Vermont Adopts Unique Approach to Promote Renewable Energy

With a signature from Governor Jim Douglas, Vermont has joined the steady procession of states adopting their own mandates for the use of renewable energy. The state’s new renewables portfolio standard (RPS) law requires utilities in the state to meet any new load growth in the next seven years with renewable energy resources.

That level is capped at 10 percent of total sales. It also incorporates an incentive for energy efficiency programs to curtail load growth. Under the new law, in 2012, the Public Service Board (PSB) will review the situation. If the goal is not met, the percentage of new load growth will become a mandatory standard. For instance, if the state experiences a 5% load growth, but utilities are not obtaining 5% of their electricity from eligible renewables by the cut-off date, a 5% RPS will come into effect. This is a rather unique approach with that of the other 18 states that have a similar RPS laws, according to the American Wind Energy Association (AWEA). While the ultimate goal with these laws is to help bolster, and often mandate, renewable energy projects, most states have a specific legislative approach. In Vermont, the new law defines “renewable energy” as “energy produced using a technology that relies on a resource that is being consumed at a harvest rate at or below its natural regeneration rate.” Small hydropower (up to 200 MW) and methane from landfill gas, anaerobic digesters, and sewage-treatment facilities are included. Large hydro and municipal solid waste is excluded. If the mandatory RPS goes into effect in 2013, utilities will be able to meet its requirements by constructing or contracting for renewable energy resources, by purchasing new renewable-energy credits, or by a combination of both. Utilities may also opt to pay into a fund that will support the development of renewable energy and energy efficiency. The law also contains a provision to make it easier to connect new projects to the system. That provision requires utilities to contract to take power from any new renewable energy facility built in the state, as long as electricity from the project does not exceed the market price. “This is a good step forward for Vermont to join the ranks of states with renewables portfolio standards,” said Andy Perchlik of Renewable Energy Vermont. “It sends the message that renewables are valuable additions to the Vermont electricity portfolio.” Counting large hydropower facilities, the state already obtains over 50% of its power from renewable energy facilities. One controversial provision is that – since the mandatory RPS does not go into effect until 2013, if ever – utilities that add new renewable projects can sell the renewable energy credits into the compliance markets to meet renewable portfolio standards in neighboring states or into the voluntary green power market. The Vermont Public Service Board (PSB) is working on developing regulations to implement the new law by September 2006. Information courtesy of the American Wind Energy Association (AWEA)
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