Renewable Energy

States’ policies are important to solar and wind energy development and in reducing energy use says a new report from the U.S. Department of Energy’s (DOE) National Renewable Energy Laboratory (NREL). The findings are in the report, State of the States 2010: The Role of Policy in Clean Energy Market Transformation.

“This report shows the importance of the state and local policy in encouraging clean energy market development,” said Mike Pacheco, NREL vice president of Deployment & Market Transformation. “Specifically, state policymakers may be more effective at driving clean energy investment using a suite of policies and keeping the policies in place longer.”

Building on an emerging body of literature identifying connections between state policy and renewable energy, the State of States 2010 report quantifies the connection between state clean energy policies, renewable energy development and actual reductions in energy use. Renewable energy use increased 3 percent across the United States in 2010, the report says. In 2009, Maine had the largest percentage—23 percent—of non-hydro renewable generation, mostly from bioenergy. Texas leads the country in total non-hydro installed renewable energy capacity. California is the leader in solar energy installed capacity.

Oregon, California, Illinois, Iowa, Maine, Montana, New Hampshire, and Pennsylvania have the strictest building codes, which require high efficiency in commercial and residential construction. It is the first time energy efficiency has been considered in this type of analysis, and the report shows significant connections between reduced energy use and building codes, electricity prices and, in some cases, energy efficiency resource standards.

Even though state policies might apply to a wide variety of renewable energy resources, the analysis shows that most often there’s a relationship between policy and solar and wind development. So, if states tailor policy to other resources, it might help increase development of renewable energy sources in addition to solar and wind.

“State policy efforts can help sustain the good work started by the American Recovery and Reinvestment Act in creating economic development opportunities through clean energy,” LeAnn M. Oliver, DOE Weatherization & Intergovernmental Program Manager. “State of the States 2010 offers practical information to policymakers on how to further promote those policies.”

To track the progress of the states and regions toward a clean energy economy, NREL also provided the analysis and findings for DOE’s 2009 U.S. State Clean Energy Data Book. The data book, published in October 2010, summarizes the status of state-level energy efficiency and renewable energy developments and supporting policy implementation, and can be accessed as a PDF and as an interactive data analysis tool. It identifies the states and regions leading in overall renewable energy capacity and energy efficiency policy.

Key findings include: Policy alone does not explain variability in state clean energy growth. When other variables—population, electricity price, and number of years a policy is in place—are incorporated into the models, the results better explained the variation among state clean energy development. Programs tailored to the specific needs of the technology may be more beneficial to renewable energy development.

Currently, state clean energy policies are more targeted at influencing the resource development of wind and solar than biomass and geothermal. Therefore, even if state policies broadly apply across renewable energy technologies, they may not meet the development needs of all technologies. For example, a rebate program with a capacity limit of 5 kilowatts may be available to geothermal project developers, but because electricity generation from geothermal resources is commonly on a multi-megawatt scale, the rebate program may not provide enough of an incentive to drive development.

State policymakers that implement a suite of policies may be more effective at driving clean energy development than those that choose a single or small number of mechanisms. For example, a wide variety of policies contributes to photovoltaic development across states. These policies, along with non-policy factors explain variation among states in wind growth. This may indicate that the specific policies in place are less important than the grouping of policies.

Policies are more connected with clean energy development the longer they are in place. This indicates policy longevity is an important aspect of effectiveness. Furthermore, due to more intensive construction requirements for geothermal and biomass projects, a longer study period may be needed to quantify policy impacts on the development of these technologies.

NREL provided the analysis for both the State of the States 2010 report and the U.S. State Clean Energy Data Book under its Clean Energy Policy Analyses project. To learn more about CEPA, visit www.nrel.gov/cepa. For more information, see the full report, State of the States 2010: The Role of Policy in Clean Energy Market Transformation.