University of Pittsburgh School of Law 2013 Energy Law & Policy Institute

Evan R. Endres Project Coordinator, PennFuture Energy Center [email protected]

Citizens for Pennsylvania’s Future (PennFuture). A statewide non-profit environmental and clean energy advocacy group. Foundation and member supported. Provide $2 million in legal services per year.

October 14, 2012

University of Pittsburgh School of Law 2013 Energy Law & Policy Institute

Distributed Generation-

Defined by on-site generation of electricity primarily for on-site use. In Pennsylvania, defined by which technologies can net-meter, operating as grid-tied. • • • • Photovoltaic (Solar Electric) • Coal-Mine Methane Solar Thermal Electric • Anaerobic Digestion Landfill Gas • Small Hydroelectric Wind • Fuel Cells using Renewable Fuels • Biomass • Waste Coal • Fuel Cells • Hydroelectric • Municipal Solid Waste • CHP/Cogeneration

October 14, 2012

University of Pittsburgh School of Law 2013 Energy Law & Policy Institute

Net Metering

University of Pittsburgh School of Law 2013 Energy Law & Policy Institute

Net-metering

Needs to have an existing load.

System size limits.

50kW limit on residential 3MW, 5MW limit on commercial

Compensation for Generation

Full retail rate, including distribution, up to 100% of usage. Excess can carry over from over until annual true –up at which the customer would receive a payment for excess. Excess over 100% is only paid at the wholesale rate with no distribution.

University of Pittsburgh School of Law 2013 Energy Law & Policy Institute 7000+ Individual Solar Installations 400+ in western Pennsylvania 12 western PA companies that offer the service of solar installation 178+ MW of in-state solar capacity 99% installed in the last 5 years

University of Pittsburgh School of Law 2013 Energy Law & Policy Institute

PA Market Drivers Declining solar hardware costs

Average installed cost per-watt, residential, $4.25. Average system size 6.8 kW. Total system cost $ 28,000

University of Pittsburgh School of Law 2013 Energy Law & Policy Institute

PA Market Drivers Progressive Energy Policies

Alternative Energy Portfolio Standard (AEPS) 18% electricity from alternative energy resources by 2020

Tier I: 8% by Tier II: 10% by compliance year 2020-2021 PV: 0.5% by compliance year 2020-2021 Achieved through REC (Renewable Energy Credit) and SREC (Solar Renewable Energy Credit) purchases.

SREC market is currently oversupplied leaving to SREC price that doesn’t stimulate new project development of consumer purchase.

6.8 kW = 8 SRECs per year x $15 = $120 per year

University of Pittsburgh School of Law 2013 Energy Law & Policy Institute

PA Market Drivers Progressive Energy Policies PA Sunshine Rebate Program

$111 Million in total funding

Residential PV: $0.75 per watt (started at $1.25 per watt) Commercial PV: $0.50 - $0.75 per watt Residential Battery Backup (1-10 kW only): $0.35 per amp-hour Solar Thermal: 35% of installed cost Low-income (PV and solar thermal): 35% of installed cost

6800 watt x $.75 per watt = $5,600 rebate (rebate can be taxed as income)

University of Pittsburgh School of Law 2013 Energy Law & Policy Institute

PA Market Drivers Federal Progressive Energy Policies

Tax Policy

Federal tax credit 30% of the system cost over 4 years.

Accelerated depreciation for commercial purchasers of renewable energy systems.

30% on $28,000= $8,400

University of Pittsburgh School of Law 2013 Energy Law & Policy Institute

National Market Drivers Solar Leasing-

= 70% of all new residential installations.

Power Purchase Agreements-

Third party owns energy system, sells electricity at an agreed upon rate. Purchase option for host. Leverages tax equity. Community Solar- Dependant on robust virtual net metering. Allows community members to subscribe to a solar installation that is not on their home or business and receive net metering benefit for a portion of that in

University of Pittsburgh School of Law 2013 Energy Law & Policy Institute

National Market Drivers

Community Solar- Dependant on robust virtual net metering. Allows community members to subscribe to a solar installation that is not on their home or business and receive net metering benefit for a portion of that installation.

University of Pittsburgh School of Law 2013 Energy Law & Policy Institute

Financing

Few Traditional Financing Mechanisms for Solar

• Residential customers use cash, unsecured financing, home-equity lines of credit. Available financing products have comparatively high interest rates.

•

Financing from non-traditional development institutions, public –private partnerships. Interest rate buy-downs, rolling funds.

• Less than 5 percent of the country’s 6,500 banks and lending institutions are actively involved in financing solar projects (commercial scale) due to ongoing concerns about, and misunderstanding, industry risks.

Tru-solar is collaborative that is working to create industry risk assessment standards (project ratings).

University of Pittsburgh School of Law 2013 Energy Law & Policy Institute

Financing

Few Traditional Financing Mechanisms for Solar cont.

• Renewable energy (or energy efficiency) are not considered in a home appraisals for the purposes of mortgages. A customer is not guaranteed to increase their home value after installation.

“Greening” real estate MLS (Multiple Listing Services) to include home renewable energy systems and energy efficiency information. Senate Bill 1106, the Sensible Accounting to Value Energy Act of 2013, is bi partisan bill that would require home energy efficiency to be cosidered in appraisals of FHA backed mortages.