A new report released today, “Powering America’s Communities,” provides a comprehensive guide to state-level policies needed to unleash distributed clean energy technology in the United States. The report was produced as part of the New Energy Leaders Project of Americans for Energy Leadership.
“Powering America’s Communities” finds that distributed generation (DG) clean energy offers a unique set of benefits to electricity consumers, clean energy generators, and communities overall. It provides a framework that can cost effectively spur the demand needed to push DG clean energy further down the cost curve, based in part on the best practices of numerous states. This framework is designed to overcome the four key barriers to widespread deployment of DG clean energy:
- Insufficient demand for DG clean energy
- Lack of proper incentives to stimulate investment in DG technologies
- Exclusion of key rate payer groups from effectively using DG clean energy sources
- Gaps in financing options for households and businesses looking to install DG systems
“Powering America’s Communities” not only showcases the best practices of state energy policy, but also introduce new ideas to promote DG clean energy without burdening ratepayers or taxpayers. Four central policy topics were explored that, if implemented, can put a state on the path toward greater clean energy adoption, local economic development, and greater energy security.
The report makes the case that at the heart of successful state energy policy there must be a mechanism that creates demand for distributed clean energy and sends clear, stable, consistent signals to the market. This comes in the form of a renewable portfolio standard (RPS). The report contends that the RPS must be aggressive, have a DG carve-out, and include proper accountability and REC price structures.
To ensure that sufficient DG clean energy is supplied to meet ambitious RPS goals, states need to design incentive programs that are straightforward, competitive, and cost effective. For residential DG this might come in the form of an upfront incentive; for commercial, a production-based incentive; and for wholesale DG, a reverse auction mechanism.
Next, the report urges forward-thinking net metering rules and community energy programs to expand opportunities for investment in DG clean energy to all ratepayers and bring economies of scale to installations. These programs open up an investment model that can build local economic development and supply clean energy to high-density buildings and urban centers.
Finally, “Powering America’s Communities” calls for improving financing options for DG clean energy systems in the wake of PACE’s setback as a key to democratizing DG clean energy. Allowing on-bill financing and third party ownership models can help get DG clean energy to low- and middle-income households, nonprofits, and other potential system owners currently frustrated by the limited financing options.
Altogether, the report establishes a framework that can be used by state policymakers interested in fostering economic development and local energy independence by cost-effectively catalyzing the widespread deployment of DG clean energy.
For questions and media inquiries, please contact the authors: Lon Huber (lhuber@email.arizona.edu) and McKenna Morrigan (mckennamorrigan@gmail.com).
