Policies that increase renewable electricity, modernize the grid, and otherwise reduce emissions in the electricity sector
Renewables and Energy Storage
Renewable Portfolio Standards
From the Center for the New Energy Economy (CNEE): One of the oldest and most successful advanced energy strategies, renewable portfolio standards (RPSs) specify a percentage of utility sales or a specific megawatt hour (MWh) capacity to be provided by renewable resources by a specific date.
RPSs usually set a standard of a specific percentage of renewable electric generation by a specific date along with incremental targets to meet that goal. In regulated states, standards place the contracting of renewable power into the portfolio of the utility, meaning the utility needs to plan for incorporation of renewable energy, issue requests for proposals for projects, and/or contract for power purchases.
The key components of an RPS policy to evaluate are:
- A list or definition of qualifying energy technologies
- An RPS or clean energy standard may apply to all investor-owned utilities, cooperative utilities, municipally owned utilities, and/or competitive retail electricity providers
- End target and date, and interim targets and dates
- Requirements for annual compliance reporting and for some states, annual RPS procurement plans
- Designation of a system to issue, record, track, and retire renewable energy certifications (RECs)
- Technology or distributed generation carve-outs
- CNEE — RPS Policy Brief
- NREL — RPS Basics
- NCSL — State RPS Tracker
- Sabin Center for Climate Change Law — LPDD Model Law: State Legislation to Decarbonize the Generation of Electricity: Model state electric decarbonization statute based on 2019 legislation enacted in Washington State
- Washington’s 2019 SB 5116 — Requires utilities to provide 100% carbon neutral power by 2030.
- Hawaii’s HB 62 — Requires all electric power to come from renewable sources by 2045
- New York’s Senate Bill 6599 — Requires 70% Renewable Energy by 2030, 100% zero-emissions electricity by 2040
- Arizona Carbon-Free 2050 Utility Target — A Commission-imposed plan to decarbonize Arizona’s electricity by 2050, with interim targets.
- New Mexico’s Energy Transition Act — Amends the state’s renewable portfolio standard to target 80% renewable energy by 2040 and 100% zero carbon energy by 2045.
- Maine’s LD 1494 — Increases Maine’s Renewable Portfolio Standard to achieve 80% renewable energy by 2030, up from 40 percent previously, and a goal of 100% by 2050.
Distributed Energy Resources/Solar Carve-Out
From the Center for the New Energy Economy (CNEE): While renewable portfolio standards (RPSs) specify a percentage of utility sales or a specific megawatt hour (MWh) capacity to be provided by renewable energy resources by a specific date, sometimes these standards do not advance distributed or customer-sited renewable resources (such as distributed solar). As a result, many states promote distributed resources through ‘carve-outs’ and/or ‘multipliers’.
Carve-outs require that a certain percentage of the generation used to meet the RPS come from distributed generation (DG). Multipliers promote investment in DG by increasing the resource’s value for meeting an RPS. For example, under Oregon’s RPS, each kilowatt hour (kWh) generated by a small solar installation (500 kilowatts to 5 megawatts) counts as two kWh towards RPS compliance. While multipliers can increase the value of DG to utilities and can incentivize investment, their use can lead to a lower overall amount of renewable generation installed to meet an RPS.
Key components of a carve-out policy to evaluate include:
- Define distributed generation, establish a percentage or capacity objective, and specify a date by which the goal is to be reached
- Define eligible technologies such as small wind, small hydropower, photovoltaic solar, solar thermal
- Define the size of qualified systems – either as a specific MW cap or as a percentage of onsite demand
- Set regional objectives – targets for specific rural, urban, or other environments through geo-specific capacity target or incentives
- CNEE — Distributed Resources/Solar Carve-out Policy Brief
- Solar Reviews — What is a Solar Carve-Out?
- Arizona — 30% DG in RPS in 2012 and thereafter
- New Jersey — Solar carve-out
- Maryland’s 2019’s Clean Energy Jobs Act — Upped the RPS carve-out requirement specifically for solar production.
- Maine’s LD 1494 — Updated the State’s RPS to require the creation of a new thermal portfolio standard to incentivize efficient heating and cooling installations.
- North Carolina RPS — Defines a REC as equivalent to 1 MWh of electricity derived from a renewable energy source, thermal or efficiency measure.
- Pennsylvania’s Alternative Energy Portfolio Standard — Includes a tier for useful thermal energy from the production of electricity, and demand-side management resources.
Net Metering and Aggregate Net Metering
From the Center for the New Energy Economy (CNEE): Net energy metering (NEM) is a policy that allows customers with local generation systems to sell their unused power to the grid. Customers are billed only for the “net” power consumed over their generation, while they are credited for excess electricity delivered to the grid. Net metering arrangements not only allow the grid to operate like a battery for the customer, but they also contribute clean generation to the energy mix.
A key provision of net metering programs is that the customer is not “paid” for power, but “credited” against their energy use. This is important for tax reasons, as revenue to a customer is taxable, while crediting for power is not. Therefore, NEM removes financial disincentives for distributed energy system customers. NEM also saves customers money and helps drive growth in the renewable sector by expanding the customer base and simplifying the interconnection process.
Traditionally, net metered systems only allow for use against one meter. Aggregate net metering allows power generated by an on-site renewable system to offset energy demand across multiple meters, usually owned by a single customer. Some systems — notably agricultural systems — have a large amount of energy usage at one meter, but install renewable generation on another meter. Aggregation allows for the total demand and total generation across meters owned by the same entity to be netted out, making sites or properties adjacent to a renewable system eligible for net metering credits.
Key components for net metering policy include:
- All distributed generation technologies should be eligible
- Allow all customer classes to participate
- Allow third-party ownership and meter aggregation
- System size limits should exceed 2 megawatts (MW)
- Policies should not limit aggregate capacity of net-metered systems as a percentage of utility peak demand
- Provide for indefinite net excess generation carryover at the utility’s retail rate
- Prohibit special fees for net metering
- CNEE — Net Metering Policy Brief
- Solar Energy Industries and Association (SEIA) — Principles for the Evolution of Net Metering and Rate Design
- National Caucus of State Legislators (NCSL) — State Net Metering Policies
From the Center for the New Energy Economy (CNEE): This policy allows for shared solar energy systems that have multiple owners or subscribers who pay for a portion of capacity or generation provided by the large system.
This type of arrangement has numerous advantages over traditional solar installations:
- Many residents — some estimates are up to 70% — are unable to install traditional solar systems due to shading issues, roofline orientation, or building ownership issues.
- Shared renewables can allow renters to own solar, and if they move, take that solar ownership with them.
- Large-scale systems can be oriented for maximum productivity and economies of scale allow systems to be developed at lower cost than individual rooftop systems.
- Virtual ownership reduces the “soft costs” associated with traditional systems including site assessments, permitting, and administrative expenses.
Key components of shared renewables authorization include:
- Enabling virtual net metering
- Specifying a minimum number of owners or amount of installed generation capacity
- Limiting the maximum percent ownership of one entity
- Guidelines for transfer of ownership
- Geographic constraints on ownership
- Requirements for a certain minimum percentage of low income or rural owners
- Rate setting for shared renewables, including different rates for specific customer classes (schools, municipalities, agricultural operations, etc)
- Language specifying whether community renewable energy projects are to be tied to the state’s net metering program (can community subscribers earn net metering credits?)
- IREC — Shared Renewables Scorecard
- Coalition for Community Solar Access — Community Solar Policy Decision Matrix
- Sabin Center for Climate Change Law — LPDD Model Law: State Legislation to Promote Community Solar Facilities: Providing a statutory framework that can be adopted by states that currently have no community solar legislation, and also serving as a basis for amending current legislation that has proved ineffective.
- NREL — Focusing the Sun: State Considerations for Designing Community Solar Policy: Identifies key differences in state policies that enable community solar and illustrates how various policy design approaches may impact the market.
- New Mexico’s Community Solar Act — Establishes community solar in New Mexico, with a 100MW cap until 2024.
- Arizona Public Service Company’s Solar Communities Program — $45 million program that funds utility-owned PV system installations on low- to moderate-income housing, multifamily housing, and non-residential properties.
- New Jersey Community Solar Energy Pilot — New Jersey’s pilot community solar program that has strong provisions prioritizing low and moderate income customer participation.
- Virginia’s HB 1184 (2020) — Requires the State Corporation Commission to establish by regulation a shared solar program.
- Hawaii’s Community-Based Renewable Energy Program — Allowing electric utility customers to participate with qualified projects in exchange for bill credits.
- Minnesota’s Community Solar Garden program — Allows multiple customers to engage with a common, utility- or non-utility owned solar system up to 1 MW.
- Massachusetts’ Neighborhood Net Metering and Community Shared Solar programs — Allows multiple customers to engage with a common, non-utility owned DG system up to 2 MW (or 10 MW for government), using solar, wind, or certain other renewables defined by law.
Energy Storage Standards
From the Center for the New Energy Economy (CNEE): Energy storage has been growing across the U.S. energy system due to two major trends: declining costs and technological advances. State policy can help maximize these benefits through a combination of establishing a framework for easy integration into the grid and establishing a marketplace that monetizes the benefits of energy storage for cost-effective investment.
The key components of energy storage policy, according to the Interstate Renewable Energy Council, include:
- Classify energy storage as an investable asset for utilities in restructured markets
- Streamline data access to allow third parties to provide energy management services based on signals from the utility.
- Amend existing interconnection and net metering policies to ensure that storage can connect to the grid through a transparent and simple process.
- Instruct the utilities commission to evaluate energy storage in strategic locations and consider a storage requirement, or identify the price point at which it will be cost-effective
- Require that utilities include energy storage in their integrated or long-term resource plans.
- Add energy storage as an eligible technology under existing clean energy policies like renewable portfolio standards or energy efficiency resource standards.
- Consider creating a mandatory energy storage procurement target or requirement for energy storage with periodic review of progress towards that goal.
- Finance and incentivize energy storage for customers and utilities in the form of rebates, grants, tax credits, and other programs.
- CNEE — Energy Storage Standard Policy Brief
- YSG Solar — State Energy Storage Incentive Database
- IREC — Energy Storage Guide for Policymakers
- Sabin Center for Climate Change Law — Energy Storage for a Modern Electric Grid: Technology Trends and State Policy Options: Assisting state lawmakers in understanding how energy storage technologies work, the benefits that storage can deliver to the electric grid, the current legal and regulatory barriers to adoption, and policy options for addressing those obstacles
- Connecticut Public Act 21-53 — June 2021 legislation establishing a goal of deploying 1,000 MW of energy storage by the end of 2030, making Connecticut the eighth state to set an energy storage target.
- NYISO Market Rules for Energy Storage — Opens the NYISO’s wholesale energy markets to Energy Storage Resources (ESRs). This development makes the NYISO the first ISO/RTO to allow full participation of these resources.
- Virginia’s Clean Economy Act, SB 851 (2020) — Requires two large utilities to close all carbon-emitting power plants by 2045 and 2050, and to acquire 3,100,000 megawatts of energy storage capacity.
- Massachusetts’ Advancing Commonwealth Energy Storage program — Provide $20 million in grants to energy storage projects that test various, multi-use business cases for energy storage.
- NJ’s A3723 — Sets New Jersey’s energy storage target at 2,000 MW by 2030.
- NY Energy Storage Target — Energy Storage Roadmap calling for an energy storage goal of 1.5 GW by 2025. In January 2018, the Public Service Commission issued an Order establishing a 2030 target of 3,000 MW.
Grid Modernization Plan
From the Center of New Energy Economy (CNEE): The electric grid is a complex system of generation, transmission, distribution, and demand. Aging infrastructure and recent technological developments are forcing changes in electricity production, delivery, and use.
Grid modernization efforts complement other policies such as those targeting demand response, customer data management, smart metering infrastructure, electric vehicles, and other technologies. It entails a thorough planning process and a suite of state and federal policy changes to support advancements in grid technology, grid management, and utility regulation. Grid modernization strategies should take a holistic view of the electric system.
The following can be used to inform the development of a state’s grid modernization strategy:
- Establish a collaborative process for developing a grid modernization plan, with the viewpoints of utility customers, utility regulators, utilities, and other stakeholders.
- Require utilities to submit and execute a ten-year grid modernization plan with measurable outcomes, overseen by the public utilities commission.
- Incorporate the impacts of electric vehicles on the grid. Provide for electric vehicle charging rates and incentives
- Create rules for who owns the data associated with energy usage; protect customer privacy; outline the process for allowing direct access to data from third parties; and promote access to the highest resolution of data possible.
- Incorporate new utility business model proceedings that are more sophisticated, forward-planning, and incentive-based. This may include alternative ratemaking, performance-based regulations, or other business models that support grid modernization.
- GridWise Alliance — Grid Modernization Index 2018
- Conservation Law Foundation — What is Grid Modernization?
- Interstate Renewable Energy Council (IREC) and GridLab — A Playbook for Modernizing the Distribution Grid
- NCSL — Modernizing the Electric Grid: State Role and Policy Options: Designed to assist state lawmakers in their efforts to gain an understanding of the many components of grid modernization.
- Regulatory Assistance Project — Electric Cost Allocation for a New Era: Focuses on cost allocation practices for electric utilities and their implications, acknowledging that charting a new path on cost allocation is an important part of creating the fair, efficient and clean electric system of the future.
- Regulatory Assistance Project — Utility Reform and Integrated Planning Reports
- Illinois Grid Modernization Market
- California’s Smart Grid
- Connecticut’s Framework for an Equitable Modern Grid — PURA framework for a plan to modernize the electric grid.
- Virginia’s Grid Transformation and Security Act (2018) — Increases utility investment in renewable energy, grid modernization, undergrounding power lines, energy efficiency and demand response.
- New Mexico’s Energy Grid Modernization Roadmap (HB 233) — Directs agencies to develop a strategic plan for energy grid modernization and to establish a competitive grant program to support implementation of eligible grid modernization projects.
- Rhode Island’s Power Sector Transformation proceeding — Focused on developing utility business models, grid connectivity and functionality, distribution system planning, and beneficial electrification.
From the Center for the New Energy Economy (CNEE): Interconnection is the process of “plugging into” the grid. For renewable energy, interconnection standards apply to both customer-sited and utility-scale systems. The goal is to achieve a clear, streamlined, affordable and predictable system for getting customers easily connected to the grid.
According to Freeing the Grid, the key components of an interconnection policy include:
- All utilities are subject to the policy
- All customer classes are eligible
- There should be no individual system capability limit
- Application costs should be kept to a minimum, especially for smaller systems
- Reasonable procedural timelines should be adopted and enforced
- Utilities should not be permitted to require customers to purchase liability insurance
- Clear, transparent technical screens should be established
- There should be a dispute resolution process
- CNEE — Interconnection Standard Policy Brief
- Vote Solar — Freeing the Grid
- ACEEE — Interconnection Standards by State
New Utility Business Model Proceeding
From the Center for the New Energy Economy (CNEE): States’ Public Utilities Commission or the equivalent is the body that regulates utilities in a way that balances between cost-efficiency and customer protection. This policy looks into whether a state utilizes new models and principles for utilities that are more sophisticated, well-integrated, forward-looking, and performance-based, instead of the conventional framework that focuses on centralized generation and load growth.
State efforts to reform the current regulatory construct have taken many forms. In terms of actual policy change, some of the concepts that have emerged are focused on regulating and rewarding utilities based on their performance against certain metrics, instead of a rate of return based on their spending as has been traditional.
In a performance-based model, the utility rate of return is a function of performance against key, pre-determined metrics, which could include customer satisfaction, reliability and availability, safety, conditions and connection, environmental impact, and other social obligations.
- CNEE — New Utility Business Model Proceeding Policy Brief
- Energy Innovation — Ratemaking and Utility Business Models
- Reforming the Energy Vision in New York
Utility Green Power Option
From the Center for the New Energy Economy (CNEE): Green power options allow customers to voluntarily purchase “green power” from renewable energy sources such as wind and solar. Customers may pay a premium to access green power, while some communities offer green power packages at lower cost than conventional utility programs.
Utility green power options can take two major forms: 1) green pricing programs, or 2) renewable energy or green tariffs. Green pricing options are primarily designed for residential and small commercial users, whereas green tariffs are typically designed for large corporate purchasers.
Green pricing programs are voluntary offerings in which customers can choose to purchase power from a “green” or renewable source, rather than the default utility offering. These programs are available to the individual customer through the major utility service in most U.S. states.
Community choice aggregation (CCA) has emerged as an additional pathway for customers to purchase green power. Under a CCA program, the community aggregates their load together and collectively purchases electricity from a supplier other than the default utility, at a lower cost than the prevailing utility rates. Typically, residents/businesses of a municipality must opt-out of CCA programs in their municipality. Most municipalities that deploy CCA programs purchase a greater percent of their electricity from renewable power than the default service. In fact, some procure up to 100% of their electricity from renewable resources at a cheaper rate than the utility.
- CNEE — Utility Green Power Option Policy Brief
- MCE Community Choice Energy — Model Community Choice Aggregation Ordinances
- Nevada’s AB465 (2019) — Requires electric utilities to offer an expanded solar access program to residential customers and to certain non-residential customers who consume less than 10,000 kWh per month.
- Virginia’s HB 868 — Allows retail electric customers to purchase 100% renewable electricity from electric suppliers, including incumbent electric utilities that are not serving their service territory directly.
- Utah’s HB 411 (2019) — Provides cities with mechanisms to establish and achieve a community goal to source net-100% of electric energy from renewable resources by 2030.
- New Jersey Community Choice Aggregation
- Rhode Island Community Choice Aggregation
- California Community Choice Aggregation — Established by 2002’s AB 117, California’s community choice aggregation program allows for communities to join together to purchase electricity on behalf of their community members.