A review of policy affecting the future of renewable energy.

MAREC’s Objectives

  • Grow wind and other renewables.
  • Work with state regulators to develop rules and supportive policies for renewable energy.
  • Promote improvement to electric transmission infrastructure to facilitate renewable energy development.
  • Provide education on environmental sustainability and renewable energy.
  • Provide technical expertise and education on integrating variable wind energy resources in the electric grid.

MAREC’s Policy

MAREC believes that policymakers should be moving forward decisively to facilitate the growth of wind energy and other renewable energy technologies to promote a more sustainable environment, develop greater energy security through fuel diversification, and facilitate economic development in the region. The following is a description of some of the critical issues facing the industry and key regionalpolicymakers.

  • Predictable Federal and State Tax Policies
    • One critical federal tax policy to the growth of wind energy in all regions of the United States has been the renewable energy production tax credit (PTC) provided to developers of wind energy. The PTC (2.1 cents per kWh) has been one of the major drivers of development of wind farms throughout the U.S. Although the PTC was established in 1992, Congress has allowed it to lapse on several occasions. Currently, the PTC is set to expire on December 31, 2012. It is important that Congress maintain the PTC and provide extensions so as to provide certainty to wind developers that the credit will be there at the time their projects begin producing clean electricity. More information about the PTC and the effect of the PTC expiring can be found at www.saveusawindjobs.com.
    • Wind project developers can also choose to receive a 30% investment tax credit (ITC) in lieu of the PTC if the project is placed in service before January 1, 2013, as long as the construction of the project began before the end of 2010. The ITC converts to a grant, which has helped drive development of wind farms during the current weakened state of the economy. It is critical to that Congress extend the ITC for projects that begin construction by the end of 2012.
    • States and local authorities have varying tax policies that can make or break development of wind energy within their borders. MAREC works with elected officials to help ensure that wind developments are treated fairly from a tax perspective and in a manner that will promote wind energy’s potential.
    • More information on how predictable policies will improve investment in the wind industry is available in AWEA’s PTC fact sheet and in the American Wind Power brochure.
  • Renewable Portfolio Standards/Renewable Energy Standards
    • Today, 29 states and Washington, D.C. have renewable electricity standards, and eight states have renewable energy goals. Please refer to the Database of State Incentives for Renewables and Efficiency for the current map of state-specific renewable portfolio standards (RPS) policies. States in the Mid-Atlantic region have taken it upon themselves to act to provide leadership in the drive to develop renewable energy technologies. These states have enacted market based
      mechanisms called RPS or renewable energy standards (RES), which are designed to ensure that a percentage of electricity sales come from renewable energy technologies. All but one jurisdiction in the MAREC footprint has a mandatory RPS program, while Virginia has a voluntary program.
    • MAREC believes that an aggressive national RPS would lead to consistency and greater development of wind and other green technologies. While MAREC states have a variety of RPS or RES programs with varying standards, we believe that enhancements to these programs, such as provisions for long-term contracting, are necessary in light of the lack of a national RPS program and to promote local and regional investments in renewable energy systems.
  • Long Term Contracts
    • There are several ways an electric supplier can meet a state’s RPS. One of the best avenues is to have the electric utility enter into a long-term contract, often called a purchase power agreement (PPA), with a wind developer. Not only does a PPA provide long-term price certainty to the supplier and its customers, but a PPA also makes projects viable for the developer by allowing the developer much greater access to financing. Financial institutions and investors are much more likely to provide funding to a project with a long-term revenue stream from a reliable counter-party like an investor-owned utility. It is also important to note that the wind developer bears the risk of the project and not the utility’s customers, because the developer assumes the risk in the event there are cost overruns for the project and the customer is not obligated to pay any contracted costs of the project until the facility is generating electricity.
    • At this point in time, some states offer limited opportunities through RPS requirements and regulatory policies for long-term contracting. MAREC will work with government officials and electric suppliers to promote policies that will facilitate long-term contracts for electricity from wind generators. These policies could take the form of allowing for prudent cost recovery for electric utilities that enter into qualifying PPAs and legislation designed to require competitive RFPs for long-term wind or other renewable energy procurement.
  • Transmission
    • According to the American Wind Energy Association
      (AWEA), one of the biggest constraints on wind energy’s growth in the U.S. is the capacity of the transmission grid to deliver wind energy to customers. Studies have shown that it is reasonable to integrate large amounts of wind energy generation into the current electric transmission system in the U.S. However, to do this there needs to be a substantial
      increase of new high voltage electric transmission line development. Wind and solar generation is often developed in more remote areas and transmission lines are necessary to bring the electricity generated from those facilities to areas that are more heavily populated. Integrating these variable resources into the electric grid so that the system can run effectively has also been an issue for some, although experience has shown that effective planning should remedy of these concerns. Because of the lack of sufficient transmission infrastructure wind energy projects are often being built in areas that have far less advantageous wind resources, because of the need to build near existing transmission. A much better course is to build out the transmission system to capture the maximum benefits of wind.
    • MAREC will work with the regional grid operator (PJM Interconnection) and transmission owners to ensure that fair policies exist to integrate wind into the transmission system and policies are in place to encourage reasonable transmission growth and siting of transmission lines to facilitate renewable energy development.
    • The Federal Energy Commission (FERC) issued FERC Order 1000 which directed transmission planning entities, like PJM, to plan for, among other things, public policy requirements, such as state RPS mandates. The idea is to have a transmission planning process that will help facilitate the ability of the states to meet their RPS mandates by having access to additional renewable resources due to the expansion of the transmission grid. FERC Order 1000 also directed that there be a methodology to allocate the cost of this new transmission in a manner commensurate with the benefits provided by the expansion. This process is moving forward before FERC. MAREC has taken the position that PJM needs to change its planning process to include consideration of cost effective and efficient transmission projects that meet FERC’s directives regarding public policy requirements and cost allocation. MAREC commends FERC’s efforts to expand the transmission grid for this purpose and we will continue to work through this process to help ensure that additional transmission gets built that will result in additional renewable energy development.
  • Siting
    • MAREC will promote responsible siting of wind projects. Responsible siting includes conducting studies to determine the suitability for a site from both environmental and wildlife standpoints. In addition, proximity to homes is a very important consideration and observance with industry standards and governmental requirements with regard to setbacks from residential development is essential to minimize any impacts a project may have real and perceived. Consequently, MAREC believes it is important to solicit and gain as much community support and acceptance as possible for wind projects. MAREC will work with community leaders and the public to try to achieve this objective.
    • Some states, like Pennsylvania, have worked to establish a model wind ordinance to provide local governments the tools to protect the safety and welfare of their residents, while at the same time advancing the development of wind energy. MAREC hopes to work in other states to establish similar models.