AEE: Changes in state policies could unlock corporate renewable energy use

Businesses large and small are increasingly drawn to renewable energy both by corporate responsibility goals and the potential for solar and wind to supply low-cost power at a stable and predictable prices. However, in many states policy barriers are preventing companies from enjoying the advantages of renewable energy.

Today Advanced Energy Economy (AEE) released a report by Meister Consultants which examines the most important state-level policies for increasing corporate use of renewable energy, and the states in which policy changes have the most potential.

The authors note that the potential market for commercial and industrial (C&I) renewable energy is enormous, estimating that it would take 450 GW of solar and wind to meet half the electricity needs of U.S. C&I customers.

Opportunities to Increase Corporate Access to Advanced Energy focuses on six policies on two tracks, both to allow off-site purchases of utility-scale solar and wind and deployment of distributed solar. It also looks at the top 11 states with the most potential for policy change to enable corporate use of renewable energy.

In terms of policy approaches the two pathways are very different. The policy changes recommended to enable off-site purchase of utility-scale solar and wind are confined to the states with regulated electricity markets, as those market like Texas which deregulated their markets are not facing similar barriers.

In fact, AEE estimates that 91% of the utility-scale solar and wind capacity under corporate contracts signed to date is located in deregulated electricity markets.

For the far more numerous states where utilities still have some degree of monopoly and vertical integration, the report focuses on three policies to enable greater corporate procurement. These are utility renewable energy tariffs, which allow companies to purchase power from a portfolio of competitively-procured utility-delivered projects, back-to-back power purchase agreements (PPAs), which allow contracts with specific projects, and direct access tariffs, which allow limited electric choice to certain customers.

The states which could benefit from these changes may surprise the casual observer. California, which has been the solar market leader in the United States, still has the greatest potential, with 79 gigawatt-hours of large corporate consumption annually that could be met with 29 GW of renewable capacity.

California does allow limited direct access; however in previous years the very restrictive cap on enrollment in the state’s Direct Access program has been filled very quickly, with the large majority of applicants being rejected.

In 2015 a bill was introduced in the California legislature to life this cap; however after multiple changes, the bill has languished. This is despite strong political support for renewable energy, not only from renewable energy producers but also potential corporate customers.

The policies to increase distributed solar are more well known: raising the capacity limits for projects that can participate in net metering, allowing third-party ownership of distributed generation, and allowing virtual net metering or meter aggregation.

Here Texas has the greatest potential. The state is beginning to undergo a boom in the utility-scale segment, but the lack of a mandatory statewide net metering policy has greatly limited the distributed solar market. Texas’ solar boom will be covered in greater detail in an article in pv magazine‘s upcoming September international print edition.