Chapter 7 – Renewable Energy Chapter 7
Renewable Energy
Renewable energy sources are energy sources that
are continually replenished. These include energy from
water, wind, the sun, geothermal sources, and biomass
sources such as energy crops. In contrast, fossil fuels such
as coal, oil, and natural gas are non-renewable. Once a
deposit of these fuels is depleted it cannot be replenished.
Both renewable and non-renewable energy sources are
used to generate electricity, power vehicles, and provide
heating, cooling, and light.
Chapter collaborators:
The five most common renewable energy sources
are biomass, water (hydropower), geothermal, wind and
solar. In 2012, about 12% of US electricity was generated
from renewable sources. US EIA, “Renewable Energy
Explained.”
Maria Travers (WF ‘ 13)
Julia Crowley (WF ‘ 14)
Lindsay Watson (WF ‘ 14)
Cameron Tanner (WF ‘ 14)
Leslie Cockrell (WF ’12)
Brian Dorwin (WF ‘13)
Cameron Hill (WF ’12)
Lea Ko (WF ’13)
Danielle Stone (WF ‘12)
Winslow Taylor (WF ’12)
According to the energy “input/output” chart (below), renewables in 2013 constituted
about 9.3% of total U.S. primary energy.
See EIA, “U.S. Energy Flow – 2013”
Chapter 7 – Renewable Energy In this chapter, you will learn about:
•
The different sources of renewable energy, i.e. cool and hot renewables
o The benefits and drawbacks of renewable energy sources
o The similarities and differences between renewable energy sources and fossil
fuels
•
The problem of the regulatory commons
o Why too much regulation and non-regulation spoils the cake
o The example of the Cape Wind Project
o The land use laws that have affected renewable energy
•
The different programs promoting renewable energy
o At the state level, the Renewable Portfolio Standards for electric utilities
o At the state level, the Feed-In Tariffs (or Renewable Energy Payments)
o At the federal level, the Renewable Power Tax Credit
o At the international level, other countries’ promotion of renewables
•
The ways in which state programs have fared in court
o Under the Dormant Commerce Clause, which protects market-based
environmental regulation
o How a federal program solves these thorny constitutional questions
•
The use of distributed generation
o How power generated on a customer’s premises can be used for multiple
purposes
o How renewables can be stretched to many uses
•
The electric transmission barriers to the deployment of renewable sources
Chapter 7 – Renewable Energy Chapter 7 – Renewable Energy Sources
7.1
Renewable Sources: How do they Stack Up to Fossil Fuels?
7.1.1 Cool Renewables
7.1.2 Hot Renewables
7.2
Problems of the Regulatory Commons
7.2.1 “Regulatory Commons” Problem
7.2.2 Case Study: The Cape Wind Project
7.2.3 State and Local Restrictions on Solar and Wind Power
7.2.4 Solar and Wind Easements: Common Law Rules
7.3
Renewable Energy Programs: Federal, State and International
7.3.1 Early Governmental Approaches
7.3.2 Renewable Portfolio Standards
7.3.3 Feed-In Tariffs (FITs)
7.3.4 Other State Financial Incentives
7.3.5 Other Federal Financial Incentives
7.3.6 Renewable Energy Programs in Other Nations
7.4
Distributed Generation
7.5
Transmission Barriers to the Deployment of Renewable Sources
7.5.1 Transmission Line Siting
7.5.2 Transmission Cost Allocation
Sources:
•
FRED BOSSELMAN ET AL., ENERGY, ECONOMICS AND THE ENVIRONMENT Chapter 13, 9961096 (3rd ed. 2010).
Chapter 7 – Renewable Energy 7.1
Renewable Energy Sources: How do they Stack Up to Fossil Fuels?
Renewable energy is energy that comes from natural resources -- such as sunlight, wind,
rain, tides and geothermal heat – all of which are naturally replenished. Wikipedia, “Renewable
Energy.” Renewable energy sources can be replaced or renewed without contributing to global
warming or other substantial environmental impacts. The appeal of these energy sources extends
beyond global warming, however. Both environmental, energy security and energy
diversification concerns have led to a widespread interest in renewable energy.
Scientists have almost universally accepted that global climate change caused by rising,
man-made GHG levels is a reality. As a result, many nations are making concerted efforts to
reduce the buildup of carbon dioxide (CO2) and other GHG emissions either by reducing the use
of fossil fuels or by finding ways to prevent emissions from entering the atmosphere. While the
United States accounts for only 5% of the world's population, it accounts for 20% of worldwide
energy usage and 20% of global CO2 emissions.
Further, proponents of a “green economy” argue that that investing in renewable energy
technology and expanding green energy production would create more jobs and stimulate the
U.S. economy – as well as reduce the adverse effects of global warming, improve public health,
and stabilize energy expenditures. US Majors, “Report on Renewables”
Renewables in the current U.S. energy mix. In 2012, consumption of renewable sources in the
United States totaled about 9% of all energy used nationally. US EIA, “Renewable Energy
Explained.”
Chapter 7 – Renewable Energy 7.1.1 Cool Renewables
There are two basic categories of renewable energy sources: (a) cool sources, which can
produce energy without being burned; and (2) hot sources, which require combustion. We focus
on cool renewables.
Solar Energy. Contrary to common belief, solar energy is a “cool energy source” because it
does not need to be burned. Energy from the sun is virtually unlimited. Although estimates say
there is enough sunshine to meet the world’s entire energy needs many times over, it is difficult
to harness that energy in useful and cost-effective ways. Currently there are four primary ways to
produce energy from the sun: (1) concentrated solar power (CSP); (2) converting sunlight
directly into electricity with photovoltaic (PV) panels; (3) heating and cooling systems (solar
thermal); and (4) solar lighting.
Concentrated Solar Power (CSP). Concentrated Solar Power systems concentrate the
sun beams to produce heat and then convert the heat energy to electricity by conventional
ways. There are several designs for concentrating the sun beams but the method is the
same in all designs. There is a reflector, which concentrates the beams in a heat collector
(also called absorber or receiver). There is a fluid (molten salt for example) flowing in the
receiver and stores heat. The hot fluid flows to a heat engine and the heat energy is
converted to electricity. There are several designs, which differ in the way of
concentrating sun beams and storing heat.
Photovoltaic. Photovoltaic is the technology used for directly converting the sun energy
to DC electricity. You are already familiar with photovoltaic if you've ever used a
calculator. Usage of photovoltaic cells in calculators is a good idea to get rid of batteries
but you can't extend the usage to higher power needs because of high costs of
photovoltaic cells. The power efficiency of photovoltaic cells is between 12-24%, which
is considered low, compared to the other energy sources. The high cost of photovoltaic
prevents them from wide usage but they have many usage areas like satellites, which
need continuous power without batteries or small devices (calculators, watches).
BloggerDollar, “Ways to Produde Electricity from Sun.”
Heating and Cooling Systems. The term solar thermal has been used to describe two
different types of systems. One is where solar panels are used to collect heat, which is
used directly, as domestic or process hot water, space heating, or in some cases, air
conditioning. This is really the most basic form of solar energy utilization, which is
commonly known as solar heating and cooling (SHC). Technically, one could consider
drying ones clothes on a clothesline at one end of the solar thermal energy spectrum,
along with the passive solar energy that comes in through the window to warm your
house on a cool spring day. TriplePundit, “Pros and Cons of Solar.”
As far back as 1993, the United States Department of Energy (DOE) has been looking at
ways to use solar energy to heat buildings. In an early report, the DOE listed ways to trap
the sun’s rays and convert them into energy. The DOE named two considerable
environmental benefits to using solar energy: (1) it is pollution free and (2) it relies on an
Chapter 7 – Renewable Energy inexhaustible resource. Some argue
that solar energy has far greater
potential than wind energy.
Solar Lighting. The Basics: solar
lighting generates light through solar
cells. Solar cells convert sunlight
into electricity, which is stored in
nickel cadmium batteries. At night,
the stored energy in the batteries
provides power to run small bulbs
inside the solar lights.
Solar cells consist of silicon crystals or less expensive crystals constructed of copperindium-gallium-selenide. Silicon is more expensive because larger crystals are not easily
grown. Crystals made from the other materials are more flexible and cheaper but are not
as efficient as silicon in converting solar light into electricity. The Process: when the
crystals absorb sunlight, the electrons between the atoms become excited and shake. This
motion produces an electric current. The batteries inside the solar lights absorb and store
this electricity during daylight hours. When the light sensor detects darkness, the lights
use the stored energy from the batteries to power the light bulbs. EHow, “How Solar
Lighting Works.”
Benefits of Solar Energy. The main benefits of solar energy are (1) solar energy systems do not
produce air pollutants or carbon dioxide and (2) when located on building, they have minimal
impact on the environment. US EIA, “Solar Explained.” However, two limitations of solar
energy are (1) the amount of sunlight that arrives at the Earth’s surface is not constant and varies
depending on location, time of day, time of year and weather conditions and (2) because the sun
doesn’t deliver that much energy to any one place at any one time, a large surface area is
required to collect the energy at a useful rate. US EIA, “Solar Explained.”
Solar energy generation can be achieved using many mediums. For example, some
proponents believe that using parking lots to generate solar energy is one of the most promising
ways. This would be accomplished by covering parking lots with a thin layer of PV film.
Benefits of this include: (1) it doesn’t require roof penetrations, thus it reduces maintenance and
reduces leaks; (2) it does not require any new land; (3) it can be implemented on a scale that
provides significant economies in installation costs; (4) it provides shad to parked vehicles; (5) it
increases the value of the parking lot; and (6) grid connections in large parking lots can be made
compatible with vehicle-to-grids storage systems.
Wind Energy. In windy parts of the world, wind power has become one of the most attractive
sources of renewable energy. The use of wind power for electricity has been growing at a rapid
rate for the last decade. In 2012, wind turbines in the United States generated about 3% of total
US electricity generation. US EIA, “Wind Explained.” Huge farms of windmills with blades
over 100 feet are used to generate electricity. Wind power has its greatest potential where
average wind speeds are relatively strong and consistent in direction.
Chapter 7 – Renewable Energy In the US, wind power has the greatest potential in regions such as the western High
Plains, the Pacific Northwest coast, portions of coastal California, the eastern Great Lakes, the
south coast of Texas, and exposed summits and passes in the Rockies and Appalachians. In the
first quarter of 2014, the top 5 states with wind power capacity installed were (1) Texas, (2)
California, (3) Iowa, (4) Illinois and (5) Oregon. US DOE Installed Wind Capacity
While the potential for wind energy is great, there are some challenges that are present.
The geographic locations of the wind resources is largely concentrated in the Midwest and the
Rocky mountain states, while the population of the U.S. is mainly along the coasts. The largest
problem with wind energy is the intermittency. This affects the system at many levels: short-term
wind fluctuations, hourly or daily variations, and week-to-week and seasonal variations. This
variability necessitates the addition of reserve capacity other than wind that can be tapped when
the wind falls below the forecasted level over a period of hours or days. Additionally, because
winds fluctuate over very short periods of time, disturbances in the electric grid are very likely.
See The New York Times, “Wind Energy Bumps Into Power Grid’s Limits.”
Consider the advantages of wind power:
•
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Wind power is carbon-free. Wind energy generates electricity without burning fossil
fuels.
Wind turbines have a small footprint. Wind turbines take up less area than the average
power station, occupying a few square meters at the base and allowing the land around
Chapter 7 – Renewable Energy •
•
•
the turbine to be used for other purposes, such as agriculture.
Newer technologies are more efficient. Once installed, wind turbines use air flows, which
are free, thus cashing in on a this free source of energy.
Wind turbines can be placed in remote locations. Wind turbines, which can be placed in
mountain communities and remote countryside, range in different sizes to support
varying population levels.
Combined with solar power, wind energy can be steady and reliable. Wind energy, when
combined with solar electricity, can provide a steady, reliable supply of electricity.
But there are also disadvantages:
•
•
•
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Wind is not everywhere. In many areas, the winds strength is too low to support a wind
turbine or wind farm.
Wind turbines are expensive. Wind turbines are expensive and must be grouped together
to produce as much electricity as the typical fossil-fueled power station
Wind turbines are noisy. Commercial wind turbines sound like a small jet engine, a
disadvantage when placed near residential areas.
Wind turbines are not natural. Protests usually confront proposed wind farms, with
many people feeling the countryside should be left intact.
See CleanEnergyIdeas, “Advantages and Disadvantages of Wind Power.”
Wind energy has boomed lately, growing annually more than 25% over the past 18 years.
By the end of 2013, the total wind energy capacity was over 300,000 MW, with almost 30% of
the world’s installed wind capacity coming from China. Source: Renewableenergyworld.com
A different approach to wind energy is to develop offshore wind resources. See North
American Offshore Wind Project Information. Several European countries have already
developed significant offshore wind resources. There are multiple advantages to implementing
wind resources over the ocean, including the fact that the wind over the ocean is steadier, which
provides more reliable output and thus lowers reserve requirements.
Chapter 7 – Renewable Energy Source: BOEM
The Wind Program funds research nationwide to develop and deploy offshore wind technologies
that can capture wind resources off the coasts of the United States and convert the wind out at
sea into electricity. Offshore wind resources are abundant, stronger, and blow more consistently
than land-based wind resources. Data on the resource potential suggest more than 4,000,000 MW
could be accessed in state and federal waters along the United States and the Great Lakes coasts,
approximately four times the combined generating capacity of all U.S. electric power plants.
EERE, “Offshore Wind.”
Geothermal Energy. Geothermal energy is another cool renewable resource. Locations in
which underground steam produces hot springs or geysers, that steam could be used for electric
generation. Geothermal heat originates at the earth’s core. The DOE estimates that “if 1% of the
thermal energy contained within the earth’s uppermost crust were tapped for use, that output
would be equivalent to 500 times the energy contained in all the oil and gas resources known in
the world.”
There are three kinds of geothermal power plants. See Wikipedia, “Geothermal
Electricity.” A “dry” steam reservoir produces steam but very little water. A “flash” power plant
uses water ranging from 300-700 degrees Fahrenheit. Finally, a binary power plant uses water
that is not hot enough to flash into steam. Geothermal power is one of the cleanest sources of
energy. Little land is required, and there is much less physical damage to the environment.
However, there is a drawback to geothermal energy. Not many places in the world are situated
in locations where hydrothermal reservoirs are close enough to the surface of the earth to be used
effectively. The United States leads the world in electricity generation with geothermal power.
US EIA, “Geothermal Explained.” In 2013, US geothermal power plants produced 0.4% of total
US electricity generation. US EIA, “Geothermal Explained.” Five states had geothermal power
plants in 2013: (1) California had 35 geothermal power plants which produced 78% of US
geothermal electricity, (2) Nevada had 20 geothermal power plants which produced 17% of US
Chapter 7 – Renewable Energy geothermal electricity, (3) Utah had two geothermal plants, (4) Hawaii had one plant and (5)
Idaho had one plant. US EIA, “Geothermal Explained.”
Geothermal technology – using a geothermal heat pump (GHP – is also used for
individual household heating and cooling. In a GHP, a refrigerant fluid runs through pipes that
are buried below the ground. Since the temperature of the ground or ground water a few feet
below the earth’s surface remains relatively constant throughout the year, the refrigerant can
draw heat from the relatively warm ground
during cold months, and in warmer months
can transfer waste heat to the relatively cool
ground. A GHP can reduce household
energy consumption by 20%.
Geothermal Power Generation.
Geothermal energy has also been seen as a
potential source of power generation by
harnessing the heat stored inside the earth.
Though not used fully due to factors such
as location and high costs but in the years
to come when fossil fuels would start to diminish, it will turn out to be the cheapest source of
power generation.
Geothermal power generation suffers from its own advantages and disadvantages:
•
•
•
•
•
Geothermal power generally involves low running costs. This source of power saves
80% costs over fossil fuels and there is no need to purchase, transport and clean up the
fossil fuels used in conventional power plants.
Dependence on fossil fuels decreases. Geothermal power does not burn fossil fuels,
release greenhouse gases, or contribute to global warming
Geothermal power does not create any pollution. Where used, geothermal power has
helped in reducing global warming and pollution. (The release of some gases from deep
within the earth is not harmful.)
Geothermal power is cheaper than fossil-fueled power. Although the initial investment is
quite steep, geothermal power is inexpensive in the long.
Geothermal power generates jobs. Many governments are investing in geothermal
energy, which created jobs for local people.
But despite these advantages, geothermal energy is not being used widely. Geothermal energy
suffers from some disadvantages:
•
•
Geothermal power technologies are not widely available. Equipment, staff,
infrastructure, training hinder the widespread installation of geothermal plants across the
globe.
Geothermal power requires huge one-time investment. Companies must hire certified
installers and skilled staff. Moreover, electricity towers, stations need to set up to move
Chapter 7 – Renewable Energy •
•
•
•
the power from the geothermal plant to consumers.
Geothermal sites can run out of steam. Drops in temperature -- for example, if too much
water is injected to cool the rocks -- may result huge losses for companies investing in
these plants.
Geothermal power is suitable only in some regions. Geothermal power comes from hot
rocks below the earth that produce steam over long periods of time. Before setting up a
plant, companies must identify suitable locations, at significant cost. In addition, the
rights to access this energy have sometimes created disputes similar to those involving
the right to sunlight. See Parks v. Watson, 716 F.2d 646 (9th Cir. 1983).
Geothermal sites may contain poisonous gases. These gases could escape deep within
the earth, through the holes drilled by the constructors. The geothermal plant must
therefore be capable enough to contain these harmful and toxic gases.
Geothermal power cannot be easily transported. Once the tapped energy is extracted, it
can be only used in the surrounding areas. Other sources of energy like wood, coal or oil
can be transported to residential areas but this is not a case with geothermal energy. Also,
there is a fear of toxic subterranean substances getting released into the atmosphere.
Other Cool Resources. Deepwater energy is an experimental form of renewable energy. Tidal
power plants can be built in areas where there is a big range of the tides. Convection plants build
up a circulation of cold deep water that could be used to cool buildings. Unlike solar and wind
energy, wave energy is continuous but highly variable. Currently, wave energy systems are in the
early stage of development in the United States. See Chapter 1 – Hydro Power.
7.1.2 Hot Renewables
Hot renewables are those that require combustion. Among the hot renewables, the term
biomass is used to describe a wide variety of renewable plant materials that can be converted to
provide various sources of energy. Biomass is the organic matter in trees, agricultural crops and
other living plant material. The growth of new plants and trees replenish the supply, making it a
renewable energy source.
Chapter 7 – Renewable Energy In 2013, biomass fuels provided about 5% of the energy used in the United States. US
EIA, “Biomass Explained.” The most common form of biomass conversion to energy is through
direct combustion with 45% of biomass energy coming from wood, 44% from biofuels (such as
ethanol), and about 11% from municipal waste.
The burning of waste vegetation from agricultural crops is a potential source of energy
that is beginning to find commercial uses. The EIA projects that biomass will become a much
bigger part of renewable electricity generation in the next 20 years. However, there is
controversy surrounding the transformation of biomass into energy. For example, one way of
transforming biomass into energy is through fermentation of feedstocks (such as corn) into
bioalcohols like biobutanol, bioethanol and biomethanol. This diminishes feedstock and requires
large amounts of water and energy to produce fuel.
7.2
Regulatory Commons: Who Regulates What?
Federal and state and local laws are critical to the success of renewable energy sources.
Sometimes, however, it seems as though government programs are counter-productive in helping
these energy sources get off the ground. This section describes the “regulatory commons”
problem and offers a prominent example -- the Cape Wind project -- of the government
frustrating renewable energy. See Cape Wind. This wind power project has been planned on
Nantucket Sound, off the coast of Massachusetts coast, but has faced a gauntlet of regulatory
hurdles and political opposition.
7.2.1 “Regulatory Commons” Problem
The “regulatory commons” problem describes the intersection of a commons resource
(not necessarily limited to oil or gas) with the regulatory gap caused by inadequate, overlapping,
or inconsistent regulation of this commons resource. See William Buzbee, Recognizing the
Regulatory Commons: A Theory of Regulatory Gaps (2003). The problem, as described, is not
too much regulation, but rather not enough – particularly as to environmental issues.
When multiple regulators are involved and jurisdiction is overlapping or mismatched, the
easiest thing to do for all involved is nothing. The public, without a clear idea of who has
jurisdiction over the problem, will not be able to make their voice heard as easily as when there
is clear primacy of a regulatory authority over a problem. Because of the fragmented nature of
regulatory statutes concerning environmental issues, government regulators find it easier to
simply not regulate than to divide up power and responsibility among themselves. Professor
Buzbee cites the Cape Wind project as a prime example of the “regulatory commons” problem.
7.2.2 Case Study: The Cape Wind Project
The Cape Wind project was supposed to be the first offshore wind farm in the United
States. It was originally proposed in 2001, and as of October 2014, its future is more secure, but
opponents have yet to give up their fight. This project According to the project developer, the
wind turbines would generate enough electricity to meet 75% of the demand on the Cape and its
nearby islands. Proponents of the project believe it is important to our national interest, and that
success in this project will pave the way for developing more offshore wind technology.
Chapter 7 – Renewable Energy The Cape Wind project has been controversial. There are concerns for wildlife and
navigation around the Cape, along with concerns that one of America’s most beloved summer
playgrounds would be ruined by wind farms. Robert Kennedy Jr., a noted supporter of wind
power, vehemently opposed this project. The Alliance to Protect Nantucket Sound has
disseminated a great deal of information opposing the project, including concerns about
migratory birds, which in poor weather could be forced down into the spinning turbines, possibly
leading to “an episodic catastrophic kill of migrating birds”. Environment - APNS. The Alliance
also claims the project will desecrate tribal lands, as an unobstructed view of the sound is critical
to the religious practices of the Wampanoag Tribe of Gay Head. Tribal Lands - APNS.
The Alliance also lists dozens of sensitive or endangered marine animals that live,
migrate through, or breed in the Nantucket Sound, which is designated an Essential Fish Habitat
by the Fisheries Conservation and Management Act. Environment - APNS. In response,
proponents of the project cite positive relationships between wind farms and ocean life in
European offshore wind farm sites. Cape Wind. As for impact on the seabed during construction,
proponent point out that disruption will be less than 24 hours for each cable laid and turbine
foundation installed. Cape Wind.
Source: Energy, Technology, & Policy Blog
Source: New Energy News
The negative public outcry has proved daunting to the different federal agencies involved
with the project. The permitting process has been a long a difficult one. The project’s
Environmental Impact Statement (3,800 pages long) occurred as the permitting process moved
from the Army Corps of Engineers to the Mineral Management Service pursuit to the 2005
Energy Policy Act. Permitting Process, Cape Wind. Additionally, state law required the
submission of an Environmental Impact Report (EIR) under the Massachusetts Environmental
Policy Act (MEPA) and a process before the Cape Cod Commission’s Development on Regional
Impact (DRI). Permitting Process, Cape Wind. All in, 16 government agencies participated in the
permitting process, each level with opportunities for public comment. Permitting Process, Cape
Wind.
Chapter 7 – Renewable Energy By October 2012, the project has cleared every federal and state review, passed
environmental standards and had been cleared by the Department of the Interior. Huffington
Post. Then the Alliance to Protect Nantucket Sound brought suit in Massachusetts court, which
decided the National Grid could purchase half of Cape Wind’s power. Cape Wind officials are
still seeking a buyer for the remainder of the project’s power. Worth noting, the project has the
support of Governor Patrick and 80 percent of Massachusetts citizens. Huffington Post.
In 2013, construction of some of the turbines began, to ensure the project would qualify
for expiring wind production tax credits. In 2014, a judge dismissed the 26th lawsuit against
Cape Wind, stating that "There comes a point at which the right to litigate can become
a vexatious abuse of the democratic process".
7.2.3 Renewable-energy Land Use Laws
Land use law also has been used to encourage renewable energy resources. These
techniques include solar-access ordinances, development guidelines, zoning ordinances with
building height restrictions, and solar permits. Again, though, there is a hodge-podge of
approaches making it difficult for the planning and implementation of renewable energy projects.
No comprehensive state renewable-energy land use laws. Because renewable energy systems
were virtually non-existent years ago, most land use laws at the state level were passed without
regard to these possible energy strategies. And, still today, most states do not have land use laws
that recognize renewable energy. Thus, it has been local governments that have revised their land
use and development ordinances – with haphazard results. Although some NGOs and university
programs have sought to create model ordinances for municipalities to adopt, but no single code
has been adopted. Columbia Model Ordinance.
Variation in renewable-energy local land use laws. The sheer number of local governments
means there are significant number of varying renewable-energy ordinances. For example, in
New Jersey with 566 municipalities, New Jersey, “Municipalities”, some ordinances completely
restrict the use of renewable sources, while others promote the use with lax requirements. For
example, some restrictive ordinances ban wind power within a certain area, while others restrict
windmill height.
Some towns, however, have sought to encourage renewable energy. Consider the City or
Maplewood, Minnesota and its Ordinance No. 914. Maplewood Ordinance. The town’s
ordinance lays out a detailed plan for solar, wind and geothermal apparatus, where they can be
used and how they fit into the existing land use, zoning and structure permit system. Maplewood
Ordinance. The Ordinance lays out rules such as noise regulations for roof mounted windmills in
single home zoning areas, maximum height levels for solar panels on industrial buildings and
classifies solar panels under the existing framework as mechanical accessory structures.
Maplewood Ordinance.
By specifying how renewable technologies can be used, residents and business owners
can install renewable technologies with the confidence their choices will not be challenged.
Without a codified framework for renewable technologies, a homeowner wanting to install solar
Chapter 7 – Renewable Energy panels, for example, may be required to get special permits from the agency in charge of the
ordinance so that the solar panels can be installed. Obtaining a variance from an ordinance can
cost both time and money – including for hiring attorneys to apply for the variance.
Not all renewable-energy codes, however, advance the cause of renewable energy. For
example, some municipalities have required burdensome documentation for installers, require
avian studies for windmill projects, require visualization studies to analyze how turbines affect
sight lines from various vantage points. Such additional studies add to the cost of the whole
project. These types of ordinances and regulatory requirements rather than facilitating renewable
technologies instead erect regulatory hurdles.
Preemption of municipal variations. One answer to the problems of multiple municipal land
use ordinances is that states (or even the federal government) could enact laws protecting small
renewable energy generators. Allowing renewable energy projects without the additional red tape
and expense could promote the use of such technology, making it easier for investors and
individuals to tap into these renewable sources.
7.2.4 Solar and Wind Easements: Common Law Rules
Historically, renewable resources such as sunlight and wind were a form or property
belonging to the landowner. For example, in England the common law once recognized a
doctrine of ‘‘ancient lights.” This doctrine treated the right to receive sunlight as an easement
appurtenant to real property -- and therefore a potential legal protection for solar or wind
projects. This doctrine, however, has been abandoned in England and in most of the American
states. See Fontainebleau Hotel Corp. v. Forty–Five Twenty–Five, Inc., 114 So.2d 357 (Fla. App.
1959). Thus, landowners planning a solar or wind project may not have rights to unimpeded
light and win.
Another common law device, however, may provide some protection to landowners
seeking to develop solar or wind projects on their property. Under the law of nuisance,
landowners have the right to use and enjoyment of their property when the threatened harm to
the owner (such as a building blocking a solar panel) outweighs the utility of the defendant
owner's conduct to himself and to the community. In 1982, the Wisconsin Supreme Court found
private nuisance when a person built a structure that interfered with the operation of a solar
collector. Prah v. Maretti, 321 N.W.2d 182 (Wis. 1982). See also Tenn v. 889 Associates, Ltd.
500 A.2d 366 (N.H. 1985) (holding that private nuisance protects property owner's interest in
light and air).
Chapter 7 – Renewable Energy 7.3
Renewable Energy Programs: Federal, State and International
Renewable energy programs range from state programs such as California’s, run by the
California Energy Commission, which is responsible for developing renewable energy sources
and alternative renewable energy technologies for buildings, industry and transportation, to
international programs like the International Renewable Energy Agency (IRENA) and Solar
Energy International and focused on helping others use renewable energy sources and
sustainable building technologies through education and technical assistance. At the federal level
the U.S. Department of Energy oversees a number of programs directed towards the goals of
achieving energy efficiency and developing and utilizing renewable energy.
7.3.1 Early Governmental Approaches
Integrated Resource Planning. The Energy Policy Act of 1992, 42 USC § 1301, required
states to consider mandating the use of integrated resource planning (IRP). IRP requires a utility
plan to include not only traditional power plants as supply side options, but also other resources
such as electricity provided by renewable energy sources (Supply-side options are different the
systems an energy producers might use produce energy for consumers) U.S. Agency for
International Development. IRP was envisioned as a way to promote renewable energy facilities
by considering environmental impacts previously disregarded.
PURPA and Renewable Sources. The Public Utility Regulatory Policies Act of 1978 (PURPA),
16 USC § 2601 et seq., responded to the energy crises of the 1970s. Part of PURPA aimed to
remove the obstacles that small power producers encountered when attempting to sell their
power utilities, by requiring utilities to purchase power from qualifying facilities at the utilities’
avoided cost.
7.3.2 Renewable Portfolio Standards
A common method used by states to mandate the development and use of renewable
energy sources is the Renewable Portfolio Standards (RPS). A RPS usually requires a certain
percentage of electricity sold by utilities in the state to be generated from renewable sources.
These requirements can be met by purchasing renewable electricity on the open market.
Typically, RPSs have two goals: (1) to reap the energy, environmental, and economic
benefits of renewable energy and stimulate market and technology development, and (2) to help
make electricity generated from renewables economically competitive with that generated from
fossil fuels.
State RPS Experience. As shown in the figure below, state Renewable Portfolio Standards
outline the percent of energy that states wish to come from renewable energy sources by a set
date.
Chapter 7 – Renewable Energy Renew able Portfolio Standard Policies..
www.dsireusa.org / June 2012.
29 states,+
Washington DC and 2
territories,have
Renewable Portfolio
Standards
(8 states and 2 territories have
renewable portfolio goals).
Source: DSIRE
Interestingly, utilities in states with competition in retail electricity markets typically meet
the RPS requirement on their own, while other states must implement other methods to reach the
goals. As of 2014, 38 states had Renewable Portfolio Standards (voluntary) or Renewable
Portfolio Goals (mandatory). U.S. Energy Information Agency.
A RPS creates market demand for renewable and clean energy supplies. EPA, “Renewable
Portfolio Standards Fact Sheet.” Currently, states with RPS requirements mandate that between
4% and 30% of electricity be generated from renewable sources by a specified date. EPA,
“Renewable Portfolio Standards Fact Sheet.”
While RPS requirements differ across states, there are generally three ways that electricity
suppliers can comply with the RPS: (1) Owning a renewable energy facility and its output
generation; (2) Purchasing Renewable Energy Certificates (RECs); (3) Purchasing electricity
from a renewable facility inclusive of all renewable attributes (sometimes called "bundled
renewable electricity"). EPA, “Renewable Portfolio Standards Fact Sheet.”
The policy benefits of an RPS are the same as those from renewable energy:
•
•
•
Environmental improvement (e.g., avoided air pollution, global climate change
mitigation, waste reduction, habitat preservation, conservation of valuable natural
resources).
Increased diversity and security of energy supply.
Reduced volatility of power prices, given stable or non-existent fuel costs for renewables.
Chapter 7 – Renewable Energy •
Local economic development resulting from new jobs, taxes, and revenue associated with
new renewable capacity. EPA, “Renewable Portfolio Standards Fact Sheet.”
Because it is a market-based program, an RPS also offers several operational benefits, including
relatively modest cost. Ratepayer impacts range from less than 1 percent increases to 0.5 percent
savings. In addition, an RPS spreads compliance costs among all customers, minimizing the
need for ongoing government intervention. An RPS functions in both regulated and unregulated
state electricity markets, and provides clear and long-term targets for renewable energy
generation to inspire investors' and developers' confidence in renewable energy. EPA,
“Renewable Portfolio Standards Fact Sheet.”
Barriers to State Goals: Dormant Commerce Clause and Preemption Concerns. Separate
state statutes concerning renewable energy sources can cause problems under the dormant
commerce clause. Many state siting statutes limit who can apply to site any power plant or
transmission line to in-state utilities or companies that have a contract with existing utilities.
Courts have found that limitations for in-state use of renewable may not be constitutional.
Follow the Money!: Article I and Article VI Constitutional Barriers to Renewable Energy in the
U.S. Future. As Article I, section 8 of the Constitution states that “Congress may regulate
Commerce . . . among the several States . . .,” the dormant Commerce Clause prohibits actions
that are, on their face, discriminatory against interstate commerce. Dep‘t of Revenue v. Davis,
553 U.S. 328, 338 (2008). But see Tampa Elec. Co. v. Garcia, 767 So.2d 428 (Fla. 2000)
(holding that tower-plant siting and need determination are areas that Congress has expressly left
to the states).
State RPS programs that prefer in-state power sources is subject to strict scrutiny, and the
state would need to show its RPS served a compelling interest and utilized the least restrictive
means to achieve that interest for the RPS to be found valid. Follow the Money! The Supreme
Court has found that even the over-arching goal of environmental preservation is not enough to
make a discriminatory regulation valid. West Lynn Creamery v. Healy, 512 U.S. 186, 206 (1994).
Federal RPS Proposals. Some argue that state RPS programs should be replaced by a single
federal RPS. Several other countries have had success setting national targets for renewables.
And it has been argued that state policies alone have not prompted development of enough
renewable energy projects. Allowing REC’s to be tradable nationwide, proponents argue, would
support renewable energy facilities better that states can currently. Among other things, a
national RPS system may be more administratively efficient by replacing overlapping and
contradictory state requirements.
Absent a federal standard, some states may set low targets to avoid harming their industries,
thus creating a “race to the bottom” in which states compete for the support of interest groups by
purposely instituting low-quality regulations. National Renewable Portfolio Standard: Smart
Policy or Misguided Gesture? State RPS targets also vary widely and are criticized as being set
without knowing how much electricity can be generated from renewable resources. A national
target may “level the playing field.”
Chapter 7 – Renewable Energy Further, the differing state RPS requirements discourages development of cost-competitive
forms of renewable energy as renewable-rich states sometimes pay to import more expensive
renewable energy from neighboring states. A federal RPS would address dormant commerce
clause issues that arise under many state RPS programs that prefer in-state renewable resources.
State RPSs that impose geographic restrictions may restrain trade, undermining the market for
renewable energy.
A national RPS would also produce a national security benefit because it would improve
infrastructure reliability and decrease energy independence. It would also reduce uncertainty for
investors caused by the complexity of the current RPS system.
Like state RPS standards, a national RPS standard would shift U.S. energy sources to
renewables and thus lower renewable energy’s cost through technological advancement and
economies of scale. Currently, state RPSs vary widely in their definition of an REC and in what
qualifies as “renewable” – a national RPS would create uniformity across the country.
Given the significant differences between state RPS designs, it is difficult to generalize about
a national RPS policy. The main issues with a nation-wide implementation are:
•
•
•
•
•
•
Resource Availability: Because of the differing geographical and regional climates,
sufficient renewable resources vary significantly. Some states will have an easier time
meeting a national standard because of natural advantages.
Renewable Energy Certificates (RECs): Creating a market for renewable electricity to be
traded to other parties and states would provide flexibility and lower rates. A national
tracking system would provide regulators with a tool to quickly identify, verify, and trace
REC ownership. See EPA, “REC Tracking.”
Geographic Eligibility: Some states restrict access to out-of-state markets, or the
intrastate grid. A national PRS system, with access to these markets, could provide for
lower rates for consumers. Similarly, removing strict state guidelines as to what facilities
can contribute to the power grid could provide for lower rates for consumers.
Solar-Specific Provisions: Some states have carve outs that favor certain types of
renewable energies. Such support for solar power in a national RPS system could
encourage the innovation and development of these specifically-required technologies.
RPS Cost Caps: A national RPS could include cost caps so customers will not be
negatively affected as states implement a national RPS policy.
Knowable Eligibility Rules: Changing eligibility, prevalent in state RPS systems, can
cause significant market turbulence. A uniform, step-by-step approach to changes in
policy will ensure a more stable market.
Opponents of a federal RPS system, on the other hand, argue that a federal RPS would
require massive (expensive) upgrades in transmission capacity. In addition, some argue that a
federal RPS would intrude on state authority. That a federal PRS system would be more
Chapter 7 – Renewable Energy administratively efficient is unrealistic given the historic split of jurisdiction between federal and
state governments in electricity policy. Further, renewables-poor states will be forced to buy
energy and REC’s from renewables-rich states, resulting in a “wealth transfer.” Finally, it may
be that other methods – besides RPS systems – can be more effective and efficient in moving
toward renewables, such as efficiency improvements or feed-in tariffs. It may be more efficient
if customers invest in small-scale low-carbon electricity, in exchange for a guaranteed payment
for the electricity they produce, with the surplus energy sold back to the grid. UK Department of
Energy and Climate Change.
7.3.3 Feed-In Tariffs (FIT) – aka Renewable Energy Payments (REPs)
Under the typical feed-in tariff structure, renewable energy projects are guaranteed
interconnection with the electricity grid, and project owners are paid an above-market rate locked
in for a specific term of years. See Wikipedia, “Feed-in Tariff.” The rate may be a fixed amount
defined in advance or a premium over the wholesale price of electricity. Some think this system
is “anti-competitive” because renewable energy providers are paid above-market rates to help
them overcome cost disadvantages.
While an RPS mandates how much customer demand must be met with renewables,
properly structured FIT policies attempt to support new supply development by providing
investor certainty. In other words, FITs are focused on setting the right price to drive renewable
energy development, while RPS policies focus on the quantity leaving the price up to
competitive bidding. Under a RPS, due to the high costs of developing a bid and the high risk of
failing to obtain a contract, the rate of return on investment requirements in competitive
solicitations are generally much higher than in jurisdictions with FITs. These high transaction
costs make it difficult for smaller investors to participate, which leads to a less-dynamic
renewable energy market. Europe’s experience supports the notion that FIT policies create stable
investment environment that allow renewable energy development and financing to happen more
quickly and cost-effectively that competitive solicitation.
European Experience. Many European countries have utilized FIT systems to encourage
growth in renewables. In Germany, the national supply of electricity produced from renewables
doubled from 2000 to 2007. Germany has a national renewable energy target of 12.5% of gross
electricity consumption in 2010 and 20% in 2020. See Development of Renewable Energy
Sources in Germany 2010.
Feed-In Tariffs in the United States. In the United States, a number of states have considered
FITs, but as of 2013 only seven have adopted them in some fashion – Washington, Oregon,
California, Maine, Rhode Island, Hawaii, and Vermont. EIA, “FIT” In May 2008, a national
feed-tariff bill was introduced, based on successful European policies: 1) guaranteed
interconnection through uniform minimum standards, 2) a mandatory purchase requirement
through fixed-rate 20-year contracts and 3) rate recovery through a regionally partitioned
national system benefits charge. However, these three design elements conflict with trends
toward market competition in the US electric sector, such as the existing “open access” rules.
Federalism concerns also pose a challenge to this proposal. See New York v. FERC, 535 U.S. 1
(2002).
Chapter 7 – Renewable Energy 7.3.4 Other State Financial Incentives
States have programs such as rebates, grant programs, RPS policies, and tax incentives to
encourage investment in renewable energy systems. Data, including comprehensive maps and
tables , can be found on the Database of State Incentives for Renewable Energy’s (DSIRE).
Public Benefit Funds/System Benefits Charges. Other state incentive programs include public
benefit funds, municipal financing, and power purchase agreements (PPAs), which is a contract
between a consumer of electricity and the owner of a renewable energy facility for the purchase
and sale of the facility’s electrical output. See Pew Climate, “Public Benefit Funds”;
Environment Magazine, “Toward a Low-Carbon Economy: Municipal Financing for Energy
Efficiency and Solar Power.”
7.3.5 Other Federal Financial Incentives
Tax Incentives for Project Owners. One aspect of federal policy on renewable energy that may
be critical to its proliferation is the federal government’s ability to provide tax incentives for
renewable energy development. Currently, the most prevalent of these tax incentives is the
production tax credit (PTC). Union of Concerned Scientists, “Production Tax Credit for
Renewable Energy.” The PTC is a tax credit which awards federal income tax credits to
businesses who own renewable energy systems like wind and solar. The PTC is given per
kilowatt-hour (kWh) of renewable energy produced.
For a while after its inception, the PTC was federally available only for short periods,
sometimes a year or less. However, the American Reinvestment and Recovery Act of 2009
(ARRA) provided for a four-year guarantee of PTCs, extending it to renewable energy facilities
placed in service on or before December 31, 2013 at about two cents per kWh of renewable
energy produced. The ARRA further provided for a 30% investment tax credit in place of the
PTC based on kWh of production. This 30% investment tax is an avenue that could prove
valuable to businesses wishing to invest in renewable energy technology without large capital
expenditures. Cash grants from the Department of Treasury may be taken instead of the
investment tax credit and PTC. Through these mechanisms, the ARRA aimed to add certainty to
the development of renewable energy systems and to ease the concerns of potential investors by
lowering capital requirements of startups.
State and local governments employing renewable energy systems may be able to benefit
from the Renewable Energy Production Incentive (REPI), which offers payment rather than
federal income tax credits (since municipalities and states do not pay federal income taxes).
These terms are attractive because they are performance based (at 2.2 cents / kWh), but
guaranteed for 10 years after initial application.
Tax and Financing Incentives for Consumers. Initially, tax breaks to homeowners purchasing
energy from renewable systems provided the initial push towards renewable energy. The Energy
Policy Act of 2005, 42 USC § 13201 et seq., provided federal tax credit for residential renewable
energy systems by allowing the taxpayer to claim a 30% credit against qualified expenditures on
Chapter 7 – Renewable Energy residential renewable energy systems. The Energy Policy Act was amended by the Energy
Improvement and Extension Act of 2008 to extend the credit to residential wind energy systems
and geothermal heat pumps. See 26 USC § 48. However, both pieces of legislation left a $2,000
cap on the amount of credit claimable. The ARRA removed this cap because many consumers
found that the cap made renewable energy systems economically unattractive.
An energy efficient mortgage (EEM) is another federal incentive for consumers to
purchase renewable energy. See Energy Star, “Energy Efficient Mortgages.” Essentially, an
EEM allows a potential buyer to increase their maximum borrowing capacity by an amount equal
to the energy savings realized by the use of certain renewable technologies and energy systems.
In recognition that urban areas may be more attractive for residential renewable energy
systems (as far as components availability, etc.), the US Department of Agriculture’s Rural
Energy for America Program established grants and loan guarantees to help farmers and small
rural businesses acquire renewable energy systems. The 2008 “farm bill” (the Farm Security and
Rural Investment Act) authorized $70 million in grants.
Research and Development Funding. One hindrance to the proliferation of renewable energy
systems is commercial viability. Research and development grants are necessary for any
technology to bridge the gap of science fiction to widespread commercial vitality. While many
renewable technologies are considered “mature” from a production standpoint, research and
development is still required to fully integrate them into our consumption patterns in different
sectors. Historically the federal government has funded these R&D programs but renewable
energy systems saw less and less through the years until the ARRA.
The ARRA contains a number of provisions designed to increase the amount of
government funding for renewable energy R&D. A total of $16.8 billion was allocated for
renewable energy programs over ten years with $2.5 billion supporting the DOE’s deployment
programs. Advanced Research Projects within the DOE receive funding under this provision of
the ARRA to explore higher risk renewable energy systems with potentially greater payoffs. The
idea behind this, presumptively, is that creativity will no longer be stifled by what is considered
to be “impossible” from an economic standpoint.
Some, like Tom Steyer, believe they ARRA has helped spur necessary investment for R
& D in renewables such as wind farms. Picking Winners and Losers. While there are opponents
who argue against the magnitude of its impact, the Council of Economic Advisors has reported
that the ARRA has accelerated innovations in photovaltaics. The U.S. Geothermal Energy
Association reported a substantial increase in new projects under development due to funding
from the ARRA, and the Energy Information Association predicts that renewable generation
capacity will increase 32% more than if the Act had not been passed. Two Years Later, the
Impact of ARRA Investments.
7.3.6 Renewable Energy Programs in Other Nations
As the United States continues to develop renewable energy facilities, several European
nations already have feed-in tariffs and other incentives in place, and also generate a large
Chapter 7 – Renewable Energy portion of their electricity from wind power. The Chinese government has also taken strong steps
to promote renewable energy.
European Programs. The member nations of the European Union aim to have renewable
energy sources providing 20% of electricity in the EU by 2020. European Commission. Each
nation has an individualized target to meet. Even before this agreement, Germany, Spain and
Denmark had national legislation promoting renewable energy sources.
Programs in China. While China is one of the largest contributors to global warming, it is
beginning to promote renewable energy sources. It recently announced that it set a wind power
capacity target of 100 GW by 2020, eight times its existing capacity. China's 12th Five Year Plan
for Renewable Energy Development set a goal of generating 9.5% of China’s electricity by 2015
China Revs Up Renewable Energy Goals.
7.4
Distributed Generation
Distributed Generation (DG) involves power generated on individual premises, through
renewable systems, being sent back to the regional grid. The attractiveness of DG increased with
the availability of small renewable energy systems available to homeowners and business
owners. DG uses smaller electric generators to generate electricity at a more efficient rate and
then sends it to local entities. The basic premise is that homeowners and business owners
investing in renewable energy systems can use energy they produce and sell excess energy back
to the grid. Further, energy companies can use their deep pockets to install renewable energy
systems on private residences and buildings and pay a sort of “rent” to the owners.
A conventional electric grid (one not using DG) consists of web circuits. See
Massachusetts Clean Energy Center Guide (MCECG), 2. These circuits move electricity from
generators to consumers through the use of a distributive system. MCECG. This generator
usually resides at a large power plant. MCECG. The distribution system takes the electricity
produced from the generator, reduces the voltage, and distributes it through transmission wires to
individual customers in a region. MCECG. The local utilities in your region own the wires.
MCECG. At the consumer’s home this electricity arrives to a transformer and a meter measures
the amount of electricity used by the customer. MCECG. With a DG system, a generator is
installed at the consumer’s location and can be interconnected to the power plant’s distribution
system to increase reliability. MCECG. Another method allows a generator to be directly
connected to the distribution system without even having to worry about the transmission
system. MCECG. The DG systems work by utilizing these small-scale power generation
technologies. MCECG. These technologies provide an alternative way to enhance and provide
power to the traditional power system. Solar panels and wind turbines are two of the most
popular systems used for DG. See Wikipedia page. To provide for a reliable source, generators
are also connected to central power grids. Wikipedia page.
The following graphic from the United States Department of Energy helps demonstrate
how DG works and shows what the distribution process looks like. The graphic also points out
which systems of DG each type of consumer tends to utilize:
Chapter 7 – Renewable Energy Due to a number of factors, DG has become a viable option for meeting electricity needs.
Distributed Generation (DG). New technologies such as solar panels and wind turbines have
made it possible for smaller entities to pursue a DG system. DG. High voltage transmission
lines, which were used previously, have become expensive. DG. Another factor is that
consumers are increasingly demanding reliability for their electricity needs. DG. Electricity
lines have become increasingly liberalized. DG. Finally, concerns in the area of climate change
has made renewable energy sources in higher demand, meaning small consumers are more
willing to pursue these avenues. DG.
A variety of disasters, such as September 11, the 2003 blackout, and recent hurricane
destructions have led individuals to question the pursuit of DG. Even disasters causing regional
power outages and high peak demands could be mitigated by the ability of hundreds, perhaps
thousands of individual entities to produce power for themselves and the grid. Several factors
have limited the viability of the DG approach but the benefits are undeniable. One possible
limiting factor with DG is that the economic benefit is weighed on a case-by-case basis, creating
economic benefits to some and economic threats to others and many users experience a high
cost. Further, public utilities have no incentive to get involved since the consumers reap the
benefit. DG. Additionally, few people are familiar with the technology of DG, which has
resulted in few analytical studies in this area, and has led to the assumption that DG possesses
greater risks than other energy sources. Finally, there are technical issues involved when DG is
connected to an existing distribution system. Regardless of these limiting factors, DG has the
potential to improve power quality and support to consumer-owned utilities, manufacturing
plants, commercial buildings, and urban areas. Furthermore, DG has the capability to provide
power even during emergency situations such as terrorist attacks, natural disasters, and other
catastrophic events.
Chapter 7 – Renewable Energy The concept of each consumer being able to power his own home is still a far ways away.
Due to many of the economic and institutional barriers to DG this technology does not likely
have the opportunity to become widespread within the next few years. However, DG does have
the power to achieve energy efficiency as well as a positive influence on the environment.
Hopefully in the next few years the market will grow more competitive as difference services in
the employment of DG become accessible.
7.5 Transmission Barriers to the Deployment of Renewable Sources
Several concerns have been raised about the ability to efficiently and effectively transmit
electricity generated through renewable energy systems to area of demand. Obviously, regional
qualities make certain renewable technologies, such as wind turbines and solar thermal fields,
more feasible in some places than others. The issue, then, is getting this renewable energy from
a place where its production is viable to a place where it is not.
7.5.1 Transmission Line Siting
When a transmission line is sited, construction or modification of electric transmission
facilities may begin. Electric power transmission is the process by which large amounts of
electricity produced at power plants is transported long distances for use by individual
consumers. See Electric Transmission. Due to the high voltage, electricity is usually shipped to a
substation near a heavily populated area. Electric Transmission. Transmission line siting comes
into play when a newly constructed facility, such as a solar plant, is going to be built and new
transmission lines and facilities are required. Electric Transmission. Therefore, when a site is
commissioned there are a number of site-specific impacts associated with the new project.
Electric Transmission.
The ability of the FERC to site transmission lines is historically non-existent. Each
individual state has typically assumed jurisdiction to approve or deny permits for the siting of
electric transmission facilities in its own state. States and local governments generally assess
transmission lines’ placement based on their own needs and narrowly focus on benefits to instate customers. The problem with using existing infrastructure, then, is obvious, as states have
well established in-state transmission systems without much thought to getting power from a
region capable of vast renewable energy. Eminent domain issues also arise within state
jurisdiction. The ability of a state to set transmission lines in another state raises ambiguous legal
questions as to jurisdiction of eminent domain and who is actually receiving the benefit of the
hypothetical transmission line. Lastly, considerations such as preservation of the aesthetic
landscape are left to the state and local governments approving transmission lines. The scope of
these considerations would obviously have to be broadened to a regional level if renewable
energy systems become prevalent on regional grids.
Traditionally power line siting was left totally to the states where state and local
regulators would take into account the public interest in determining whether the need for
transmission line was present. How state and local authorities acted on this information greatly
influenced the development of transmission projects in individual states. One major issue is who
benefits from the proposed siting. For example, many states will not permit a major siting that
Chapter 7 – Renewable Energy benefits out-of-state ratepayers. The ratepayers have a significant impact because ultimately
these ratepayers are who elect the officials in charge. Boss
In 2005 Congress responded to the FERC’s limited ability to site transmission lines by
adding Section 216 to the Federal Power Act. That section authorizes the Secretary of Energy to
designate areas with transmission restraints to issue permits for construction or modification in
certain instances. One part of this section gave rise to litigation. This provision essentially gave
FERC authority to issue a permit for construction if the states withheld siting approval for more
than 1 year after the filing of a permit application. § 216(b)(1)(C)(i). In the case that arose from
this addition to the FPA, Piedmont Environmental Council v. F.E.R.C., 558 F.3d 304 (4th Cir.
2009). In this case, the Fourth Circuit discussed what this term “withheld” actually meant.
FERC argued that the term “withheld” meant that if the state expressly denied an application
within one year, FERC would be permitted to issue or deny the permit. The court held that this
interpretation did not give FERC authority when a permit had been denied. This decision
ultimately limited the siting power granted to FERC by this legislation. Today FERC is allowed
to issue a permit for transmission line siting if the state is unable to act or acts inappropriately,
and cannot simply reverse the decision if a permit is denied.
7.5.2 Transmission Cost Allocation
Similar to transmission line siting, transmission cost allocation has typically been an
issue of state regulation. Once again, the state would often focus narrowly on its own benefits.
Once a transmission site is approved, the issue of cost is still a problem. Ratepayers, like the ones
mentioned above, are usually the ones who finance the cost of the project. Therefore, few
transmissions have broad social benefits that extend beyond their state.
Due to these insufficient mechanisms, FERC is attempting to articulate national cost
sharing principles. FERC wants to ensure that those public utilities’ rates and terms are
reasonable across the board for all states. FERC currently has greater ability to assign costs
where there is a regional transmission organization (RTO). An RTO is an organization where an
owner of a transmission line can join to become integrated with a regional grid. Each member of
the association cedes to the RTO’s complete operational control of said transmission lines. FERC
is encouraging Congress to grant it more authority to grant transmission system costs where the
public interest is spread through an entire region.
Currently, FERC’s involvement has been related mostly to approving RTO tariffs, which
allocate costs among members of the organization. FERC has the ability to approve pricing
schemes even on the basis where they believe there will be a benefit, even it if it not calculable.
In Illinois Commerce Commission v. F.E.R.C., 576 F.3d 470 (7th Cir. 2009), the Seventh Circuit
held that FERC must make a reasoned decision based on substantial evidence before it allocates
transmission costs. Therefore, to order development of new transmission, FERC must have clear
expectations regarding the recovery costs for new investments in transmission infrastructure.