solar carve-out

Solar carve-outs

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More than thirty states in the United States currently have renewable energy policies. Most of these goals, targets, and mandates allow for compliance from a range of different types of renewable energy technologies. In a few cases, however, states have included a technology-specific mandate as a part of their renewable energy policies. One such policy mechanism is a solar carve-out.

What is a solar carve-out?

Renewable portfolio standards (RPS) are policy-makers’ go-to option for helping to grow the renewable energy industry within their state. By requiring increasing percentages of in-state electricity generation or consumption to come from renewable resources, state legislators can send a strong signal to the industry that renewable energy is a priority.

However, renewable portfolio standards and clean energy targets allow for compliance from a wide range of renewable or zero-carbon technologies, such as wind, hydropower, solar, geothermal, biomass and more. In order to ensure that a certain portion of the renewable energy target is met by a certain specific technology, policymakers will “carve out” a piece of the overall renewable energy target for one technology. As such, a solar carve-out is a mechanism that requires a specific portion of a state’s renewable energy target to be met by just solar energy.





Don



How do solar carve-outs work?

Renewable energy targets are typically set in one of two ways: either as a percentage of electricity consumption that must be met by renewable energy or as a specific amount of electricity–expressed in terms of megawatt-hours or kilowatt-hours–that must come from renewable resources. In each scenario, a solar carve-out explicitly requires that a portion of the target be met by solar.

For instance, if a state has a renewable portfolio standard that mandates that 10 percent of electricity is renewable in 2020, a solar carve-out would then say that 1 percent of the state’s electricity must come specifically from solar. Thus, the solar carve-out is not an additional, additive renewable energy policy but rather a policy that functions within the bounds of pre-existing renewable energy targets.

Which states have solar carve-outs?

The following states have passed renewable portfolio standards that include a solar carve-out.

StateSolar carve-outTarget year
Delaware3.5%2025
Illinois1.5%2025
Maryland2.5%2025
Massachusetts3200 MW2020
Minnesota1.5%2020
Missouri0.3%2021
Nevada1.5%2025
New Hampshire0.7%2020
New Jersey5.1%2021
New Mexico4%2020
North Carolina0.5%2018
Ohio0.5%2026
Pennsylvania0.5%2021
Washington D.C.10%2041
Source: DSIRE.org

Why are solar carve-outs important?

In order to provide low-cost electricity to their ratepayers, utilities are incentivized to procure electricity from the least expensive resources possible. The same holds true for when utilities decide which renewable energy technologies to purchase to serve their consumers’ demand.

When renewable energy targets were first being introduced by state governments, wind energy was far and away the least expensive renewable resource that utilities could procure. As a result, states that wanted to develop the local solar industry used solar carve-outs as a way to ensure that solar played a role in meeting state targets even if it was not the lowest-cost renewable energy resource. As with subsidies and incentives in all industries, the solar carve-out was a way to kick-start the industry with a clear legislative signal of intent.

In recent years, the cost of solar has decreased substantially, making it increasingly competitive with not only wind but traditional, fossil-fuel-fired resources. Solar is now an attractive investment for many utility companies even in the absence of additional subsidies. As such, solar carve-outs are diminishing in both necessity and popularity among policymakers.

What does a solar carve-out mean for you?

Solar carve-outs are a way for state policymakers to express their intent to help grow the local solar industry. In order to do so, solar carve-outs are often accompanied by favorable solar incentives and policies to make it a more attainable investment for property owners. If you live in a state that has a solar carve-out, it’s likely that you will have great local incentives to go solar. To see how much you could save by going solar in your state, check out the free EnergySage Solar Calculator. If you’re ready to get quotes for solar to take advantage of current state-level solar incentives, register for an account on the EnergySage Solar Marketplace to get free quotes from local, pre-screened solar installation companies.





Don



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About Spencer Fields

Spencer is the Content & Research Manager at EnergySage, where he writes about all things energy. Prior to joining EnergySage, he spent five years at Synapse Energy Economics, providing environmental, economic and policy analysis for public interest groups. Spencer has degrees in Environmental Studies and Hispanic Studies from Brown University, meaning when he's not in the office you can find him outside or traveling somewhere to work on his Spanish.

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