Policies: Renewable Energy

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.

A brief sheet on UNS Electric's application for rate design change

Published June 2016
Tags: , ,

Published June 2016

(Download full brief here)

The essentials:

  • UNS Electric, Inc., is a small utility serving approximately 93,000 ratepayers in Santa Cruz and Mohave Counties in Arizona.
  • The utility faces challenges in paying for fixed assets with a declining demand and a business model built on increasing energy consumption.
  • As a remedy, UNS is applying for a rate change focused on increasing the cost of electricity for small volume electricity users, especially those that may benefit from net-metering policies for distributed (primarily solar) generation.
  • Although the utility is small, the rate case is being closely watched, as it may be precedent setting for other utilities.

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.

 

Brief sheet on the Arizona Department of Revenue's reinterpretation of tax law on third-party owned solar installations

Published June 2014
Tags: ,

published June 2014

download full brief

the essentials

 

  • In 2013 the Arizona Department of Revenue reinterpreted A.R.S §42-11054(C)(2) and A.R.S. §§ 42-14155(B)(C) to require third-party financed solar installations to be assessed a property tax. Homeowners, governments, businesses, and other entities that own their rooftop systems would continue to be exempt from property tax assessments.
  • Taxing leased systems would add roughly $150/year to system costs. The added cost is expected to be passed onto the solar equipment lessees.
  • During the most recent legislative session, some legislators proposed a bill codifying the DOR’s reinterpretation while others worked to exempt all solar panels from property taxation, regardless of how they are financed. However, neither position was codified.
  • Preliminary tax assessments will begin June 2015.

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.

California's Energy Storage Policy

Published March 2014
Tags: ,

Published March 2014

download full brief

The essentials

  • The Energy Storage Program is designed to facilitate California’s aggressive Renewable Portfolio Standard (33% by 2020) and greenhouse gas reduction target (80 percent below 1990 levels by 2050) by vastly increasing the state’s energy storage capacity. Increased storage mitigates intermittency issues and will enhance the state’s ability to meet peak energy demand while relying on a significant amount of wind and solar electricity generation.
  • To accomplish this goal, the plan sets the following targets:
    • Pacific Gas and Electric Company, Southern California Edison Company, and San Diego Gas and Electric Company, three of California’s biggest utilities, are mandated to procure 1,325 MW of energy storage by 2020, with installations completed by 2024.
    • Other electric service providers and “community choice aggregators” must procure energy storage capabilities of 1% of their annual peak load by 2020, with installations completed by 2024.

Crowdfunding and Renewable Energy: Could it Revolutionize Large-Scale Renewable Project Financing?

Published March 2014
Tags: , ,

(download full brief)

The essentials

  • Crowdfunding presents a new model for public investment in large-scale renewable projects.
  • Crowdfunding would allow businesses access to an estimated $2 trillion in capital from the general public. It has been successfully applied to financing utility- and commercial-scale solar projects by Mosaic, a California-based start-up company.
  • Rewards-based crowdfunding (as opposed to “donation-based” crowdfunding) is the funding of a company or project by selling small amounts of equity to many investors with an expectation of return on investment.
  • At this time, only residents of New York and California can participate in crowdfunding investments.  However, the 2012 JOBS Act obligates the SEC to issue regulations allowing start-up companies to raise up to $1 million in capital via crowdfunding from the general public across the country.
  • The new crowdfunding regulations will likely be issued in the third quarter of 2014.
  • When crowdfunding regulations are issued, it will allow the general public to invest small amounts in renewable energy with a reasonable expectation of return on investment.

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.