EGEE 401
Energy in a Changing World

Other Enabling Policies

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The use of renewable energy sources offers many benefits to society, including a significantly cleaner environment and far less greenhouse gas emissions, freedom from highly variable fuel costs (where fossil fuel costs can rise and fall due to many factors beyond our control, renewable energy fuel costs are always the same: $0), "energy independence" (less dependency on energy imports) and a boost to local economies. To encourage development and use of clean-energy resources, governments of all levels offer financial incentives in a range of forms including grants, rebates, tax credits, and financing. Each incentive has criteria for eligibility, its own application process and deadlines, and rules for how money is awarded and spent.

Thankfully, this information is readily available in a single well-organized source: the Database of State Incentives for Renewables and Efficiency (DSIRE). I use this site nearly every day for something, and have yet to find it out-of-date or incorrect!

"DSIRE is the most comprehensive source of information on incentives and policies that support renewable energy and energy efficiency in the United States. Established in 1995, DSIRE is operated by the N.C. Clean Energy Technology Center at N.C. State University and is funded by the U.S. Department of Energy. Follow the navigation above to read about the history of DSIRE, the partners on the project, and the research staff that maintains the policy and incentive data in DSIRE." (DSIRE About Us)

Reading Assignments

Visit DSIRE

  • Read through the FAQs (under Help/Support), scan the Glossary and explore Resources.

The DSIRE database references many types of policies designed to encourage adoption of energy efficiency and clean energy practices and systems. Two of particular interest are "net metering" and PACE.

Net metering

We've learned in this course that electricity supply and demand need to be matched. How does that work when a home or business is generating its own electricity? When the system is installed, wiring is run to carry electricity generated by the system directly to the building's electrical panel. The building uses electricity generated by the system to meet demand (from anything in the building that needs electricity). If the building needs more electricity than the system is generating at that time, the building gets the electricity it needs FROM the grid. If the system is generating more electricity than the building is using, than the excess electricity is sent TO the grid. The utility company keeps track of the electricity that is sent to and from.

Here's how DSIRE defines net metering, "For electric customers who generate their own electricity, net metering allows for the flow of electricity both to and from the customer – typically through a single, bi-directional meter. When a customer’s generation exceeds the customer’s use, electricity from the customer flows back to the grid, offsetting electricity consumed by the customer at a different time during the same billing cycle. In effect, the customer uses excess generation to offset electricity that the customer otherwise would have to purchase at the utility’s full retail rate. Net metering is required by law in most U.S. states, but state policies vary widely."

In Pennsylvania, we have a strong net metering laws. I have a 9.6 kW system at my all-electric house (including car). In the summer, this system generates far more electricity than we are using. (We seldom use air conditioning in the summer.) This excess generation is sent to the grid and we are given "credit" for it on our electric bill. In the winter, however, our PV system generates less electricity and we are running our geothermal heat pump and using more electricity. So, during the winter months, we start using the "credit" we had built up over the summer. When it's gone, we pay for any more electricity we need. (Usually around January for us.)  

The tricky part is how the customer-generator gets compensated for the electricity they send back to the grid. In PA, for every kWh we sent to the grid we get a kWh of credit to use later. Seems fair, right? But some would say, hey, if you do that, who is paying for the grid? You're using the wires but aren't paying for them! Ah, but system owners would say, hey, I paid for this clean energy system and we all benefit from the avoided emissions--my system is making the air and environment safer for all of us! And, the grid is too congested anyway. Most of the electricity we make is used right here, and that reduces traffic on the grid and that's good for all of us too. 

This is a hot topic in clean energy policy these days. Stay tuned!

Property Assessed Clean Energy (PACE) 

PACE is way of financing clean energy projects (energy efficiency, renewable energy and water efficiency) where building owners pay no up front costs but pay for the project through property tax assessments. In other words, the cost of the project is added to the owner's property tax bill over a period of time, typically 5 to 20 years. If the building is sold, the new owner continues the payments. For PACE programs to be established, usually a state legislature has to pass "enabling" legislation that authorize and guide local governments. The, the local governments need to create and fund programs (usually with bonds).

Residential PACE programs ran into a snag a few years ago with mortgage lenders, because if a building owner defaulted the PACE lenders would be paid before the mortgage lenders. This lead to opposition by the Federal Housing Authority (FHA) and most states have currently suspended residential PACE programs. However, it is still being figured out and new Federal legislation remains a possibility.

Commercial PACE programs are not opposed by the FHA and are widespread. These programs may include multi-family residences, as well as agricultural, non-profit and government facilities.