States net metering and RPS solves Green New Deal adoption
Steven Ferrey 20, Professor of Law at Suffolk University Law School and was a Visiting Professor of Law at Harvard Law School. Since 1993, Professor Ferrey has served as a primary legal advisor to the World Bank, the European Union, and the United Nations on their renewable energy and climate change policies for developing countries in Asia, Africa, and Latin America. He holds a B.A. in Economics from Pomona College, a Juris Doctor degree and a Master's of Planning degree in Regional Energy Planning, both from the University of California at Berkeley, and was a post-doctoral Fulbright Fellow at the University of London between his graduate degrees. He is the author of 100 articles and 7 books on energy and environmental law. LEGAL FRAMEWORKS FORA GREEN NEW WORLD: BREATHING LIFE INTO THE GOALS OF THE GREEN NEW DEAL: VERMONT LAW REVIEW 19TH ANNUAL SYMPOSIUM OCTOBER 4, 2019: THE "GREEN NEW DEAL": CONSTITUTIONAL LIMITATIONS; REROUTING GREEN TECHNOLOGY, 44 Vt. L. Rev. 777 //pipk
B. State Legal Incentives for Green New Deal Power Generation
1. Uneven "Green" Resource Distribution and Access
States have always been able to provide subsidies with state funds, as long as they do not commandeer or affect the operation of wholesale-power [*802] markets. 168 This can include state tax breaks 169 or direct subsidies, which some states have done for decades. 170 However, with 50 states, 5 territories, and the District of Columbia, all of the states have different dispositions as to which power-generation technologies they want to promote. 171 States have the reserved power to tell their regulated utilities the type of power generation technology that they are required to provide. 172
However, it is clear, given that some states produce significant amounts of coal, natural gas, oil, or biomass resources, that not all states are of one mind regarding the types of power that they want to incentivize or the costs that they want their ratepayers to bear. 173 There are potential legal restrictions in mandating that we will all embark on a particular technology for generation of power, whether that technology be renewable energy or coal or any other option, without looking at the economic and equity issues. 174
[*803] Figure 2. Concentrating Solar Resource of the United States 175
As a physical factor, renewable-power options are not equally available in states across the United States 176 Figure 2 displays available solar resources, with the northern United States enjoying much fewer, even half, the solar resources as part of the southern United States. 177 These resource differences determine both the availability and cost of switching to a different power resource. 178 And in Figure 2, not all of the southern half of the United States enjoys more intense availability of solar power, by as great a factor as [*804] 2:1. 179 Rather, there is a distinct advantage to the southwest United States to utilize solar power. 180
Figure 3. U.S. Annual Wind Power 181
Figure 3 shows the amount of potential usable wind power nationwide. 182 Again, the amount of wind power across the United States varies by a substantial factor--with no substantial wind resource in a substantial number of areas. 183 Figure 4 illustrates that solar and geothermal resources, combined at approximately 0.5% of all electric power resources, were less than 20% of the contribution of wind resources and less than 10% of the contribution of hydroelectric resources. 184 Figure 4 also illustrates that solar is not the dominant renewable energy source. Yet in most of the United [*805] States, biomass (which is a renewable resource) is often burned and emits CO[2] . 185 Biomass is renewable and is the dominant non-hydroelectric renewable energy source in 24 of the 50 states and the District of Columbia. 186 With the disparity of available renewable-power resources among states, motivating a concerted green response by all of the fifty states or even the tens-of-thousands of communities in real time would be a significant challenge.
Figure 4. Predominant Non-Hydro Renewable Fuel for Utility-Scale Electricity Generation, 2011 187
The two primary state legal mechanisms to incentivize renewable energy development required by the Green New Deal are state net metering of power and state renewable portfolio standards. 188
[*806] 2. State Net Metering
With net metering, when the customer makes conventional purchases from the utility, the meter runs forward. 189 When more electricity is produced by the customer's renewable-energy facility than is used on-site, the excess flows to the electricity grid, running the meter in the reverse direction and creating credits for the customer. 190 Because only a single rate applies to a single utility meter's recorded sales, by turning the meter backwards, net metering compensates the renewable-power generator at the full retail rate. 191 Approximately two-thirds of the retail bill is attributable to transmission, distribution, and taxes for transferring just the wholesale power. 192
In 2016, the number of net metering states had declined by 6 states to 38 states when Nevada, Georgia, and Hawaii ended their net metering programs. 193 It is still the most prominent and widespread state incentive for renewable energy. 194 In each of the 38 states that provide net metering, both solar- and wind-power technologies are eligible to be net metered. 195
Net metering is more like an accounting convention applied to trading power than it is a legal sale of the power, because it credits the value of on-site renewable-distributed power on the customer's side of the retail utility meter. 196 The value received by the renewable energy developer for its net-metered power is an amount at a price or value above the utility's avoided cost 197 or the wholesale rate set by either FERC or independent system [*807] operators (ISOs) who manage the utility grids for more than half of U.S. consumers. 198 The retail credit received in some high retail-rate states can be in the vicinity of $ 0.20/kilowatt-hour (kWh), which corresponds to roughly 500% of the wholesale $ 0.04/kWh value of this power in the United States during the prior decade. 199
3. State Renewable Portfolio Standards
Renewable Portfolio Standards (RPS) require electric utilities, and in some states other retail electric providers that are allowed to sell retail power, to include in their annual retail sales evidence of a specified percentage of electricity supply from state-specified renewable energy sources, evidenced by acquisition not of renewable power itself, but tradable Renewable Energy Credits (RECs). 200 Twenty-nine states and the District of Columbia have RPS programs. 201 The required state percentage of energy delivered to consumers from eligible renewable sources currently varies from 2% to 100% of annual retail sales in different state programs. 202
There are many variations on state RPS models in the 29 RPS states. 203 The 29 mandatory RPS programs in the United States cover 46% of nationwide retail electricity sales. 204 RPS programs were characterized as a form of "backdoor" renewable energy subsidy for renewable energy. 205 A solar REC (SREC) in those states that offer them, provides a subsidy of $ 0.20/kWh to $ 0.60/kWh in a state such as Massachusetts. 206 Such a SREC [*808] subsidy operates as a 500% to 1300% bonus payment above and beyond the average $ 0.04/kWh sale value of the power itself when it is sold. 207 Five years ago, the cost of these subsidies was already at $ 3 billion per year and climbing in each successive year, as there was more renewable energy. 208
Federal tax credits, state net metering, and state RPS programs shift incentives from one group of customers to another. 209 Most of the customers who install solar, wind, or other eligible renewable-energy projects, tend to own their own buildings. 210 However, this shift would appear to be counter to what the "New Deal" elements of the Green New Deal are seeking to do. 211 Existing beneficiaries of these state net metering and RPS programs tend to be owners rather than renters, and more affluent customers of the utility. 212 Captive retail power consumers bear the cost incurred by utilities of net metering and acquiring the required RECs. 213 Those who absorb the costs of each of the state programs in higher utility rates tend to be those who do not have solar or wind power on their buildings; they are left to pay the higher cost of conventional utility service, which provides these renewable-energy subsidies to the still relatively small number of customers who have eligible renewable energy technologies. 214
FERC held in MidAmerican 215 that federal law did not preempt state net metering practices, and that no sale occurs when net metering accounts for less power exported from the renewable-power generator than the amount of power sold back by the utility to the distributed generator in a given billing period (usually one month). 216 In the 2009 Sun Edison case, 217 FERC [*809] determined that the Commission lacked jurisdiction over the on-site renewable-power generator if there was no net sale of power to the utility over the billing period. 218 There was no net sale unless the customer delivered back to the utility more electricity than the back-up power he or she purchased from the utility. 219 The MidAmerican and Sun Edison decisions limited the legal findings to the facts presented where there was no net flow of power back to the power grid. 220