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									     Incentives, Mandates, and
    Federal / State Policies for
   Promoting Renewable Energy

Forrest Stegelin
Extension Agribusiness Economist
University of Georgia
       Renewable Energy Concept
 Renewable energy is derived from resources that
  are generally not depleted by human use, such as
  the sun, wind, and water movement. These
  primary sources of energy can be converted into
  heat, electricity, and mechanical energy in several

 For federal, state, and local policies (incentives,
  grants, standards) for renewable energy, see
  Database for Incentives for Renewable Energy at
 Renewable Portfolio Standard (RPS) – for retail
  electricity suppliers, and RPS sets a minimum requirement
  (often a percentage) for electricity production from renewable
  energy resources or for the purchase of tradable credits that
  represent an equivalent amount of production.

 Renewable Energy Production Tax Credit (PTC)
  and Renewable Energy Production Incentive

 Renewable Fuel Standard – minimum production
  increases in renewable fuels (ethanol, biodiesel, and natural
  gas produced from landfills, sewage treatment plants, and
  certain other sources, i.e., crops)

 Renewable Hydrogen – focuses on producing
  hydrogen energy from renewable energy and renewable fuels
 Residential Tax Credit – an investment tax credit or
  tax deduction for homeowners who purchase
  photovoltaics, wind energy, or solar water heating

 Renewables Tax Revenue Effect – estimated 10-
  year revenue effect of renewable energy tax provisions:
  residential solar tax credit - $0.018 billion; net total, all tax
  provisions - $8.090 billion; renewables share of total –

 Other Renewables Provisions – see Congressional
  Research Service (CRS) Report RL32860, Energy
  Efficiency and Renewable Energy Legislation in the 109th
      Current Federal Policies
    Supporting Renewable Energy
 Production Tax Credit -
  – 1.8 cents/kWh for 10 years
  – Only accrues to corporate entities
  – Extended through Dec 31, 2007 (part of Energy Policy Act of
  – Supports utility scale wind

 2002 Farm Bill – 9006 Program
  – Allocates $22-23 million/year through 2007 to cost-share
    renewable energy production for farms and rural small
  – Awards from $10,000 to $500,000 per project, up to 25%
    cost share
  – Also, EQIP and CSP (in conservation title) are possible
    funding sources for wind and other renewable energy
   Current State-Level Policies
  Supporting Renewable Energy
 Renewable energy standards – 22 states plus
   – Mandate utilities to purchase a certain percentage of
     energy from renewable sources
   – Supports utility scale renewable production

 Net metering – 40 states (supports small wind and solar)

 Grant/loan/rebate programs – 26 states
   Helps to offset cost of installation, can pair with federal
DSIRE:                                                                                                        May 2006

               Renewables Portfolio Standards
                                          MN: 10% by 2015 Goal +
                                              Xcel mandate of                       VT: RE meets load
                                          1,125 MW wind by 2010                      growth by 2012
                                                                                                             ME: 30% by 2000
                     MT: 15% by 2015                           WI: requirement varies by
                                                                                                              MA: 4% by 2009 +
                                                               utility; 10% by 2015 Goal
                                                                                                             1% annual increase
                                                                                                            RI: 15% by 2020
                                                                                                           CT: 10% by 2010
CA: 20% by 2010                                  IA: 105 MW                                             ☼ NY: 24% by 2013
                                                                   IL: 8% by 2013                       ☼ NJ: 22.5% by 2021
     ☼ NV: 20% by 2015                 ☼ CO: 10% by 2015
                                                                                                        ☼ PA: 18%¹ by 2020
                                                                                                        *MD: 7.5% by 2019
                                                                                                        *DE: 10% by 2019
       ☼ AZ: 1.1% by 2007
                                                                                                        ☼ DC: 11% by 2022
               *NM: 10% by 2011

                            TX: 5,880 MW by 2015
       HI: 20% by 2020
                                                                                                                           State RPS
                                  ☼ Minimum solar or customer-sited requirement                                            State Goal
                                             * Increased credit for solar
                            ¹PA: 8% Tier I, 10% Tier II (includes non-renewable sources)

                                                     22 + DC states                                                                                             June 2006

                                       Net Metering Rules
                    25                                                                     100
                    kW                 50                                                  kW
                                                                                 VT: 15/150      100
                                       50   *        100 *                                            NH: 25
                                                                                                      MA: 60
                    25                                           40     * 30
                                                                       20               10/400        RI: 25 *
                              25/100                                                           *
                                            25                              *             *            CT: 100
                                                                  500*       no limit
                                                                                       varies    NJ: 2,000
                              *                                         40                    * DE: 25
                                                                           10 *
                                            2,000*                                               MD: 500
                                                                                *                VA: 10 /500
                     *                                                                20/100
                                                                                                 DC: 100
                                                        100        25/100
                                  10        10*                                  10/100

                                                       50    *

                                                                                                  Net metering is
          State-wide net metering for all utility types                                             available in
     *    State-wide net metering for certain utility types (e.g., IOUs only)                     40 states + D.C.
          Net metering offered by one or more individual utilities
      #s indicate system size limit (kW); in some cases limits are different for residential and commercial as shown
State Loan/Grant/Rebate Programs
• Support installation of a number of small-
  scale renewable technologies
• Low-cost or zero-percent loans
• State grants to pair with federal dollars-some
  states up to 50%
• Rebates on installed technologies

• Primary incentive for
  farm/business/residential renewable energy
DSIRE:                                 March 2006

              Loan Programs for Renewables


                                      State & utility/local programs
                                       State program
                                      Utility or local programs
                          30 states                                                                  March 2006

   Grants for Renewable Energy Technologies
                                *                                   *
                       *                   *
                                               *               *

                                                   State offers at least one grant program

                               23 states       * Private, utility and/or local program
DSIRE:                                            March 2006

                  Rebate Programs for
              Renewable Energy Technologies


                                      Both state & utility/other programs available
                                      State programs available

                          27 States   Utility/other programs available
  USDA announces $17.5 million investment in
renewable energy and energy efficiency, 8/30/06

 Ag Secretary Mike Johanns announced award of $17.5
  million in Section 9006 Renewable Energy and Energy
  Efficiency Program Grants to 375 recipients in 36 states.
  “These grants will directly promote energy savings and
  increased energy production in rural America.”

 2002 Farm Bill authorized the Renewable Energy Systems
  and Energy Efficiency Improvements program. Rural
  development grant funds can be used to pay up to 25% of
  the eligible project costs. The program provides loan
  guarantees up to $10 million to fund up to 50% of eligible
  projects. $4.6 million in federal funds have been allocated
  in loan guarantees and grants earlier this year.
 Eligible projects include those that derive energy from a wind,
  solar, biomass, or geothermal source, or hydrogen driven from
  biomass or water using wind, solar, or geothermal energy
  sources. Awards are made on a competitive basis for the
  purchase of renewable energy systems and to make energy

 States receiving funding were AK, AL, AZ, CA, CO, FL, HI, ID,
  IA, IL, IN, KS, MA, ME, MI, MN, MO, MS, MT, NC, NB, NH,
  NJ, NY, OH, OK, OR, PA, SC, SD, TN, VT, WS, WV, and WY.

 Indiana recipient: Integrity Biofuels LLC, $500,000 to
  purchase a renewable energy system.

 Ohio recipients: Myron Wehr Farms LLC, $18,323 –
  replacement of an older inefficient grain dryer; Enviroscape
  EMC, Ltd, $35,375 – infrastructure improvement and purchase
  of pelletizing and heating equipment to pelletize waste straw;
  Tusco Display, Inc, $10,308 – lighting replacements & replace
  existing natural gas furnace with geothermal heat pump
 Michigan recipients: Schipper Farms, $12,350 – replace 30-year old
  grain dryer with continuous flow 3-phase grain dryer; Curt D. Ratajczak,
  $8,600 – installation of new grain dryer to replace older model; R.A.
  VanHorn, LLC, $45,000 – install a wood pellet boiler to use low value
  sawdust and wood pellets as fuel in pellet production manufacturing;
  Carol A. Terry, $4,981 – installation of a 5kW wind turbine to generate
  electricity for farm; Coveyou Farms LLC, $5,640 – heat two greenhouses
  with corn burning biomass heaters; Majestic Farm, LLC, $12,074 –
  purchase and install 6kW wind turbine for farm; Klamer Greenhouses,
  LLC, $15,000 – install corn boiler to heat 1/3 of total greenhouse space of
  120,000 sq. ft.; Todosciuk Farms & Greenhouses, LLC, $24,909 – install
  solid fuel fired, light industrial hot water boiler for greenhouses; Hyde
  Properties, LLC, $38,945 – install geothermal heating/cooling system for
  health clinic; A.L. Grezeszak Farm, $3,154 – purchase and install outside
  wood furnace; Great Lake Woods, Inc., $78,576 – install energy efficient
  lighting and a motor controlled dust collection system; Meadowridge, Inc,
  $28,392 – install energy curtain in 3 greenhouses; PC SHAK &
  Renewable Energy Systems, $9,712 – purchase and install a corn
  burning outdoor boiler heating system for the small business; Dickerson’s
  Greenhouse, $110,249 – provide a renewable energy source for the
  primary heating unit of two greenhouse ranges
Indiana Incentives for Renewables and Efficiency
 Financial Incentives:
   –   Renewable Energy Property Tax Exemption
   –   Alternative Power & Energy Grant Program
   –   Duke Energy – Low Income Weaterization Utility Grant Program
   –   Duke Energy – Small Commercial and Industrial Energy Efficiency
       Rebate Program
   –   Duke Energy – Smart Saver Energy Efficiency Rebate Program
   –   Indianapolis Power and Light – Perfect Cents Energy Efficiency
       Rebate Program
   –   South Central Indiana REMC – Residential Energy Rebates
   –   US Department of Energy’s Alternative Fuels Data Center
 Rules, Regulations, & Policies
   – Indiana Building Energy Codes; Interconnection Standards; Indiana –
     Net Metering; Solar Access Laws; US DOE’s Alternative Fuels Data
 Related Programs and Initiatives
   – US DOE’s Green Power Network and Wind Powering America sites
  Ohio Incentives for Renewables and Efficiency
 Financial Incentives
   – Energy Conversion Facilities Corporate Tax Exemption
   – Fuel Cell Grant Program & Fuel Cell Loan Program
   – Energy Conversion Facilities Property Tax Exemption
   – Energy Conversion Facilities Sales Tax Exemption
   – Energy Loan Fund (ELF) Grants – Distributed Energy and Renewable
     Energy; and Energy Efficiency
   – State Grant Programs: Business and Institutional Loans; Double
     Saving Loan; Renewable Energy Loan Program
   – The Energy Cooperative – Dual Fuel Heating Program
   – US Department of Energy’s Alternative Fuels Data Center
 Rules, Regulations, & Policies
   – Ohio Building Energy Code; Environmental Disclosure; Interconnection
     Standards; Ohio – Net Metering; Yellow Springs Utilities – Net
     Metering; Energy Loan Funds; Solar Easements; US DOE’s Alternative
     Fuels Data Center
 Related Programs and Initiatives
   – US DOE’s Green Power Network; Million Solar Roofs Initiative; Wind
     Powering America
 Michigan Incentives for Renewables & Efficiency
 Financial Incentives
   – Nonrefundable Business Activity Credit
   – Refundable Payroll Credit
   – Alternative-Energy Personal Property Tax Exemption
   – State Grant Programs: Biomass Energy Program Grants; Community
     Energy Project Grants; Energy Efficiency Grants; Energy Star Home
     Grant Program; Large-Scale Photovoltaic Demonstration Project Grants
   – US Department of Energy’s Alternative Fuels Data Center
 Rules, Regulations, and Policies
   – Michigan Building Energy Codes; Solar Contractor Licensing; Energy
     Efficiency in State Buildings; Fuel Mix and Emissions Disclosure; Ann
     Arbor – Green Power Purchasing; Interconnection Standards; Michigan
     – Net Metering; Low-Income and Energy Efficiency Fund (LIEEF); US
     DOE’s Alternative Fuels Data Center
 Related Programs and Initiatives
   – US DOE’s Green Power Network; Wind Powering America

   DSIRE [Database of State Initiatives for Renewables & Efficiency
Federal Initiatives for Renewables & Efficiency
 Financial Initiatives
   –   Energy Efficient Commercial Buildings Tax Deduction
   –   Modified Accelerated Cost-Recovery System
   –   Residential Energy Conservation Subsidy Exclusion (Corporate)
   –   Business Energy Tax Credit
   –   Energy Efficient Appliance Tax Credit for Manufacturers
   –   New Energy=Efficient Home Tax Credit for Builders
   –   Renewable Electricity Production Tax Credit
   –   Tribal Energy Program Grant
   –   USDA Renewable Energy Systems and Energy Efficiency
       Improvements Program
   –   Energy Efficient Mortgage
   –   Veterans Housing Guaranteed and Insured Loans
   –   Residential Energy Conservation Subsidy Exclusion (Personal)
   –   Residential Energy Efficiency Tax Credit
   –   Residential Solar and Fuel Cell Tax Credit
   –   Renewable Energy Production Incentive
   –   US Department of Energy’s Alternative Fuels Data Center
 Rules, Regulations and Policies
   –   Federal Appliance Standards
   –   Energy Goals and Standards for Federal Buildings
   –   Federal Government – Green Power Purchasing Goal
   –   US Department of Energy’s Alternative Fuels Data Center
     One thing is certain: the topic of
   renewable energy will not disappear.
 Must make individual management decisions according to
  one’s own objectives, resources, and risk philosophies.

 “Benjamin Franklin may have discovered electricity, but it
  was the man who invented the meter who made the
  money.” – Earl Wilson, American newspaper columnist

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