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State Clean Energy Policy Analysis: Renewable Energy Rebates

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Title: State Clean Energy Policy Analysis: Renewable Energy Rebates


1
State Clean Energy Policy Analysis Renewable
Energy Rebates
SCEPA Webinar Eric Lantz Markets and Policy
Analyst February 12, 2009

2
Background
  • Rebates provide a direct cash incentive for
    renewable energy technology
  • Drivers
  • Deployment
  • Cost reductions at scale
  • Demonstrate technology feasibility
  • Internalize environmental/social costs

3
Rebate Program Prevalence
Source www.dsireusa.org December 2008
4
PV Rebate Activity in New Jersey
Source New Jersey CORE Rebate Program Data
http//www.njcleanenergy.com/
5
Solar Water Heating Rebate Activity in Hawaii
Source Richmond, R. (2007). Solar Water Heating
Program Overview. U.S. DOE Solar Hot Water Market
Expansion Workshop.
6
Small Wind Power Rebate Activity in California
Source Emerging Renewables Program Statistics
http//www.energy.ca.gov
7
General Case Study Conclusions
  • Program success has been variable however, when
    properly designed, market growth can be dramatic
  • Programs that target technologies that are not be
    ready for the marketplace are not likely to
    facilitate market expansion or result in high
    levels of consumer uptake
  • In cases where well-designed incentives are
    ineffective, resources may be better targeted at
    non-cost related market barriers (i.e.
    interconnection standards, net-metering, or
    public awareness).

8
General Case Study Conclusions
  • At the current level of observed cost reductions,
    it is unlikely that rebate programs alone will
    achieve widespread renewable energy deployment
  • Complementary policies are likely to be necessary
    to ensure the near-term competitiveness of
    renewable energy technologies.

9
Impacts on Renewable Energy Deployment
  • Qualitative Overview
  • High impact on market growth, learning by doing,
    meeting RPS set asides, and stimulating early
    adoption
  • Moderate impact on cost reductions and reducing
    technical barriers
  • Limited impact on reducing fossil fuel
    consumption and driving technological innovation
  • Quantitative Impacts

Source State Program Data
10
Impacts on Energy Security
  • Qualitative Overview
  • High impact on distributed generation resources
  • Moderate impact on peak demand, diversifying
    energy technologies, and building grid resiliency
  • Limited impact on total energy production and
    reducing the transfer of wealth outside of US
  • Quantitative Impacts

Source US Energy Information administration,
State Program Data, and estimated industry
capacity factors
11
Impacts on Economic Development
  • Qualitative Overview
  • High impacts on the potential for developing
    community owned assets
  • Moderate impacts on attracting new investment
  • Limited impacts on job creation, electricity
    price stability, and state economic growth
  • Quantitative Impacts

12
Impacts on Environmental Policy Drivers
  • Qualitative Overview
  • Generally limited across various potential
    environmental policy goals
  • Impacts are limited due to the technology scale
    and market share that rebate program technologies
    typically command
  • Quantitative Impacts

Source NREL estimates derived from state program
data and eGRID 2007 1.0
13
Summary of Qualitative Impacts
14
Summary of Qualitative Impacts
15
Rebate Program Challenges
  • Fiscal
  • Establishing the proper rebate amount
  • Maintaining appropriate market growth
  • Dealing with cost reductions or the lack thereof
  • Freeridership
  • Program Funds
  • Marginal Program Value
  • System performance
  • Administrative costs
  • Non-cost barriers
  • Policy duration/unexpected results

16
Key Design Elements
  • Appreciate market-initiating attributes and scale
    limitations of the rebate programs
  • Use complementary policies to address non-cost
    barriers
  • Target the right technology at the right time
  • Consider existing state, local, or federal
    incentives
  • Target technologies with foreseeable concrete
    cost reductions at scale and develop an approach
    to address unexpected changes in cost
  • Establish the proper rebate amount based on
    existing market trends, the cost of alternatives,
    and the desired market growth/size
  • Include a clear and specific mechanism for
    reevaluation and adjustment of rebate values
    based on changes in market dynamics
  • Ensure adequate funding

17
Conclusions
  • Rebates function well when applied to
    market-ready technologies and when programs have
    explicit goals
  • Rebates may function poorly when context-specific
    market factors are not considered or when the
    precise rebate amount is not tailored to existing
    market and policy conditions.
  • Rebate programs may be most effective when
    designed and implemented as one component in a
    suite of policies.

18
Thank you Questions?
Eric Lantz Markets and Policy Analyst Strategic
Energy Analysis Center National Renewable Energy
Laboratory www.nrel.gov/analysis 1617 Cole
Blvd. Golden, CO 80401-3393 P (303)
384-7418 email Eric.Lantz_at_nrel.gov
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