New Washington State Legislation
Is Expected To Spur A Regional Solar PV Market In The State
(This article is included with the permission of RenewableEnergyAccess.com.
It is reprinted from their weekly newsletter.)
With Gov. Christine Gregoire's recent signature, what is being
called the most progressive renewable energy legislation ever passed
in a U.S. state is now a reality. The two new laws reflect a fresh
policy approach to promoting renewable energy at the state level
and already have the full attention of industry manufacturers who
expect the measures to kick-start a new regional market in the
U.S.
The two bills — SB 5101 and SB 5111 — steamrolled their way
through the state's legislature earlier this spring, winning overwhelming
bipartisan support from lawmakers interested in creating a thriving
market for renewable energy that would specifically foster new
high-tech manufacturing in the state.
The first bill, SB 5101, is responsible for driving strong market
demand for small renewable energy projects, especially solar photovoltaic
(PV) energy. The law establishes a renewable energy "feed-in" production
incentive, the first such application of this approach in a U.S.
state. Homes and businesses with solar PV and wind power systems
would earn a credit of 15 cents per kWh of electricity generated
by their renewable energy systems up to $2,000 annually — roughly
tailored to the yearly market output of a typical 3.5 kW PV system.
In addition to the feed-in credit, the bill is progressive because
it combines economic multipliers to increase the system owner's
credit if the project's components are manufactured in Washington.
This can raise the 15 cent per kWh credit up to as much as 54 cents
and this rate would be available for a fixed 10 year period beginning
July 1, 2005.
With the first bill taking care of the demand side of the equation,
the second bill would take care of the supply side by nurturing
new, high-tech manufacturing of renewable energy components. SB
5111 will provide tax breaks for renewable energy businesses that
currently reside in the state or choose to relocate there. And
the bill goes above that to offer higher tax breaks to companies
that locate themselves in economically depressed areas.
A New Policy Approach
 Photo: NREL The feed-in credit, SB5101, is particularly relevant to the larger
renewable energy effort in the U.S. because it reflects a new policy
approach for the state-based promotion of clean energy.
Denis Hayes, founder of Earth Day, former director of the federal
Solar Energy Research Institute and current President of the Bullitt
Foundation, described SB 5101 "as the most important solar
legislation ever introduced in any American state legislature."
While it would represent a paradigm shift for solar legislation
in the U.S., it's not an altogether new approach. Any solar PV
installer trying to order or maintain a good supply of solar modules
knows where else this approach has been staggeringly effective:
Germany.
Since enacting a national production incentive, Germany has been
a veritable black hole for solar panels, sucking up worldwide supplies
of PV at a time of increasing demand and limited manufacturing
capacity.
"The eyes of much of the country will be on this performance-based
approach," said Tom Starrs, Chair of the American Solar Energy
Society, and Vice President of Marketing and Sales with the Washington-based
Bonneville Environmental Foundation. "It's a very innovative
idea, I've been a strong proponent for creating incentive programs
that focus on paying for performance, as opposed to capacity-based
dollar per watt incentives."
Capacity-based incentives, like those in California, require the
state or utilities to pay an up-front rebate for the cost of a
solar PV system based on a dollar per-watt of a system's installed
capacity. For example, at the current California rebate rate of
$2.80 per watt, a payment of $8,400 is paid out for a 3 kW system.
A production-based approach provides a rebate per kWh of energy
produced over a fixed period of time. It's a more gradual approach
that lends itself to flexible, creative financing mechanisms. It
also promotes the maximum efficiency of the solar projects over
the course of their 20-30 year lifespan. In a capacity approach,
since the entire rebate is dolled out all at once, there is no
guarantee the solar production capabilities are maintained by the
owner.
Starrs said that during his 20 years in the industry he has seen
capacity-based incentives "basically fail," leading to
what he thought were counter-productive results with both wind
power and solar thermal. Production-based incentives were later
offered to US wind power which then thrived under the new model.
"Conceptually, performance-based approaches tie the incentive
more closely to what the goal is," Starrs said. "It's
not to get stuff on the roof, but to produce electricity. It discourages
systems that don't perform as well as they could. It creates a
better match between the policy goal of supporting renewable energy
and the energy itself — and therefore it's more defensible from
a public policy perspective."
Getting State Utilities on Board
In legislatures all across the country, many a worthy renewable
energy bill has been crushed under the weight of influential electric
utilities which have traditionally been against two items: renewable
energy and mandates of any kind.
Mike Nelson, Manager of the Washington State University Northwest
Solar Center, who had a technical role in crafting the legislation,
said utilities have actually become some of the bill's strongest
supporters.
Residents and businesses taking part in the production credit
will be provided the per kWh credit (up to $2,000 annually) from
their local utilities but those utilities are not required to take
part in the program. No mandate. What could be read as a toothless
piece of legislation is really a case of offering a carrot and
not a stick. The utilities are allowed to write-off the cost of
providing the credits against their state taxes, so they see an
inherent value in participating.
"The Public Utility Districts Association getting behind
this really started to make this bill move," said John Friederichs,
Conservation Director, for Ferry County PUD, one of the 64 utilities
in Washington state. "If this passes the house, how can you
miss, you get paid to create electricity. It's too good an idea
not to pass."
Continued…
| Back | Next
|
|
