Policies: Incentives

A brief sheet on the ITC and PTC extension

Published July 2016
Tags: ,

Published July 2016

download full brief here

The essentials

  • On December 18, 2015, Congress passed The Consolidated Appropriations Act which extended Investment and Production Tax Credits for select renewable energies, effective through 2020.
  • An Investment Tax Credit (ITC) allows a taxpayer to take a certain percentage of an investment or purchase from his taxes. Similarly, a Production Tax Credit (PTC) is a tax reduction by a given amount per unit of a good produced.
  • The Act extends the current 30 percent ITC for qualifying solar energy facilities to 2019. It then creates a phase out program where the ITC is reduced to increasingly lower values until 2022. This ITC also applies to qualifying hydroelectric, biofuel, and methane recapturing programs.
  • The Act also extends the current PTC for wind and other qualifying facilities for another year. Thereafter, the PTC is incrementally reduced before being completely phased out in 2020.
  • The Act also includes an unrelated provision which lifts a 40 year ban on the exportation of crude oil from the U.S. While this seems to be at odds with the favorable renewable energy provisions of the Act, the wind industry has viewed this as an acceptable tradeoff and a net win for the environment.
  • The Act is expected to create $73 billion in new renewable energy investment, 8 million more households powered by renewable energy, and 37 gigawatts of new wind and solar capacity.

California's 50 Percent Renewable Portfolio Standard: Opportunities for Arizona

Published March 2016
Tags: ,

Published March 2016

download full brief

The Essentials

  • For our analysis of California’s 2011 Renewable Portfolio Standard (RPS), please see California’s Renewable Portfolio Standard: How will Arizona and the Southwest be affected?
  • Under SB 350, named the “Clean Energy and Pollution Reduction Act of 2015,” California recently increased its RPS to 50 percent renewables by 2030 (up from 33 percent by 2020).
  • California’s goal is more than double what will be needed to comply with the Clean Power Plan (21 percent by 2030).
  • The RPS includes interim targets of 40 percent renewables by the end of 2024, 45 percent by the end of 2027, and 50 percent by the end of the 2030.
  • SB 350 also requires demand-side energy efficiency savings for retail consumers of electricity and natural gas to double by 2030. The benchmark for this goal has yet to be determined.

Read full brief at this link: https://energypolicy.asu.edu/wp-content/uploads/2016/03/California-RPS-standards-brief.pdf

APS's Track and Record Proposal Part III

Published January 2016
Tags: , ,

Published January 2016

download full brief

The essentials

  • See our previous brief sheets for background on What a Renewable Energy Credit (REC) is and the background on why the Arizona Corporation Commission is addressing how utilities obtain the Renewable Energy Credits needed to comply with the Arizona Renewable Energy Tariff and Standard (REST).
  • Arizona's Renewable Energy Standard & Tariff (REST) requires that 4.5% of electricity comes from distributed generation (DG) systems such as rooftop solar.
  • Regulated utilities demonstrate compliance with the REST by purchasing Renewable Energy Credits (RECs) from their customers who have installed DG systems, typically with upfront cash incentives meant to help customers finance the installation of the DG system.
  • With the rising demand for DG installations since the start of the REST, the Arizona Corporation Commission agreed to significantly reduce upfront incentives. As a result, the regulated electric utilities lost their guaranteed source of RECs that are needed to demonstrate compliance.
  • In June 2012, utilities proposed a Track and Record option that would allow utilities to demonstrate compliance by tracking and counting towards compliance any new DG connection added within each service territory, independent of REC ownership.
  • The REST rules had not been updated since they were approved in 2006.
  • The Utilities Division Staff (“Staff”) of the ACC proposed seven options to modify the REST rules. Ultimately, the ACC adopted a modified version of APS’s Track and Record option.
  • The adopted modifications require a utility to include in its compliance reports the actual kWhs of energy produced within its service territory from DG. A utility must differentiate between kWhs for which it owns the REC, and kWhs produced in the service territory for which it does not own the REC. Those kWhs for which a utility does not own the REC will not count towards compliance, but will be “acknowledged” by the ACC for informational purposes only. The REC remains with the producer of DG energy, unless purchased by a utility.

Read full brief

Gliding Toward a Clean Energy Future - a joint report from EPIC and the Sonoran Institute

Published December 2015
Tags: , , , ,

Screenshot 2015-12-16 09.12.15In the wake of the Clean Power Plan, EPIC and the Sonoran Institute issued this Build-out Study on utility-scale solar developments in the pipeline at the end of 2015. These are projects

1. that are fully permitted

2. with planning or permits likely to be concluded by the end of 2017, or

3. are located in areas already identified as suitable for large-scale solar installations).

In addition to this survey, the report identifies existing policies that supported these installments and recommends future policies to continue the clean energy trajectory.

 

A Brief on the Draft Amendment to Change Arizona's Energy Efficiency Resource Standard to a Goal

Published November 2014
Tags: , ,

download full brief

The essentials

  • The Arizona Energy Efficiency Resource Standard (EERS) requires regulated electric utilities with an annual revenue of more than $5 million to achieve a cumulative energy savings of 22 percent by 2020, based on historical customer demand. The incremental savings began in 2011 at 1.25% of the previous year’s retail sales. Regulated gas utilities have a similar requirement of 6 percent cumulative energy savings by 2020, also based on historical consumer demand.
  • On November 4th, 2014, the Arizona Corporation Commission (ACC) staff filed a draft amendment to the state EERS that would have the effect of rescinding the mandatory Standard. Instead, gas and electric utilities would be allowed to determine their own custom energy efficiency goals each year, on the basis of cost-effectiveness, during their bi-annual integrated resource planning (IRP) process. The IRP is non-binding.
  • The public has until Tuesday, November 18th, 2014 to submit comments to the ACC regarding the proposal. (Comment submission information can be found at the end of this document).
  • Currently, the Societal Cost Test is used to verify all energy efficiency programs under the EERS. The amended goal would allow the Commission to use three other tests to determine cost effectiveness:

o   The Participant Cost Test

o   The Ratepayer Impact Cost Test

o   The Utility Cost Test

 

 

The ACC seeks an alternative to RECs: APS's Track and Record brief Part II

Published April 2014
Tags: ,

Published April 2014

(download full brief)

The essentials

  • Arizona's Renewable Energy Standard & Tariff (REST) requires that 4.5% of electricity comes from distributed generation (DG) systems such as rooftop solar.
  • Regulated utilities demonstrate compliance with the REST by collecting Renewable Energy Credits (RECs) from their customers who have installed DG systems, in exchange for upfront cash incentives meant to help customers finance the installation of the DG system.
  • With the rising demand for DG installations since the start of the REST, the Arizona Corporation Commission agreed to significantly reduce upfront incentives. As a result, the regulated electric utilities lost their guaranteed source of RECs that are needed to demonstrate compliance.
  • During June 2012, Arizona Public Service (APS), Tucson Electric, & Power (TEP), and UNS Electric (UNS) proposed a Track and Record option that would allow utilities to demonstrate compliance by tracking and counting towards compliance any new DG connection added within each service territory, independent of REC ownership.
  • On February 24, 2014, the ACC issued an order indicating that good cause exists for authorizing a one-year waiver to the regulated utilities' (APS, TEP, and UNS) 4.5% DG requirement. The purpose of this waiver is to allow the ACC time to develop a new method to track utility compliance with REST.

Property Assessed Clean Energy (PACE): What it is, and whether it can be implemented in Arizona

Published February 2014
Tags: , , , ,

The essentials

(download full brief here)

  • Property Assessed Clean Energy (PACE) offers a path for building owners to fund energy efficiency upgrades and renewable energy projects.
  • Under the PACE framework, a local government provides the up-front capital for a building owner to install an energy efficiency project and/or a renewable energy system on their building. The building owner repays the capital over the course of 20 years through a property assessment tax.
  • PACE is being successfully used in 12 states and Washington, D.C. for commercial properties. Many states also allow PACE financing for residential properties, but most residential financing programs have been shelved for now while the Federal Housing Finance Agency (FHFA) issues rules related to lien seniority for mortgaged homes.
  • Developing a PACE program in Arizona would require passage of PACE-enabling legislation. PACE-enabling bills have been introduced in past legislative session, but have not been signed into law.
  • During the current 2014 session, State Reps. Orr (R) and Sherwood (D) are sponsoring PACE-enabling bill HB 2206.

Community, virtual and aggregate net metering, oh my!

Published January 2014
Tags: , ,

download full brief

The essentials

  • Basic net metering requires an agreement between an electrical utility and an individual customer. That customer must have a single meter that is connected to a single, on-site renewable energy system.
  • Under current net metering rules, Arizona allows community net metering but not aggregated and virtual net metering.
  • Several states have revised their net metering policies to allow a broader swath of utility customers to participate in net metering. These customers include municipalities with multiple buildings, tenants in multi-family buildings and stores in shopping malls.

APS's Proposal to Change Net-Metering

Published October 2013
Tags: , ,

(download full brief)

updated December 2013

The essentials

  • Rooftop solar installations have exponentially increased in recent years, in Arizona and nationally. With the continued increase penetration of distributed generation from rooftop solar installations, utilities have begun re-evaluating the price structures they use to compensate owners for the electricity their installations feed into the grid.
  • Currently, Arizona Public Service Company’s (APS) net-metering program compensates a solar rooftop owner at retail rates for the excess electricity the solar rooftop installation exports to the grid.
  • APS recently proposed to reduce compensation for electricity put onto the grid by solar rooftop installations, reducing the value that rooftop installations provide to their owners.
  • APS argues that the current net-metering rates effectively subsidize rooftop solar owners and unfairly shift costs from solar rooftop owners to non-solar rooftop owners. Rooftop solar installations also decrease residential electricity demand, thereby decreasing APS’s revenue.
  • The solar industry opposes the proposal because they argue the current plan fairly compensates for the value solar provides to the system, and will stall the development of the industry. Free market proponents also argue that the policy hurts competition and endorses the regulated monopoly utility model.
  • On October 1, 2013, the Arizona Corporation Commission (ACC) staff rejected both of APS’s suggestions for net-metering changes. Instead, they recommended addressing the distributed generation concerns during the next APS rate-case.
  • On November 14, 2013, the ACC voted to implement a $0.70/kW fee for customers with rooftop solar installations who participate in their net metering program. The fee equals roughly $5/month for a typical residential installation. The ACC agreed to review the net metering policy in more depth during the next APS rate case.

Renewable Energy Credits in Arizona

Published July 2013
Tags: , ,

(download full brief)

The essentials

  • In the U.S., when electricity is generated by a renewable energy source, two products are created: electricity and a Renewable Energy Credit (REC).
  • In Arizona, a Renewable Energy Credit (REC) represents the non-power attributes of a kilowatt hour of electricity from renewable energy. These attributes include renewable benefits (such as hedging against fossil fuel price increases) and environmental benefits (such as avoided pollutants).
  • The Arizona Corporation Commission requires regulated utilities to demonstrate their compliance with the Renewable Energy Standard and Tariff (REST) by obtaining RECs.
  • RECs can be bundled or unbundled, and traded, bought or sold in markets such as the Western Renewable Energy Generation Information System (WREGIS).