The following is an article written by Autumn Proudlove, Senior Director of Policy Program at the North Carolina Clean Energy Technology Center.
States have been at the forefront of clean energy policy for many years and 2021 was no exception, with states enacting numerous bills promoting clean energy technologies, grid modernization and electrification of transport. The NC Clean Energy Technology Center, which maintains the national database of state incentives for renewable energy and efficiency, has long tracked clean energy legislation across the country and has identified the following notable trends in the legislative activity of 2021:
Electricity sector decarbonisation objectives
An important trend among state legislatures in 2021 has been to set targets for the decarbonization of the electricity sector to address growing climate concerns. Specific policy approaches adopted by states include increasing existing requirements for renewable energy portfolio (RPS) standards or adopting new clean electricity standards or emission reduction targets.
In North Carolina, lawmakers enacted HB 951, requiring a 70% reduction in electricity-related carbon emissions by 2030 and carbon neutrality by 2050. Likewise, Oregon lawmakers adopted a target of reducing greenhouse gas emissions associated with electricity by 100% by 2040. In Illinois, legislation sets a target for decarbonizing the electricity sector by 2045 , while increasing the state’s RPS to 40% by 2030. Delaware has also increased its RPS to 40% by 2035.
Massachusetts lawmakers have enacted legislation setting a goal of economy-wide net zero greenhouse gas emissions by 2050, and Rhode Island is demanding a plan be developed to achieve net zero emissions across the state economy by 2050.
Promote the deployment of energy storage
Another popular topic among state policy makers this year was promoting the deployment of energy storage through state targets or tax incentives. Connecticut and Maine became the eighth and ninth states to adopt energy storage targets, with Connecticut setting a target of 1,000 MW by 2030 and Maine aiming for 400 MW by 2030.
A growing number of states are also extending eligibility for property tax or sales tax exemptions for renewable energy projects to energy storage systems. Legislation enacted in Arizona, Colorado, Massachusetts, Nevada, Vermont and Virginia allows energy storage projects to benefit from property tax exemptions or allowances available for renewable energy, while Bills passed in Arizona, Indiana and Virginia extend sales tax exemptions from renewable energy to energy storage systems.
Extension of rooftop and community solar programs
While net metering credit reforms have been in the spotlight in state legislatures in recent years, activities related to net metering and community solar programs in 2021 were more focused on program expansion, with several states increasing overall program ceilings or increasing the size of the system eligibility.
Bills enacted in Maryland and Massachusetts increased overall net metering ceilings, while Illinois law increased system size limits for net metering and community solar projects from 2 MW to 5 MW and opened a new block of incentives for community solar development. Delaware’s SB 2 has also increased the size limit for community solar installations and relaxed some program requirements.
New Mexico lawmakers have established a new community solar program for the state, details of which are currently under review by the Public Regulatory Commission. Another notable development expanding customer access to solar power is West Virginia’s enactment of HB 3310, allowing the use of power purchase contracts with third parties for on-site solar power.
Solar dismantling and installation rules
With large-scale solar development booming in many parts of the country, a number of states are creating new requirements for the siting and decommissioning of these facilities. Much of the interest in solar planting centers on farmland, while the conversation about decommissioning centers on financial insurance.
Legislation enacted in West Virginia requires solar and wind developers to post bonds to cover the costs of decommissioning projects of 1 MW and larger. Texas SB 760 specifies that lease agreements between landowners and solar operators must include facility removal provisions and financial insurance. In Maine, the state legislature required ground-based solar projects occupying three or more acres to submit a decommissioning plan that included financial insurance to cover decommissioning costs.
Maine lawmakers also enacted a bill that directs the Department of Agriculture, Conservation, and Forestry to convene a task force on ways to discourage the siting of solar installations on large farmland. value and encourage development on more marginal agricultural land. The Ohio SB 52 also deals with the choice of location of projects, giving county commissions new power to prohibit the construction of large solar and wind farms in particular areas before projects reach the Ohio Power. Siting Board.
Offshore wind development
Several states have enacted wind energy related bills this year, the majority of which relate specifically to offshore wind. Many of these bills are designed to promote the development of offshore wind, with coastal states rushing to establish themselves as leaders in this technology.
Legislation enacted in Oregon sets a target of having 3 GW of offshore wind floating off the state’s coast by 2030. California’s AB 525 also requires the California Energy Commission to set targets. of offshore wind to be achieved by 2030. In Massachusetts, SB 9 orders the state to acquire an additional 2,400 MW of offshore wind by 2027, in addition to the 1,600 MW required by previous legislation.
Electrification of transport
Transportation electrification has been one of the main areas of focus across the country in recent years, and state legislatures play a key role in shaping the policy framework around electric vehicles and charging infrastructure. State lawmakers are approaching electric transportation in many ways, such as adopting procurement targets for state fleets, putting in place incentives, and instructing utilities and regulators to take action. specific measures.
Connecticut and Hawaii have passed bills creating new requirements for the purchase of zero-emission vehicles by state fleets. Connecticut now requires that at least 50% of cars and light trucks purchased or leased by the state be zero-emission vehicles by 2030. In Hawaii, all new purchases of light vehicles from the state fleet must be zero-emission vehicles from 2022. Maryland lawmakers also passed a bill requiring state transit bus purchases to be zero-emission buses starting in fiscal 2023 .
In other cases, state lawmakers are calling on utilities and regulators to take action for transportation electrification. In Illinois, the SB 2408 standard requires large utilities to file beneficial electrification plans, including deployment of out-of-the-box infrastructure, vehicle charging rates, and optimized charging programs. Law in South Carolina and Virginia requires state regulators to review transportation electrification
Another topic related to transportation electrification that continues to gain the attention of state legislatures is that of additional registration fees for electric and hybrid vehicles. New fees were passed in Oklahoma and South Dakota in 2021, while registration fees were increased by legislation enacted in Missouri. Currently, 30 states apply additional registration fees for electric vehicles.
Public service business model reforms are receiving increasing attention from state legislatures and utility regulators, with performance-based regulation being one of the more attractive approaches today. Unlike cost-of-service regulation, where utilities have the opportunity to make a return on their capital investments, performance-based regulation allows utilities to earn a return based on the achievement of specific metrics. The intention behind this is to better align the public service interest and the public interest.
As part of Illinois’ massive energy bill enacted in September 2021, the Illinois Commerce Commission is to establish a comprehensive performance-based pricing framework for utilities serving more than 500,000 customers. Washington state lawmakers have also enacted legislation directing the Public Utilities and Transportation Commission to develop a policy statement addressing alternatives to regulating service costs, including incentive mechanisms for service costs. performance. Although it does not impose performance-based regulations, North Carolina’s HB 951 permits its use.
Wholesale market reform
Another approach to regulatory reform in the spotlight in 2021 was wholesale market reform, and in particular the topic of state membership in regional transport organizations (RTOs). While much market reform activity has taken place at the regulatory level, such as the creation of a new Southeast Energy Trading Market, state legislatures have also weighed in on the subject.
In Nevada, SB 448 requires state transportation providers to join an RTO by 2030. Colorado lawmakers also passed a bill requiring transportation utilities to join a wholesale market. organized by 2030. Meanwhile, lawmakers in Oregon enacted legislation directing the State Department of Energy to prepare a report on the benefits, challenges, and opportunities of developing or expanding a RTO in the state.
While the above trends highlight clean energy policy issues that receive a lot of attention from lawmakers, states continue to act as laboratories of innovation, adopting unique policy approaches and testing their own. solutions to these problems. While most states have completed their 2021 legislative sessions at this point, 2022 is fast approaching and we expect many of these issues to re-emerge in legislation next year.