Berkeley Lab Science Beat Magazine banner Berkeley Lab logo
November 5, 2004
Fast-Growing State Support for Renewable Energy

A new report from Berkeley Lab researchers tracks renewable energy growth in the United States and finds that states are playing an increasing role in funding renewable energy projects.

Nine states have committed more than $345 million to support 163 large-scale renewable energy projects so far, totaling more than 2,288 megawatts (MW) of capacity — enough to power about 800,000 homes. "Large-scale" is defined as those renewable projects, including wind, biomass, and geothermal power, that will produce more than one megawatt of electricity.

The study was conducted by Mark Bolinger, Ryan Wiser, and Garrett Fitzgerald of Berkeley Lab's Environmental Energy Technologies Division, in conjunction with the Clean Energy States Alliance (CESA), a new nonprofit multi-state coalition in which most state clean-energy funds participate.

Fourteen states have established clean-energy funds, which are usually generated by a small surcharge on retail electricity rates and promote the development and commercialization of renewable energy technologies. The aggregate total is more than $300 million per year. In addition to directly supporting the large-scale renewable energy projects covered by the recent Berkeley Lab study, state funds provide critical support for distributed generation, such as small solar-power projects sited on the customer's premises, and related market and commercial activities.

"With this initial activity, state clean-energy funds are positioning themselves to be a significant driver of renewables development in the coming years," Bolinger says. Berkeley Lab researchers provide analytic and evaluation support to many of these funds, both directly and through CESA.

Through clean-energy funds and other policies, states have assumed an increasingly important role in building markets for renewable energy. Support for large-scale renewable projects has risen steadily since 1998. Of the 2,288 MW of new renewables capacity supported in aggregate, 707 MW have been built so far, leaving more than 1,500 MW still in the development pipeline.

"This backlog is partly a reflection of unforeseen difficulties in the development process, as well as the recent nine-month lapse in the federal production tax credit for wind power," says Wiser, "but steady growth is expected to continue."

California's is the largest fund

According to the report, California is home to the largest fund, accounting for more than half of all dollars committed and capacity supported to date. Programs in the other states are also significant, and their renewable funding is often more recent than California's. Wind power has emerged as the most favored large-scale renewable technology, capturing roughly 60 percent of total funding and 80 percent of the total capacity supported. Solar power, not covered by the recent Berkeley Lab study, has also been a key target for state funding.

The report also addresses the proliferation of more creative financing techniques. While many states effectively continue to use standard production-based cash incentives to support projects, "states are increasingly using new and innovative incentives to support clean energy projects," says Lewis Milford, executive director of CESA.

For example, some states are using methods borrowed from capital markets such as subordinated debt financing and price insurance, which mitigates a project's revenue risk when there is no long-term contract to sell power to a specific buyer.

To conduct their analysis, the authors of the study used a new publicly available database designed to track information on all large-scale renewable energy projects supported by funds that are members of the Clean Energy States Alliance.

The states included in the CESA survey are: California, New York, Pennsylvania, Minnesota, Illinois, Massachusetts, New Jersey, Oregon, and Rhode Island.

Additional information