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Renewable Energy in the 21st Century:
Fortnightly Magazine - March 2005

by 2020. (Schwarzenegger has proposed accelerating the deadline to 2010.) Recently, Rendell announced his support for an RPS which would require that in 10 years, 10 percent of the electricity generated in Pennsylvania come from renewable resources. Pataki proposed, and the New York Public Service Commission enacted, a 25 percent RPS by 2012, which could result in 3,700 MW of new renewable energy. In March 2004, New Mexico adopted a 10 percent RPS to be met by 2011. In total, it is estimated that there are now at least 19 states that have programs encouraging the use of renewable energy for electricity generation 3, and compliance with these RPS programs could result in $10 billion of spending on renewable energy by 2010.

Moreover, states have promoted clean energy and renewable energy through traditional tax policy and rebates. For example, Connecticut has established a $1.8 million clean energy incentive program that provides rebates of up to $25,000 for a solar power system. New Mexico provides an exemption from state excise taxes for consumers who purchase hybrid vehicles. Arizona has a $2,000/kW rebate for solar and a tax credit against personal income in the amount of 25 percent of the cost of a solar or wind energy device. But perhaps the most powerful tax incentive/rebate program has been adopted in California. Through its Emerging Renewable Program (ERP), the California Energy Commission offers a $3.00/watt rebate for solar and $0.90/watt to $1.90/watt for wind, and there is a phased Solar Income Tax Credit for residential and commercial customers purchasing onsite solar systems up to 200 kW in size. California's solar initiative has had powerful results: the ERP has supported an estimated 9,600 photovoltaic (PV) installations and, at one point, almost 80 percent of U.S. solar business was conducted in the state. California, however, has a formidable solar competitor on the East Coast. New Jersey has an RPS calling for 90 MW of solar power by 2008 (the nation's most aggressive RPS for solar power) and offers a Clean Energy Rebate of 70 percent of the cost of a solar system or $5.50/watt, whichever is less. The effect of these programs is stunning: Since January 2002, solar power in New Jersey has grown 550 percent, from less than 1 MW to 6 MW.

State-Backed Venture Funds

While tax credits and rebates are traditional public policy tools, a dozen states have taken particularly innovative action, promoting energy technology and renewable energy by forming government-backed venture funds. The two best-known examples of these are the Connecticut Clean Energy Fund and the Massachusetts Renewable Energy Trust. The Connecticut Clean Energy Fund (CCEF) began operating in January 2000 as a part of legislation deregulating the state's electric utility industry and is funded from a surcharge on ratepayers. This surcharge is expected to generate $100 million over the next five years. CCEF is engaged in a long-term effort to foster the production and use of energy from clean and renewable sources in Connecticut. CCEF has invested in biomass gasification projects, fuel cell companies, and ocean wave technologies.

The Massachusetts Renewable