Aligning renewable energy incentives with RPS compliance.
Daniel P. Venora is a partner in the law firm Wiggin and Dana in New Haven, Ct., where he specializes in energy and utilities.
According to the Database of State Incentives for Renewables and Efficiency,1 all 50 states have adopted some form of financial incentive program to encourage the development of renewable energy. Incentives may take the form of tax breaks, rebates, grants, low-cost loans, expedited siting and similar measures, and in many cases, all of the above. Most states have adopted a combination of such programs targeting renewable projects.
In parallel with financial incentives, 29 states have adopted renewable portfolio standards (RPS), which over time are requiring more substantial percentages of electric load to be served from renewable resources. As RPS mandates escalate, however, questions emerge regarding whether the goals of renewable incentive programs to promote local resources and in-state economic development are consistent with the idea of achieving RPS compliance in the most cost-effective manner. As the cost of RPS compliance also increases, there should be a greater focus on the relative costs and benefits of current incentive programs and the sufficiency of resources expected to be available through the renewable energy credit (REC) markets.