and moderate-income customers.
- A Washington resolution (H.R. 4664) addressed the end-of-life of solar photovoltaic panels. The resolution established a stakeholder process to develop recommendations for the financing, takeback and recycling of solar modules sold before July 1, 2016 and places the responsibility of takeback and recycling of solar modules on the manufacturer. The stakeholder process includes solutions for takeback processes when a manufacturer is no longer solvent or doing business at the end of the module’s useful life.
- A Washington, D.C. bill (Bill 758) approved a contract with DC Solar to deploy solar systems at approximately 15 district government buildings and to authorize payment for the power generated by the system for a 20-year period. A second bill (Bill 650) established the Solar for All Program, which is designed to increase solar access for senior citizens, small local business owners, nonprofits and low- and moderate-income households.
Other Notable Legislation
Several states enacted notable legislation that does not fall under the categories listed above. This section includes notable enacted legislation related to green jobs, energy storage and consumer protection.
The renewable energy sector saw a significant uptick in jobs in 2016. According to The Solar Foundation’s National Solar Jobs Census, the solar workforce increased by more than 51,000 workers in 2016, a 25 percent increase over 2015. In total, the census reported that there were more than 260,000 solar workers in 2016. Similarly, the American Wind Energy Association reported the creation of more than 14,500 full-time jobs, bringing the total of workers employed by the wind sector to more than 102,000 workers. To encourage further job creation, workforce development and economic growth in the renewable energy sector, states have created green jobs policies. Examples of enacted legislation related to green jobs include:
- Rhode Island enacted several pieces of legislation related to green jobs. Two of the enacted bills (H.B. 7890 and S.B. 2328) required the State Career Pathways System to provide workforce training programs and employment opportunities in the clean energy sector. A resolution (S.R. 2326) requested that the Department of Labor and Training include green industries partnerships in the next solicitation for the state’s Real Jobs RI program and implementation grants.
Storage can help to integrate renewable energy and increase grid reliability and resiliency. Recently, the adoption of energy storage technologies has increased rapidly, and in 2016 the U.S. added approximately 207 megawatts (MW), or 257 megawatt hours (MWh), of energy storage. As of the end of 2016, the U.S. had deployed approximately 622 MW, or 661 MWh, of energy storage. At least five states enacted legislation related to energy storage and renewable energy sources during this 2016 session including California (A.B. 33 and A.B. 2868), Connecticut, Massachusetts, Oregon and Utah. Notable enacted legislation includes:
- A California bill (A.B. 33) requires the California Public Utilities Commission (CPUC) to evaluate and analyze the potential for long-duration bulk energy storage to help integrate renewable energy sources into the electrical grid. A second piece of enacted legislation (A.B. 2868) directs utilities to file applications for programs and investments to accelerate the deployment of distributed energy storage systems. The bill requires utilities to deploy up to 500 MW of additional storage capacity, of which no more than a quarter can be behind-the-meter storage. Additionally, the bill requires the CPUC to prioritize energy storage projects for the public-sector and low-income customers.
- Connecticut enacted legislation (S.B. 272) that authorized the Connecticut Department of Energy and Environmental Protection to use grants and loans awarded under the Microgrid Program to provide matching funds and low-interest loans for energy storage systems as well as distributed energy generation projects.
Consumer protection is an increasing area of attention in distributed energy policy, specifically for distributed solar. These policies ensure that individual homeowners and small business owners make fully informed decisions about whether to enter into contracts for solar energy and that they understand what the implications may be. In 2016, several states enacted legislation related to consumer protection including Arizona, California and Utah. California’s legislation established a consumer protection framework for residential PACE financing. More information on this bill is included in the “Financing” section. Another example of enacted legislation is:
- An Arizona bill (S.B. 1417) amended the state’s consumer protection provisions for solar energy devices. The bill prohibits solar companies from installing solar panels until the homeowner’s utility has approved the application to connect to the grid, unless the utility takes more than 60 days. Additionally, the bill requires certain financial details to be included in solar contracts. The bill also: requires that the solar energy device is warranted for at least two years or includes an energy production output guarantee; requires that buyers or lessees of distributed energy systems separately acknowledge several provisions included in the financing, sale or lease agreement; and prohibits recurring payments under distributed energy system leases to begin before the system is energized and interconnected.
In addition to the categories listed above, states enacted legislation on several other topics.
- Several states enacted legislation appropriating funds, as well as establishing or extending incentive programs, funds or grants for renewable energy projects and research and development. States include: Massachusetts (H.B. 3881 and H.B. 4412), Rhode Island (H.B. 7454 and S.B. 2450) and Vermont.
- A handful of states enacted legislation related to renewable fuels and renewable fuels standards. Hawaii enacted legislation establishing a renewable fuels production tax credit. A bill enacted in Iowa extended tax credits for renewable fuels, and an Iowa resolution urged the president and the Environmental Protection Agency to continue to support the Renewable Fuels Standard.
- A small number of states enacted legislation related to net-zero buildings. Examples include a bill in Hawaii that established the sustainable school initiative that set the goal of all public school facilities becoming net-zero energy by Jan. 1, 2035, and legislation in Washington that required a new ferry terminal to be net-zero energy.