Barriers to Entry:
Renewable Energy in the 21st Century:
State involvement in promoting renewable technologies has profound implications for the future of the energy industry.
Election-year posturing seems to have prevented the federal government from reaching consensus on a number of energy issues ranging from standard market design to global warming, MBTE to Kyoto, ANWR to nuclear waste disposal. At the precise moment the federal government appears so stymied, state governments throughout the United States have avoided the pitfalls of partisan politics as governors and legislatures, both Democrat and Republican alike, have united to take significant actions to promote new energy technologies and renewable energy. The policies, programs, and regulations being adopted at the state level are making a real difference and foreshadow the powerful political forces that underlie energy issues in the 21st century.
Almost immediately upon assuming the governorship of California, Republican Arnold Schwarzenegger announced the creation of a public/private partnership to build a hydrogen highway in California and called for the installation of solar panels on 1 million California homes and businesses. Bill Richardson, freshman Democratic governor and former secretary of energy, has been equally aggressive, designating New Mexico the "Clean Energy State," and challenging the Western states to adopt targets of 20 percent increases in both renewable energy and energy efficiency by 2020. Democratic Arizona Gov. Janet Napolitano has said her state could be the "Persian Gulf" of solar power. Republican Gov. George Pataki has committed New York "to promoting advanced technologies such as fuel cells, microturbines, and clean generators because they help to protect our environment, improve our energy security, and produce positive benefits for our economy." Connecticut has a stated goal of becoming "the fuel cell capital of the world" and Democratic Gov. Ed Rendell has declared Pennsylvania "open for business in advanced energy development." More impressive than this rhetoric, however, is the action actually being taken.
Across the country, states have promoted new energy technologies and renewable energy by: (1) implementing renewable portfolio standards; (2) adopting tax incentives and rebates; (3) forming state-funded venture capital funds; (4) directing investment dollars to clean technology; (5) purchasing renewable energy for government facilities; (6) providing loan supports; (7) easing interconnection requirements and allowing net metering; and (8) funding R&D and public outreach programs.
The following is a brief summary of some of the state programs adopted across the country and how these programs promote energy technology and renewable energy. 1
Renewable Portfolio Standards and Tax Incentives
In 1999, Texas, under then Gov. George W. Bush, adopted a renewable portfolio standard (RPS) in connection with the restructuring of the state electricity market. An RPS requires that utilities produce some portion of their electricity from clean energy sources such as wind, solar, or biomass. The Texas standard required the installation of 2,000 MW of new renewable capacity by 2009. The RPS led to a "Texas Wind Rush" that produced 10 new wind projects totaling 930 MW of power in 2001 alone. 2 In 2002, California passed an RPS requiring utilities to buy or produce 20 percent of their power from renewable sources