Utility-scale renewable energy projects are typically defined as those 10 megawatts or larger. Utility-scale renewable energy projects can benefit from state and local policies and programs that help to address and overcome potential barriers to implementation. Resources related to different types of utility-scale renewable energy policies and programs are available below.
A feed-in tariff (FIT) is an energy-supply policy focused on supporting the development of new renewable power generation. In the United States, FIT policies provide a guarantee to eligible renewable generators that their utility will be required to purchase either electricity, or both electricity and renewable energy attributes. The FIT contract provides a guarantee of payments in dollars per kilowatt hour for the full output of the system for a guaranteed period of time (typically 15-20 years).
Financial Incentives and Programs
Incentive programs for utility-scale projects are highly individualized. The most effective states have coupled renewable portfolio standards with financial mechanisms such as tax benefits and clean energy fund grants to encourage and support development of large-scale projects within their borders.
Renewable Portfolio Standards
A renewable portfolio standard (RPS) is a regulatory method mandating utility companies operating within a certain jurisdiction to increase production of energy from renewable sources, such as wind, solar, biomass, and other alternatives to fossil and nuclear electric generation. This is also known as a renewable electricity standard.
Historically, the addition of new electric generation facilities has been accompanied by new transmission systems. For example, large nuclear and coal plants built in the 1960s and 1970s required interstate transmission infrastructure to deliver the electricity they produced. Likewise, the development of solar and wind generation in the United States will likely involve the development of new transmission. Although the cost of building transmission lines to access renewable resources are significant, consumers benefit from the lower energy production costs of solar and wind over conventional generation. In addition, transmission expenditures as a percentage of the overall cost of electricity to consumers are dwarfed by the cost of electricity production (i.e., fuel, operations, and maintenance) and the capital costs of generation development. As transmission expenses are recovered through ratemaking, policymakers have the ability to encourage transmission development with supportive policies.