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Energy Law. Topic: State Strategies for Promoting Renewable Energy. Joel Roberson [email protected] Spring 2007. Reducing Dependency Through Promotion of Renewable Energy. Renewable Portfolio Standards Grant Programs Loan Programs Personal and Corporate Tax Incentives

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Energy law l.jpg

Energy Law

Topic:State Strategies for Promoting Renewable Energy

Joel Roberson

[email protected]

Spring 2007


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Reducing Dependency Through Promotion of Renewable Energy

  • Renewable Portfolio Standards

  • Grant Programs

  • Loan Programs

  • Personal and Corporate Tax Incentives

  • Mandatory Government Procurement Rules

  • Government-funded research


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Top Seven Energy Consuming States

  • Texas

  • California

  • Florida

  • New York

  • Ohio

  • Pennsylvania

  • Illinois

Source: Energy Information Administration – State Energy Data 2003


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1. TEXAS

  • Total Energy Consumption: 12,369.8 trillion Btu

  • #1 Residential Energy Consumer

  • #3 Commercial Sector Consumer

  • #1 Industrial Sector Consumer

  • #2 Transportation Sector Consumer

Source: Energy Information Administration – State Energy Data 2003


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Texas Renewable Energy Mandate

  • In 1999, the Public Utility Commission of Texas adopted three new rules:

    • Renewable Portfolio Standard (RPS)

    • Renewable Energy Credit (REC) Trading Program

    • Renewable Energy Purchase Requirements


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Texas Renewable Portfolio Standard

  • Enacted: December, 1999

  • Effective: January, 2000

  • Original Requirement:

    • 2,000 renewable Megawatts (MW) by 2009

  • Acceleration in August, 2005:

    • 2,280 MW by 2007

    • 3,272 MW by 2009

    • 4,264 MW by 2011

    • 5,256 MW by 2013

    • 5,880 MW by 2015 (min. 500 MW from sources other than wind)

    • 10,000 MW by 2025


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Texas Renewable Energy Credit Trading Program

  • Enacted: December, 1999

  • Effective: July, 2001

  • Procedures:

    • Each credit = 1 Megawatt-hour

    • Each utility provider is assigned a portion of the annual RPS goal according to a Capacity Conversion Factor (CCF)

    • A utility provider that fails to meet the assigned RPS standards must purchase credits or face penalties.


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2. CALIFORNIA

  • Total Energy Consumption: 8,130.3 trillion Btu

  • #2 Residential Energy Consumer

  • #1 Commercial Sector Consumer

  • #3 Industrial Sector Consumer

  • #1 Transportation Sector Consumer

Source: Energy Information Administration – State Energy Data 2003


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California Emerging Renewables Program

  • Initiated: 1998

    • Part of the broader Renewable Energy Program

  • Rebate Program:

    • Wind:

      • $2.50 per watt for the first 7.5 kW

      • $1.50 per watt between 7.5 kW and 30 kW

    • Fuel Cell:

      • $3.00 per watt

  • Funding Level: $118 mil from 2002-2006


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California’s Renewable Portfolio Standard (RPS) Program

  • Initiated: 2002

  • RPS Requirement:

    • Required 20% renewable energy by 2017

  • Acceleration of RPS Program:

    • In 2003, the RPS 20% RPS deadline was accelerated to 2010.

    • In 2004, Governor Schwarzenegger recommended a further acceleration of the RPS system requiring 33% renewable energy by 2020.


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California Self-Generation Incentive Program (SGIP)

  • Initiated: 2001

  • Includes:

    • Wind Turbines

    • Fuel Cells

    • Microturbines

    • Internal Combustion Engines

    • Gas Turbines

  • Incentive Payments:

    • $1.00 to $4.50 depending on technology


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California Leading the Way on Wind Energy Generation

Source: Windustry – January 2006


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California Solar Initiative

  • Enacted: January, 2006

  • Rebates Begin: January, 2007

  • Rebate Payment Schedule:

    • Units under 100 kW (one-time payment):

      • Residential and Commercial: $2.50 per watt

      • Government: $3.25 per watt

    • Units 100 kW and larger (monthly for 5 years):

      • Taxable Entity: $0.39 per kilowatt-hour

      • Government/Nonprofit: $0.50 per kilowatt-hour

  • Funding Level: $2.9 billion from 2007-2017


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3. FLORIDA

  • Total Energy Consumption: 4,287.8 trillion Btu

  • #3 Residential Energy Consumer

  • #4 Commercial Sector Consumer

  • #16 Industrial Sector Consumer

  • #3 Transportation Sector Consumer

Source: Energy Information Administration – State Energy Data 2003


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Florida Solar Energy System Incentive Program

  • Enacted: June, 2006

  • Effective: July, 2006

  • Expires: June, 2010

  • Incentive:

    • Photovoltaics: $4.00 per watt (Max: $20K residential; $100K non-residential)

    • Solar Water Heater: $500 residential; $15 per 1,000 BTU non-residential/multi-family (Max: $5K)

    • Solar Thermal Pool Heaters: $100 per installation

  • Funding Level: $2.5 million for FY 06-07


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Florida Renewable Energy Technologies Grants Program

  • Enacted: June, 2006

  • Effective: Immediate

  • Eligibility:

    • In-state entity

    • Involved in demonstration, commercialization, research, or development for a qualifying activity

  • Qualifying Activity:

    • “electrical, mechanical, or thermal energy produced . . . [using] hydrogen, biomass, solar energy, geothermal energy, wind energy, waste heat, or hydroelectric power.”

  • Funding Level: $15 million for FY 06-07


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Florida Renewable Technologies Investment Corporate Tax Credit

  • Enacted: June, 2006

  • Effective: July, 2006

  • Expiration: June, 2010

  • Benefits:

    • 75% of capital costs, operation, maintenance, research and development

  • Qualifying Activities:

    • Hydrogen-Powered Vehicles and Fueling Station

    • Commercial Stationary Hydrogen Fuel Cells

    • Biodiesel and Ethanol Production, Storage, and Distribution

  • Cannot be combined with the Investment Tax Credit


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Florida Renewable Energy Production Corporate Tax Credit Credit

  • Enacted: June, 2006

  • Effective: January, 2007

  • Expiration: June, 2010

  • Benefit:

    • $0.01 per Kilowatt-hour (Max: $5 million)

  • Qualifying Activity:

    • “electrical, mechanical, or thermal energy produced . . . [using] hydrogen, biomass, solar energy, geothermal energy, wind energy, waste heat, or hydroelectric power.”


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4. NEW YORK Credit

  • Total Energy Consumption: 4,220.6 trillion Btu

  • #4 Residential Energy Consumer

  • #2 Commercial Sector Consumer

  • #18 Industrial Sector Consumer

  • #4 Transportation Sector Consumer

Source: Energy Information Administration – State Energy Data 2003


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New York Solar and Fuel Cell Tax Credit Credit

  • Enacted: August, 1997

  • Solar Energy:

    • Effective: January, 1998

    • 25% of the cost of equipment and installation

    • Capped at $5,000 credit

    • Residential equipment that utilizes solar power for heating, cooling, hot water, or electricity

    • Non-recreational applications

  • Fuel Cell Energy:

    • Effective: January, 2003

    • 20% tax credit (Max: $1,500)

    • Max rated baseload capacity: 25 kW

    • Utilizes proton exchange membrane (PEM)


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New York Green Building Tax Credit Program Credit

  • Enacted: May, 2000

  • Effective: January, 2001

  • Expiration: December, 2009

  • Qualifying Credits:

    • Whole Building Credit

    • Base Building Credit

    • Tenant Space Credit

    • Fuel Cell Credit

    • Photovoltaic Module Credit

    • Green Refrigerant Credit

  • Available to corporations and individuals

  • Funding Level: $25 million 2005-2009


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New York Renewable Power Procurement Policy Credit

  • Executive Order: June, 2001

  • Effective: Immediately

  • Applicability:

    • All state agencies under the control of the Governor

  • Requirement:

    • 10% of state purchased energy must be from renewable sources by 2005

    • 20% of state purchased energy must be from renewable sources by 2010


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New York Renewable Portfolio Standard Credit

  • Enacted: September, 2004

  • Effective: Immediately

  • Requirement:

    • 25% of renewable energy by 2013

  • NY State Energy Research and Development Authority encourage the development of new renewable energy resources

  • Incentive Funding: $45 million through 2009

    • 30.7% supports PV technology

    • 10% supports small wind

    • 24.9% supports fuel cells

    • 24.4% supports anaerobic digestion

    • 10% discretionary


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New York Solar Sales Tax Exemption Credit

  • Enacted: July, 2005

  • Effective: September, 2005

  • Expires: December, 2009

  • Benefit:

    • Sale and installation of solar-energy systems is free from NY state tax

    • Locality can also exempt taxes on this transaction

  • Requirement:

    • Solar energy must be used for heating, cooling, hot water, and/or electricity

    • Non-recreational


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5. OHIO Credit

  • Total Energy Consumption: 3,986.2 trillion Btu

  • #7 Residential Energy Consumer

  • #7 Commercial Sector Consumer

  • #5 Industrial Sector Consumer

  • #6 Transportation Sector Consumer

Source: Energy Information Administration – State Energy Data 2003


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Ohio Energy Conversion Facilities Corporate Tax Exemption Credit

  • Real property used in energy conversion are exempt from property taxation and are not considered an improvement

  • Applicable technologies:

    • Solar-thermal systems

    • Photovoltaic systems

    • Wind

    • Biomass

    • Landfill gas

    • Waste-recovery systems


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Ohio Energy Loan Fund (ELF) Grant Program Credit

  • Enacted: 1999

  • Benefit:

    • Various grants up to $150K

  • Qualifying Projects:

    • Distributed Energy Resources

    • Non-residential Renewable Energy

    • Residential Renewable Energy

    • New Solar Homes Incentive

    • Manufacturing Energy Efficiency Incentives

    • Small Business Energy Savers Incentive


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Ohio Wind Production & Manufacturing Incentive Program Credit

  • Effective: February, 2007

  • Wind-energy Generation:

    • An incentive of $0.01 per kilowatt-hour

    • Available for up to five years

    • Must be operational before December, 2008

  • Ohio Manufactured Turbines

    • An incentive of $0.012 per kilowatt-hour

    • Turbine parts are made in Ohio or assembled by Ohio employees.


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6. PENNSYLVANIA Credit

  • Total Energy Consumption: 3,972.7 trillion Btu

  • #5 Residential Energy Consumer

  • #6 Commercial Sector Consumer

  • #6 Industrial Sector Consumer

  • #5 Transportation Sector Consumer

Source: Energy Information Administration – State Energy Data 2003


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Pennsylvania Energy Development Authority (PEDA) Grants Credit

  • Enacted: December, 1982

  • Grant Funding:

    • PEDA provides grants to provide financial incentives towards the creation of clean, alternative-energy projects and investment in the Pennsylvania energy sector

  • Funding Levels:

    • $5 million in 2006

    • Max of $1 million per grant


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Pennsylvania Alternative Energy Portfolio Standard Credit

  • Enacted: November, 2004

  • Effective: February, 2005

  • Requirement:

    • 8% of electricity must be generated by Tier I sources (solar, wind, geothermal, fuel cells, etc) by 2021

    • 10% of electricity must be generated by Tier II sources (waste coal, solid waste, wood byproducts, etc) by 2021

  • Pennsylvania was the first state to include waste coal, coal-mine methane and coal gasification


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Pennsylvania Wind-Energy System Exemption Credit

  • Enacted: November, 2006

  • Effective: January, 2007

  • Benefit:

    • Wind turbines and related equipment are not assessed for property tax purposes

    • Instead, real property used for wind energy are assessed using income capitalization approach


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7. ILLINOIS Credit

  • Total Energy Consumption: 3,918.3 trillion Btu

  • #6 Residential Energy Consumer

  • #5 Commercial Sector Consumer

  • #7 Industrial Sector Consumer

  • #7 Transportation Sector Consumer

Source: Energy Information Administration – State Energy Data 2003


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Illinois Sustainable Energy Plan Credit

  • Sustainable energy is defined as:

    • Wind

    • Solar thermal energy,

    • Photovoltaic cells and panels,

    • Agricultural products and organic biomass

    • Methane recovered from landfills,

    • Hydropower from existing dams


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Illinois Renewable Portfolio Standard (RPS) Credit

  • Enacted: June, 2001

  • Effective: July, 2001

  • Renewable Portfolio Requirements:

    • 2% of retail load to be renewable in 2007

    • Increase 1% each year reaching 8% in 2013.

    • 75% of the renewable energy used to meet the RPS must come from wind power.

  • Energy Efficiency Portfolio Goal:

    • 10% reduction in projected load growth in years 2007-2008,

    • 15% reduction in years 2009-2011,

    • 20% reduction in years 2012-2014, and

    • 25% reduction in years 2015-2017.


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Illinois Manufacturing Energy Efficiency Program (MEEP) Credit

  • Eligibility:

    • Illinois manufacturers

  • Rebate Program

    • 50% of the of qualifying expenses

    • Max of $10,000

  • Qualifying Expenses

    • Development an energy efficiency action plan

    • Technical assistance for energy efficient technology.


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Illinois Renewable Energy Resources Program (RERP) Rebates Credit

  • Enacted: December, 1997

  • Effective: Immediately

  • Benefit:

    • 30% of qualifying expense

    • Max of $10K

  • Qualifying Expense

    • New solar-energy technology with a design capacity greater than 800 watts


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