April 15, 2008
LEGISLATIVE INITIATIVES TO ENCOURAGE WIND POWER
By: Kevin E. McCarthy, Principal Analyst
You asked for a description of what the legislature has done to encourage the use of wind power.
The legislature has adopted a number of initiatives since 1998 to encourage wind and other renewable energy resources. The legislation that partially deregulated the electric industry (PA 98-28) established several measures to encourage the use of renewable energy. These include requiring electric companies to obtain part of their power from renewable resources under the renewable portfolio standard (RPS), establishing the Clean Energy Fund to fund renewable energy projects, requiring electric companies and competitive suppliers to pay retail rates for power produced by wind and certain other renewable technologies (net metering), and exempting these technologies from the property tax. Subsequently, the legislature has increased the RPS; expanded net metering requirements; required, rather than allowed, municipalities to exempt certain renewable energy technologies; and facilitated the interconnection of renewable energy systems with the grid.
RENEWABLE PORTFOLIO STANDARD
Since the passage of PA 98-28, electric companies and competitive suppliers have had to obtain part of their power from renewable resources. In recent years, the legislature has increased these requirements. Under current law, electric companies and suppliers must get 5% of their power from class I resources, which include wind as well as other clean energy technologies such as fuel cells. This requirement will increase in steps to 20% by 2020. In addition, the electric companies and suppliers must obtain another 3% of their power from either class I or class II resources (the latter includes power from trash to energy plants, among other things).
CLEAN ENERGY FUND
PA 98-28 also established the state's Clean Energy Fund to promote various types of renewable energy. Historically, the fund has primarily supported solar and fuel cell technologies. However, it has undertaken several wind initiatives. It has provided $82,000 to help fund a small (50 kilowatt) wind system on a farm in Lisbon, Connecticut. It has recently issued a request for proposals for a program to evaluate small wind turbines. It is developing an incentive program, based on its existing residential solar rebate program, to encourage the deployment of small wind turbines.
The fund is also working with various parties to disseminate information to help develop wind power in the state. It has produced a detailed map of average wind speeds in New England. The map and associated databases provide information that can be used to evaluate prospective wind energy sites and estimate wind turbine performance at these sites. The map and related data are available on-line at http://truewind.teamcamelot.com/ne/. As the map indicates, most of Connecticut has limited wind resources. Most of the state has an average wind speed of less than 12.3 miles per hour, the lowest category used in the map. (According to the American Wind Energy Association, large wind systems need an average wind speed of 13 miles per hour to be viable.) A small part of Connecticut, primarily in the Litchfield Hills, has an average wind speed ranging from 13.4 to 14.5 miles per hour.
PA 98-28 required electric companies and suppliers to give a billing credit to their customers in one- to four-dwelling unit properties who generate electricity using wind or other class I resources. (In effect, the customer's electric meter runs backwards with regard to the power produced from these resources.) PA 07-242 expands these provisions to cover all customers with generation capacity up to two megawatts. It provides for credits to customers who generate more power than they use in a given billing period, with annual reconciliation in which the customer would be paid for any excess production at the avoided wholesale cost, and makes related changes.
PROPERTY TAX EXEMPTION
PA 98-28 created a local option property tax exemption for class I renewable systems (including wind). PA 07-242 requires, rather than allows, municipalities to exempt these systems from the property tax but limits the exemption to systems installed on or after October 1, 2007. The act also expands the exemption to apply to systems installed on non-residential properties.
PA 07-242 also requires the Department of Public Utility Control (DPUC) to establish a grant program for distributed generation projects in business and state buildings that are powered by class I resources. It requires DPUC to award grants of up to $25 million each for fuel cell and other projects. The act apparently authorizes $50 million in bonding for this program.
In most cases, renewable energy systems are connected to the transmission grid. To avoid harming the grid, the systems must meet interconnection standards, which deal with such things as the transformers that connect generating facilities with transmission lines. PA 07-242 requires DPUC to issue a final decision on interconnection standards that meet or exceed national standards. If DPUC does not do this by October 1, 2008, each of the utilities and the municipal electric energy cooperative must meet New Jersey's interconnection standards.