Posts Tagged ‘Proposed solar legislation’

Magic and Sunrays in the Air

Monday, August 15th, 2011

In a neighborhood where painting your door a different color requires approval from a presidentially appointed commission, Georgetown Energy is aiming to permanently change the view of dozens of houses – from the sky.

Georgetown Energy, a student consultancy devoted to helping residents convert to solar electricity, is heading a monumental solar project that involves turning 43 quintessential student townhouse residences to solar electricity in the midst of Washington DC’s historic Georgetown district. Although it is a long-term project to be enjoyed by the generations after many of the current members of the group have graduated, Georgetown Energy students believe that the rewards of such an innovative project are well worth the effort.

What magic surrounding solar coaxed students to become involved so profoundly?  First, there is a substantial payback for the investment. In a solar lease contract signed between Georgetown University, which owns the student townhouses, and Solar City, a leading national solar installation company, adding 96.6 kW of solar capacity to 43 townhouses will require an initial investment of about $164,000, much less than if the University were to purchase the solar panels. Although Georgetown Energy has partnered with SolarCity for this project and used its solar lease scheme as a model, the project will be offered to various installers at its final stages. In the innovative solar lease scheme, the University will “lease” the roof of each townhouse to the installer, which will design, own, and operate a solar photovoltaic system on each townhouse.  The installer will then sell the electricity produced from each solar project to the residents of the townhouse at a lower price than the traditional competing utility. Savings increase every year and over the 20 years duration of the solar lease contract, students would save a total of $458,856 in their electricity cost. After the contract is over, the student body can decide whether to buy the panels at a low price.

Indeed, another charming aspect of the proposal is that everything is student-owned. Originating from the need to allocate a 3.4 million dollar defunct student endowment, the solar investment will take up only a portion of the available fund and coexist with other student proposals as well as generate profit. Ideally, Georgetown Energy sees the proceeds creating a fund for related projects to further environmental awareness and energy studies on campus.

Is there anything else in it for the university, the students, and the DC area? Sol Systems, a strong force in the fight for better solar incentives in DC, believes so. Not only is being involved in such a movement ideal preparation for a career in renewable energy (two recent graduates and former members of Georgetown Energy actually work at Sol Systems), but there is much potential for the greater DC area too. Of course, cleaner air for the district tops the list. It may even attract more students interested in environmental and energy issues and demonstrate the feasibility of clean energy investments, creating a virtuous cycle of environmental awareness and action in the university community. Perhaps the project may even set an example of a successful clean energy investment that some students may follow individually in the future. Lastly, it is a modern display of service to the community, the crux of the founding Jesuit ideals of Georgetown University.

What stage is the project at right now? In April 2011, a student commission voted in support of the proposal. Now Georgetown Energy students are working with University officials on the details. These include contractual issues, billing mechanisms, pricing, and structural and electrical issues with the houses. The Georgetown Energy students are learning some concrete skills needed for evaluating any type of construction investment. The work done from June-August 2011 will culminate in a final recommendation to be handed to the University on September 1st after which Georgetown Energy students will have to persuade the rest of the student body off their feet for a concluding student referendum and choose from final proposals from competing vendors and permitting.  If all goes well, the battle will be won one year from today. The panels will be constructed in Fall 2012 and convert ordinary sunrays to a unique opportunity for revenue and intellectual growth – truly magic!

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What House Budget Means for Solar

Sunday, February 27th, 2011

Early on Saturday, February 19th, 2011, the House passed its version of this year’s budget, which was highlighted by $61 billion in cuts from federal programs. The bill will now move to the Senate where there will likely be amendments and eventual compromise before President Obama signs the bill. Nevertheless, it is an interesting time to examine what this budget and drive to reduce the federal deficit means for solar financing and the solar industry in general.

President Obama has made it clear that, although his priority is to trim the federal deficit, he is not willing to sacrifice funding for clean energy research and development. For the 2012 fiscal year, Obama unveiled a $29.5 billion budget request for the Department of Energy (DOE), which includes $3.2 billion for the DOE’s Office of Energy Efficiency and Renewable Energy (EERE)– a 44% increase over the current appropriation. This request includes an 88% increase in funding for the solar EERE program specifically.

The budget passed by the House, however, is more aggressive in its attempts to reduce the federal deficit and would cut billions of dollars from federal energy and environmental programs. In particular, the Advanced Research Projects Agency-Energy, which invests in early stage and risky projects, would be hit hard. Similarly, the EERE would lose 35% of its budget relative to last year, a stark contrast to the White House’s plans. The budget would also cut funding for several DOE loan guarantee programs.

The Solar Energy Industries Association (SEIA) has characterized these cuts as “disastrous”. Currently, solar developers use the DOE loan guarantee programs to help finance solar projects at low interest rates, and these cuts could halt solar projects around the country. However, the chances of the House budget passing into law in its current form are very slim. Senate Democrats and President Obama will likely push back against dramatic reductions in the DOE loan guarantee program.

Despite the fact that House Republicans are currently proposing cuts to clean energy funding, it is important to highlight that a GOP Congress has historically supported solar. The first tax credits for solar were passed in a 2005 Energy Bill by a Republican Congress and later extended by President George W. Bush.

Both parties see the job growth opportunities in the solar industry. Solar employers expect jobs to increase by 26 percent over the next year, and lawmakers from both parties share concerns over the current U.S. unemployment rate.

It is important to note that no matter what happens with the Federal Budget, there will be states that maintain policies promoting solar deployment and allowing for job growth in the renewable energy industry. For example, more and more states are adopting a Renewable Portfolio Standard (RPS) that contains a solar carve-out requiring utilities to procure a certain percentage of their electricity from a solar source. These solar carve-outs create markets for Solar Renewable Energy Credits, or SRECs. An SREC is a tradable credit that represents all the clean energy benefits of electricity generated from a solar electric system. SRECs are a market-based mechanism that do not rely of state or federal funding, so SRECs will help system owners finance their solar energy systems regardless of federal cuts to clean energy programs.

The House resolution on the budget, although likely not to pass in its current form, would certainly be detrimental to the health of the solar industry, particularly the reductions in the DOE loan guarantee program. We hope lawmakers will recognize the job growth and economic opportunity that the solar sector represents, instead of seeing it as a way to trim government spending.

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Connecticut: the Next Big SREC Market?

Monday, January 10th, 2011

Recent shifts in the political landscape indicate that Connecticut will be the next state to legislate a Solar Renewable Energy Credit (SREC) marketplace. A SREC marketplace allows solar energy system owners to trade their SRECs (the environmental attributes associated with 1 megawatt hour of solar electricity production) on a secondary market at a competitive price. Although Connecticut does not currently have a robust SREC market, the state has a Renewable Portfolio Standard with relatively ambitious targets and a newly elected governor who has voiced his support for solar.

Enacted in 1998, Connecticut’s RPS mandates that 23% of the retail electricity load come from renewable electricity by January 1, 2020. Renewable technologies in the RPS are differentiated into Classes 1, 2, and 3, with solar and wind electricity both being designated as Class 1 technologies. Electricity suppliers can comply with Class 1 annual requirements by procuring Renewable Energy Credits (“RECs”) from facilities located within the ISO New England area (i.e. Connecticut, Maine, Massachusetts, Rhode Island, Vermont, and New Hampshire). In addition, RECs from systems located in states outside of the ISO New England area, such as Pennsylvania and Delaware, are eligible for compliance purposes. If electricity suppliers fail to generate or purchase sufficient RECs to meet their renewable energy requirements, they must submit an Alternative Compliance Penalty (ACP). The current ACP in CT is $55.00 per REC or megawatt hour.

In the spring of 2010, Assembly Bill 493 was passed by the Connecticut House and Senate, but vetoed by former Governor Rell. This bill, “An Act Reducing Electricity Costs and Promoting Renewable Energy”, would have defined a specific requirement for solar energy technologies, and would have created a more stringent non-compliance penalty. If passed, the legislation would have increased the value of SRECs. Connecticut’s current Governor, Dan Malloy, has, in the past, voiced support for the passage of this legislation and stated that he would have signed the bill. However, to date, no solar legislation or discussion drafts are available for analysis.

As the solar topic continues to gather steam inside and outside of Connecticut, Sol Systems would like to note a list of provisions that will be central to any new future solar legislation in Connecticut.

1. The Alternative Compliance Penalty (ACP): The ACP largely determines the ceiling value for an SREC. A higher ACP can lead to higher SREC prices, resulting in a better payoff for those investing in solar energy. For example, neighboring Massachusetts is a state that has helped enact an SREC market by creating a $600.00 ACP; as a result, SRECs in Massachusetts are currently fetching prices between $275-$500.

2. System Eligibility: Currently, Connecticut is an “open market” meaning that it’s RPS allows Renewable Energy Credits (“RECs”) from a large region outside of Connecticut to be eligible for compliance. If new legislation retains this “openness” the SREC and REC values will likely be decreased, as was the case with SRECs in the District of Columbia. To ensure the integrity of a future market, advocates for solar in Connecticut should ensure eligibility requirements that would not lead to an oversupply of SRECs on the market.

3. The Solar Carve-Out Schedule: A solar carve-out schedule defines how much solar electricity must be produced each year, and therefore determines the demand for SRECs. To ensure the market is robust, advocates of solar should advance aggressive solar requirements, akin to states such as New Jersey and Maryland.

Sol Systems’ anticipates future SREC legislation in Connecticut, and will be working with other solar advocates towards advancing a robust solar future in the state.

About Sol Systems:

Sol Systems is a solar energy finance and development firm that was built on the principle that solar energy should be an economically viable energy solution. With thousands of customers and hundreds of partners throughout the United States, Sol Systems is the largest and oldest SREC aggregator. We provide homeowners, businesses, solar installers, and developers with sophisticated financing solutions that help make solar energy more affordable. Sol Systems also helps energy suppliers and utilities manage and meet their solar RPS requirements efficiently by providing them with access to diverse portfolios of SRECs. For more information, please visit www.solsystemscompany.com.

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California’s HomeBuyer Solar Option Sets Example for Growth of Distributed Solar Generation

Thursday, October 7th, 2010

California continues to prove its leadership in advancing the solar industry by instituting a new HomeBuyer Solar Option and Solar Offset Program to promote distributed solar development. The HomeBuyer Solar Option requires residential real estate developers to offer a solar photovoltaic energy system option to all new home buyers. Developers who do not participate in the HomeBuyer Solar option will be required to set up a solar offset system in which they generate an equivalent amount of solar electricity on another project.

This program is revolutionary because it specifically incentivizes the development of “distributed generation” electricity. Distributed generation, unlike centralized generation from large fossil-fuel power plants and renewable energy farms, reduces the amount of energy lost during electricity transmission and helps Independent System Operators (ISOs) mitigate congestion in the transmission lines.

States such as New Jersey, District of Columbia, Pennsylvania, Ohio, Maryland and Delaware have set up aggressive Renewable Portfolio Standards (RPS), which promote the development of solar energy and create markets for Solar Renewable Energy Credits (SRECs). However, if these states wish to incentivize the promotion of distributed solar generation, it is important that they follow California’s lead in creating specific incentives for residential solar development.

If the 375,000 new homes sold across the U.S.* were equipped with a 5kW solar photovoltaic system, an additional 2,250 MWh would be generated each year. This would be sufficient to meet their energy demand for approximately six months.

*2009 Census- new home sales in U.S.
**Energy Information Administration- Table 5 Average Monthly Bill by Census Division, and State

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As the Federal RES Evolves, What Does it Mean for Solar?

Monday, October 4th, 2010

This last September, the U.S. Senate introduced the Renewable Electricity Promotion Act of 2010, Senate Bill 3813, a stand-alone Renewable Electricity Standard (RES) that will require sellers of electricity to retail customers to obtain certain percentages of their electric supply from renewable energy resources. If S. 3813 looks familiar, it should. The legislation is what remains of comprehensive climate change legislation that was introduced in the American Clean Energy Leadership Act of 2009 S.1462. This is therefore perhaps the last chance for any comprehensive federal approach to climate change or renewable energy prior to the next election.

So what does it mean for solar energy? In sum, it doesn’t hurt solar, but its immediate effects may not help much either. The proposed alternative compliance payment (ACP), which is the penalty energy suppliers must pay if they do not comply with their requirements is set low, especially when compared to current state RES programs such as New Jersey or D.C that have developed a foundation for a strong solar market. In addition, the portfolio of qualifying technologies may be too inclusive (by including numerous technologies the impact on any one technology is limited.

However, the legislation provides the framework, a seed of sorts, for the continued implementation and development of RES legislation nationwide. As RES markets develop nationwide, the solar industry can begin the task of adjusting to a more sustainable regulatory mechanism that is likely to help accelerate the implementation of solar technology (and others) well into the next decade. Our analysis is below.

BACKGROUND

What Does a Federal RES Do?

The federal Renewable Electricity Standard requires that a certain percentage of the electricity purchased in the country come from renewable energy resources. The purpose of an RES is to set up a competitive market in which utilities either (1) directly produce a specific amount of renewable energy based on their total load or (2) effectively purchase this renewable energy from others producing it or (3) pay a penalty. Most utilities will choose some combination of all three. In some state markets, an RES is called a renewable portfolio standard (RPS) or alternative energy portfolio standard (AEPS).

If utilities opt to go with the second strategy listed above, they usually do not purchase the energy from renewable energy resources, they simply purchase title to the “credit” associated with the renewable energy, termed a renewable energy credit (REC). Since energy can be measured in megawatt-hours (MWh), one REC represents the green attributes associated with one MWh of production from a renewable energy resource. Each time a homeowner or business produces one MWh from its solar system, it can sell the REC associated with this MWh in a competitive market. Technologies compete to produce RECs and sell them, and as these technologies scale, the supply of RECs increases, and the costs of these RECs decreases. The market is designed to drive down the costs of compliance and catalyze alternative energy technologies to scale.

CURRENT RES OVERVIEW

Volumes

The RES targets are less than the twenty to twenty-five percent recommended by most industry groups and President Obama himself this last year. The current RES requirements are below:

2012-13: 3%
2014-16: 6%
2017-18: 9%
2019-20: 12%
2021-39: 15%

The Alternative Compliance Payment

The Alternative Compliance Payment, which is the fee that electric utilities must pay in lieu of actually purchasing or producing the renewable energy credits required by the RES, is $21, adjusted for inflation. This means that for every MWH of electricity that the utility fails to supply from renewable energy, it must pay a fine of $21. The ACP effectively sets the ceiling on the value of renewable energy credits, with the caveat that there are multipliers (described below) that make some RECs more valuable than others.

Qualifying Technologies

Under the current RES, those resources include solar, wind, geothermal, biomass, landfill gas, qualified hydropower, marine and hydrokinetic renewable energy, incremental geothermal, coal-mined methane, qualified waste-to-energy, and potentially other technologies.

Multipliers

In order to incentivize certain technologies, states (and in this case the federal government) often provide multipliers for RECs from specific technologies or locations. Under the federal RES, utilities will receive double credit for RECs produced by renewable energy systems located on Indian land (to incentivize the development of renewable energy on Indian land) and triple credit for small renewable distributed generation less than 1 MW. Although not stated, it is likely that the maximum ceiling on energy efficiency credits will conversely reduce the value of RECs produced from energy efficiency upgrades.

No Preemption

The national RES will not preempt current state RES or RPS standards. Instead, the RES is meant to set a floor for states without current RES or RPS legislation to set up trading regimes and complement preexisting state legislation. The RES is a bit like the federal Clean Air Act or Clean Water Act in this respect, both of which provide states with a blueprint which they can either accept in whole, or mimic with state-specific standards that are as strict or less strict. This is incredibly important for those states that have more favorable solar requirements than the federal RES.

National Market

It is unclear at this point whether a national market will develop because of the legislation. Currently, the legislation provides for the delegation of responsibilities to either a national trading mechanism or a more regional mechanism. States will have to figure out whether they want their REC markets to be regional, like the Regional Greenhouse Gas Initiative (RGGI), or isolated, like Delaware, New Jersey, Massachusetts and others.

SREC Values

The value of solar renewable energy credits (SRECs) is typically a function of supply and demand . It is therefore unclear what the values of SRECs will be since this supply and demand will differ from state to state. Taken by itself, the legislation will not push SREC prices very high since the ACP is $21, with a potential multiplier of three ($63). However, current RPS states will likely retain their markets, and states without an RPS may develop more aggressive RPS legislation in light of the national RES.

ANALYSIS

Potential Negatives

1. The effective solar alternative compliance payment (SACP) is $63 per MWH for distributed solar energy systems (those below 1 MW in nameplate capacity). This is low enough that it is not likely to create a significant market for solar renewable energy credits (since the ACP provides a ceiling on the value of SRECs). This legislation is therefore unlikely to single-handedly develop robust markets for solar. However, as discussed below, the RES may provide the necessary legislative framework for the creation of such a market.

2. The list of qualifying “renewable energy resources” includes technologies that will be much less expensive to implement initially, and will likely flood REC markets. Solar energy, for example, is not likely to be able to compete with biomass or methane from mining.

3. Utilities can purchase energy efficiency credits. These credits are also likely to be much less valuable than SRECs, and may also flood the market – although they are limited to 26.67 percent of their overall required needs.

Potential Positives

Setting up a national RES begins to set minimum requirements, build the framework for the introduction of renewable energy legislation that many states currently do not have in an organized fashion, and develop a sustainable means by which to incentivize renewable energy. RES legislation is especially important for new technologies that may have higher up-front costs (like solar) because requirements can be structured around these costs. Although the standards may not be perfectly structured to assist solar energy at this time, most RES legislation is tweaked over time to better suite solar energy.

OUR CONCLUSION

The proposed federal RES is a good beginning, and provides a decent foundation for future legislation. Although it may not be perfect for solar initially, it forces legislators to address the important issue of alternative energy development, and provides them with a blueprint with which to do so. Our guess is that the requirements, and the ACP, will likely increase on a state-by-state basis. In the meantime, renewable energy is able to put itself on the map, and we’ve taken the first step of many in diversifying our energy infrastructure and moving towards a more sustainable future.

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A Secondary Market for SRECs In California?

Friday, August 13th, 2010

In California, the environmental attributes of solar electricity are bundled with the electricity; in fact, they are not allowed to be separated. For this reason, the environmental attributes of solar-generated electricity, or Solar Renewable Energy Credits are not tradable as compliance commodities. This means there is no secondary market for Solar Renewable Energy Credits (“SRECs”) in California. However, this may change.

The people of California have been trying to create an SREC market since 2006 when the California Assembly passed Senate Bill 107 (the “Bill”). This Bill granted authority for the California Public Utilities Commission (CPUC) to develop and administer a secondary market for Tradable Renewable Energy Credits (TRECs).

Three years later, in March 2010, the CPUC issued a decision establishing the rules and regulations that would structure California’s future secondary SREC market. The regulations proposed an alternative compliance penalty of $50.00 for 2010 and 2011; this amount would effectively serve as the ceiling value for the TRECs. (This is a relatively low value when compared to more robust SREC markets such as New Jersey and Maryland). However, the CPUC sidelined their decision in May 2010, and that is where the secondary SREC market sits today in California. The decision was sidelined in response to concerns expressed by investor owned utilities (IOUs) and energy suppliers.

However, a new bill in the State Assembly proposes a legal framework for a secondary SREC market in California. The details of this new bill are not firm enough to offer a good viewpoint on what a future SREC market may look like in California.

In the meantime, California solar energy system owners must sell their electricity and attributes bundled.  Systems sited outside of the state of California can enter into Power Purchase Agreements with California IOUs, to sell their bundled electricity and attributes.  However these systems must be located within the Western Regional Energy Generation Information System (WREGIS).  If, and when, California’s laws change, Sol Systems will be there to develop the SREC market for our customers.

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Update on Proposed Changes to Solar Investment Tax Credit and Section 1603 Grant Program

Friday, August 6th, 2010

A discussion draft of the Domestic Manufacturing and Energy Jobs Act of 2010 was introduced by acting Chairman of the House Way and Means Committee last week. The Chairman’s discussion draft (the “Bill”) proposes significant changes to the current federal incentive structures for renewable energy.

One major change is that the Bill allows the Section 1603 Grant program to expire. Section 1603, which was funded through the American Recovery and Reinvestment Act (ARRA), allowed companies who installed solar energy systems to receive a cash grant in lieu of Investment Tax Credits or Production Tax Credits. In other words, a business investing $100,000 in a solar energy project could receive a one-time payment from the Treasury for $30,000. This allowed businesses who did not have a tax appetite (due to the recession of 2009-2010) to receive the same financial benefits as they would have received with a tax credit. (Click here for more information on Sec. 1603 Grants).

In place of renewing Section 1603, the Bill would allow the taxpayer to elect a refundable deemed tax payment in lieu of the Investment Tax Credit or Production Tax Credit. Using the example above, a deemed tax payment means that the $30,000 cash grant would be treated as a $30,000 tax payment. In the event that $30,000 exceeds the actual tax liabilities of the business, the taxpayer could file for a refund. Treating the ITC and PTC as refundable deemed tax payments means the system owner will likely need to wait longer to receive the value of the federal incentive, but would not need to have the full tax appetite to fully utilize the subsidy.

Sol Systems will continue to track this and other solar legislation.

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The Future Outlook of the Connecticut SREC Market

Wednesday, July 28th, 2010

Earlier this year, Connecticut state legislators Rep. Vickie Nardello and Sen. John Fonfara introduced an energy reform bill that was posed to change the Connecticut renewable landscape and establish a market for Solar Renewable Energy Credits (SRECs). Solar enthusiasts celebrated the potential of ‘Bill 493 – An Act Reducing Electricity Costs and Promoting Renewable Energy’ to reduce consumer electricity rates, create green jobs, and reduce CO2 emissions. It was passed in both the House and Senate, but was ultimately vetoed by Governor Jodi Rell when it reached her desk. The governor expressed her support of the intent behind the bill, but concluded that the proposed legislation would in fact increase electricity costs, estimating a $1.4 billion price tag for the bill that would be footed by Connecticut taxpayers.

The status of solar energy financing in Connecticut remains at a standstill with no SREC market in 2010 and limited state rebates. The Connecticut Clean Energy Fund, which provides residential system owners with a state rebate of up to $15,000, has reopened but will soon be fully subscribed. As a result, it is possible that many installers and developers will move into states with solar-friendly legislation including Massachusetts, New Jersey, and Ohio. However, there is still hope for renewable energy and green jobs on the horizon. Dan Malloy, a potential Democratic candidate for Governor, has publicly stated that he would have signed the bill if it had been his decision. The election will take place on November 2nd and if he is chosen to serve the highest office in the Nutmeg State he may be able to reverse Gov. Rell’s decision and forge ahead with a Connecticut SREC market.

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Update on New York Solar RPS

Friday, July 16th, 2010

The New York State legislature recently introduced Bill S7093 (the “Bill”), its response to the growing appetite for solar energy in America.  The Bill contains draft legislation to effectively grow solar photovoltaic capacity to at least 5,000 megawatts (MW) by 2025, with interim targets of at least 500 MW by 2015 and 1,500 MW by 2020.  This is an ambitious target when viewed in comparison to existing capacity of approximately 34 MW at the end of 2009.  In addition, New York is positioning itself as a major player in the solar industry with higher solar PV targets (by capacity) than its neighboring states, with the exception of solar heavyweight New Jersey.  Aside from the obvious environmental benefits, the draft legislation, if enacted, is estimated to create 22,200 new jobs as well as boost GDP by $20 billion.

In terms of specifics, at least twenty percent of each energy supplier’s annual SREC obligation shall be met through the purchase of SRECs from retail distributors of solar energy generation (i.e. less than 50 kW systems), and at least an additional thirty percent of the obligation shall be met through retail distributed energy generation of any size.  As a result, this promotes a more distributed use of solar energy due to the combined 50% SREC purchase requirement from retail distributors.  Furthermore, the Bill requires energy suppliers to purchase at least 75% of their SREC compliance obligation from systems owned by an independent third party. This effectively provides for a robust secondary SREC market.

While this may seem like a win for solar enthusiasts, certain ambiguities contained in the Bill makes it toothless.  Specifically, the alternative compliance payment (ACP) is not mandatory.  According to the Bill, the New York Public Service Commission is charged “… to establish an alternative compliance payment that electric distribution companies may pay in the event they cannot meet their annual SREC obligation [Emphasis added].”  Without tougher language for enforcement, Bill S7093 may be ineffective.  We look forward to tracking the development of this Bill, and will be sure to keep you posted.

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Delaware Senate Passes Amendment to Strengthen RPS

Wednesday, July 14th, 2010

On June 30th, the Delaware House of Representatives voted to pass an amendment to Senate Bill No. 119. The bill would strengthen the RPS requirement and increase penalties for non-compliance. Taken together, these measures will improve the growth prospects for the solar industry.

The legislation ramps up the amount of renewable energy required in Delaware from 20% in 2019 to 25% by 2025. The proposition also raises standards for solar energy, from 2.005% in 2019 to 3.5% by 2025. Short-term solar energy prospects in Delaware are addressed by increases in annual targets for solar that move to .2% by 2011 (previously .048%) and .354% by 2014 (.8%).  The new targets ensure immediate incentives for the development of solar energy and will be seen as welcome news for regional installers and developers as well as Delaware homeowners interested in financing their solar energy systems.

The legislation has different effects on electricity suppliers in Delaware. The fine administered to utilities for non-compliance, known as the ACP, is raised to $400 per MWH (it was previously set at $250). As previously legislated under SB-119, a $50 increase in the ACP will be administered annually to non-compliant utilities.

A new provision in the amendment grants the State Energy Coordinator the authority to adjust the ACP by 20% “to determine reasonableness compared to market-based SREC prices.” Another new provision allows the solar requirement to be frozen if the total cost of compliance exceeds 1% of the retail cost of electricity. These amendments exhibit Delaware’s intent to provide more robust compliance incentives while also safeguarding against unreasonable increases in the cost of electricity.

The amendment to SB-119 is currently awaiting final approval from Governor Jack Markell who is expected to sign the bill this week. The amendment follows similar legislative changes in neighboring Maryland, which has recently expanded its renewable energy targets. Delaware’s proposed bolstering of the RPS is further evidence for the success of RPS programs implemented in several states across the mid-Atlantic region.

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