Lawrence Berkeley National Laboratory Lawrence Berkeley National Laboratory Title Clean energy funds: An overview of state support for renewable energy Permalink https://escholarship.org/uc/item/2j29w1xz Authors Bolinger, Mark Wiser, Ryan Milford, Lew et al. Publication Date 2001-04-01 eScholarship.org Powered by the California Digital Library University of California LBNL-47705 Clean Energy Funds: An Overview of State Support for Renewable Energy Mark Bolinger and Ryan Wiser Environmental Energy Technologies Division Ernest Orlando Lawrence Berkeley National Laboratory 1 Cyclotron Road, MS 90-4000 Berkeley, CA 94720 with Lew Milford and Michael Stoddard Clean Energy Funds Network and Kevin Porter National Renewable Energy Laboratory April 2001 The work described in this study was funded by the Assistant Secretary of Energy Efficiency and Renewable Energy, Office of Power Technologies of the U.S. Department of Energy under Contract No. DE-AC03-76SF00098. ii Table of Contents ACKNOWLEDGEMENTS......................................................................................................... V EXECUTIVE SUMMARY....................................................................................................... VII I. INTRODUCTION................................................................................................................. 1 II. BACKGROUND ON CLEAN ENERGY FUNDS ............................................................. 3 A. FUNDING LEVEL AND DURATION ......................................................................................... 3 B. TECHNOLOGY ELIGIBILITY AND FOCUS................................................................................ 6 C. ADMINISTRATION................................................................................................................. 8 III. PROGRAM STATUS AND DESIGN ............................................................................... 11 A. OVERVIEW OF FUND STATUS ............................................................................................. 11 B. PROGRAMMATIC FOCUS ..................................................................................................... 11 C. PROGRAM ELEMENTS ......................................................................................................... 13 IV. FUNDING RESULTS.........................................................................................................17 A. FINANCIAL INCENTIVES FOR LARGE SCALE PROJECTS ....................................................... 17 B. DISTRIBUTED GENERATION POLICIES................................................................................. 20 C. SUPPORT FOR RENEWABLE ENERGY MARKETING .............................................................. 23 V. OBSERVATIONS AND LESSONS LEARNED..............................................................27 A. ADMINISTRATIVE ISSUES.................................................................................................... 27 B. PROGRAMMATIC ISSUES..................................................................................................... 31 C. STRATEGIC ISSUES ............................................................................................................. 42 VI. CONCLUSION.................................................................................................................... 47 APPENDIX A. CASE STUDIES OF CLEAN ENERGY FUNDS.........................................49 CALIFORNIA ............................................................................................................................... 49 CONNECTICUT ............................................................................................................................ 58 DELAWARE................................................................................................................................. 61 ILLINOIS ..................................................................................................................................... 62 MASSACHUSETTS ....................................................................................................................... 66 MONTANA .................................................................................................................................. 73 NEW JERSEY............................................................................................................................... 77 NEW MEXICO ............................................................................................................................. 81 NEW YORK................................................................................................................................. 84 OHIO .......................................................................................................................................... 88 OREGON ..................................................................................................................................... 89 PENNSYLVANIA .......................................................................................................................... 92 RHODE ISLAND........................................................................................................................... 98 WISCONSIN .............................................................................................................................. 102 iii iv Acknowledgements Work reported here was primarily funded by the Assistant Secretary for Energy Efficiency and Renewable Energy, Office of Power Technologies of the U.S. Department of Energy under Contract No. DE-ACO3-76SF00098. The support and encouragement of Jack Cadogan and Larry Mansueti of the U.S. Department of Energy is particularly acknowledged. The authors also thank the Rhode Island Renewable Energy Collaborative, which funded initial drafts of the state case studies. The work done by Lew Milford and Michael Stoddard on this report, through the Clean Energy Funds Network, was made possible by the generous contributions of the Energy Foundation, Rockefeller Brothers Fund and the Surdna Foundation. The authors also acknowledge the information and assistance provided by numerous state fund managers, without which this project would not have been possible. Detailed reviews of this report were kindly provided by Bob Grace of Sustainable Energy Advantage, Roger Clark of the Reinvestment Fund, Don Wichert of the Wisconsin Department of Administration, John Saintcross of NYSERDA, Dale Bryk of NRDC, David Ryan of the Montana Power Company, Melinda Hall of the New Mexico Environment Department, and Jonathan Raab representing the Rhode Island Renewable Energy Collaborative. Of course, any remaining omissions or inaccuracies are our responsibility. v vi Executive Summary As competition in the supply and delivery of electricity has been introduced in the United States, states have sought to ensure the continuation of “public benefits” programs traditionally administered or funded by electric utilities. Many states have built into their restructuring plans methods of supporting renewable energy sources. One of the most popular policy mechanisms for ensuring such continued support has been the system-benefits charge (SBC). This paper discusses the status and performance of state renewable energy funds supported by system- benefits charges.1 Overall Funding Between 1998 and 2012, roughly $3.5 billion will be collected by the 14 states with renewable energy funds that currently exist and are covered in this paper: California, Connecticut, Delaware, Illinois, Massachusetts, Montana, New Jersey, New Mexico, New York, Ohio, Oregon, Pennsylvania, Rhode Island, and Wisconsin. At this level of capitalization, these funds collectively have the potential to provide significant support for clean energy technologies over at least the next decade. California, whose fund will collect at least $135 million per year through 2011, accounts for more than half of all funding. Connecticut, Massachusetts, and New Jersey are the next largest funds, each collecting on average between $20 to $30 million per year. The following graph depicts combined annual and cumulative SBC funding for renewable energy over this period. 400 4.0 Annual, all states (left scale) 350 3.5 Cumulative (right scale) 300 3.0 250 2.5 200 2.0 Billion US$ Million US$ 150 1.5 100 1.0 50 0.5 0 0.0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1 Though treated less systematically, we also discuss and address some of the renewable energy funds created through utility settlements and other lump-sum transfers. We further note that our discussion excludes Arizona, which will use SBC funds to help fund their renewables portfolio standard. System-benefits charges collected by the publicly owned utilities in California are also excluded from our discussion. vii Eligibility and Administration Wind and photovoltaic (PV) energy are eligible for support from virtually every fund. Geothermal electricity is also eligible under many of the funds, but is frequently a strong target for support only where economic resource potential exists in the West. Landfill gas has proven to be moderately popular, especially in states that do not simultaneously have a renewable portfolio standard (RPS) to support such near-market technologies. Fuel cells (using either renewable or non-renewable fuels) have also been targeted by many funds, especially in states with limited wind and solar