Distributed generation is the term used when electricity is generated from sources, often renewable energy sources, near the point of use instead of centralized generation sources from power plants. State and local governments can implement policies and programs regarding distributed generation and its use to help overcome market and regulatory barriers to implementation. Resources related to different types of distributed generation renewable energy policies and programs are available below.
Community renewable programs provide community members with a renewable alternative to conventional energy sources in the form of power and/or financial benefit generated by renewable energy systems.
Enabling Legislation: Third-Party Ownership
States can allow third-party ownership of renewable assets, which expands the type of financing available to the residential sector and encourages expansion of residential sector deployment. Third-party ownership models, such as solar leases or residential power purchase agreements, can take advantage of more tax incentives than homeowners can typically realize, ultimately reducing the up-front costs of a photovoltaic (PV) system. As a result, these third-party models are attractive alternatives to direct ownership of a residential PV system but require states to pass enabling legislation to allow them to happen.
Financial Incentives and Programs
There are various programs in place that offer financial incentives to the residential, commercial, industrial, utility, education, and/or government sectors for renewable energy. Programs include permitting fee reduction or elimination, grant programs, loan programs, property-assessed clean energy financing, personal and corporate tax incentives (credits, deductions, and exemptions), property tax incentives, rebate programs, and sales tax incentives.
Interconnection is defined as the technical procedures and legal requirements surrounding energy customers' ability to connect their small-scale renewable energy projects to the electricity grid. The process is regulated by each state, though utilities are usually tasked with executing the approval process.
State governments can lead-by-example by promoting renewable energy programs and policies. Efforts to lead-by-example include using renewable energy resources (including alternative fuel for vehicles) and incorporating renewable energy generation into new and existing public buildings.
State net metering policies allow customers to produce onsite electricity and sell excess generation to the utility at a set price, which creates an incentive for private investment in distributed renewable energy technologies by providing value to the electricity generation that, during certain times of day or seasons, exceeds the customer’s electricity demand.
Other Resource: Interstate Renewable Energy Council: Net Metering Model Rules