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

the state house for five years from clean sources; and, recently, Gov. Jim Doyle set a goal that Wisconsin purchase 20 percent of its electricity usage by 2010 from renewable sources.

In addition to investment dollars and renewable purchases, states promote renewable energy by providing loan supports. The Ohio Energy Loan Fund, for example, provides reduced interest rates on standard bank loans for Ohio residents who borrow money to implement energy efficiency or renewable energy projects. The program is financed through the sale of state general obligation bonds. The program has loaned approximately $300 million over its 20-year life. The Iowa Energy Bank, a similar program, has funded $138 million in improvements. The Pennsylvania Energy Development Authority can provide approximately $1 billion in tax-free bond financing for clean energy projects.

Net Metering and Interconnection Standards

Many renewable energy sources and new energy technologies focus on producing energy not at a centralized location, such as a power plant, but in a distributed manner, on-site-where the energy is used. Distributed generation creates two issues: how the energy source can be connected to the grid (and what will be the charges for both interconnection) and how such energy can be sold.

Interconnection raises safety issues for incumbent utilities, but many believe it has been used to prevent the adoption of new energy sources. California, Connecticut, and other states have adopted programs to promote certain renewable energy sources by exempting them from interconnection charges. The issue of selling distributed power is often addressed with so-called net-metering rules. States such as California, New York, and a dozen others allow customers to receive a credit on their bills for excess electricity they generate from renewable energy sources (net metering), thereby providing an incentive to invest in solar, wind, and the like.

States have taken other actions as well. The California Public Interest Energy Research (PIER) program supports research and development with research grants totaling up to $62 million annually. Massachusetts has launched an initiative to provide teachers with teaching materials and financial support so that they can strengthen the teaching of energy concepts, renewable energy, green building, and climate change. California has passed a law limiting the aesthetic restrictions local authorities can impose on solar projects. (The law is designed to address the refusal of Los Gatos, Calif., to approve a solar facility in 2002-2003 because the solar panels were visible from the street.) A bill in the California Assembly would allow hybrid cars, regardless of the number of passengers, to use freeway HOV lanes. These actions, and the ones detailed above, lead one to ask what is driving the huge amount of bipartisan state action promoting energy technology.

The Political Drivers for Energy Tech

Schwarzenegger has said that "every megawatt of energy Californians procure from renewable resources like the sun reduces our dependence on other sources." In 2001, Iowa Gov. Thomas Vilsack's Energy Task Force supported an RPS to "establish a responsible level of energy security, economic stability, and environmental sustainability." Massachusetts' energy officials have argued that renewable energy investments make sense "from an economic and environmental