The State of Clean Energy: State Policy Impacts Markets

Contemplating renewable energy for your home or business? If I were a betting man, I would wager that the reason you will follow through with the project is because of your state’s financial incentives for clean energy.

It’s a fact: 'People respond to incentives.' No, we at Ecocentric haven’t moved into the marketing business, but this statement is especially true in clean energy development.

Although the federal government’s tax credits and grants reduce the sticker shock of capital-intensive clean energy technologies, states are driving renewable energy policy in the United States. Different states have chosen different policies to promote renewable energy and energy efficiency to achieve various goals. In order to assess progress, the National Renewable Energy Laboratory (NREL) has issued the "State of the States" report for the past couple of years. This year, NREL analysts Elizabeth Doris and Rachel Gelman overhauled the report.

The updated report uses a statistical analysis to quantify the connection of clean energy policies and actual energy reductions and renewable energy use. The report is stats heavy, so I'll sum it up for you.

First, the report demonstrates, as would be expected, that renewable energy projects (solar, wind, etc.) are correlated with clean energy policies. And policies that encourage energy efficiency (efficiency codes and standards, reduced consumption of energy, etc.) tend to do just that.

Second, and what is particularly interesting, is that other factors are at play. Each respective state’s population, electricity prices and the age of the policy can affect the results aside from the policy itself. Also, the results of the program can be technology specific. Polices that target small scale systems may result in wind and solar installations, but may be averse to geothermal energy power plants that engineers design to be as large as possible.

Additionally, the report also notes that clean energy develops best in states that have suites of policies rather than one or two. For example, solar energy will be more readily adopted in states that have policies that reduce electric bills through net metering, offer rebates and qualify for the state renewable energy portfolio, rather than one of those alone.

As policies mature, their effect on clean energy will become clearer. The continuing publication of the State of the States report will help guide policymakers as they make decisions on if and how they create these programs.

With the creation and implementation of these policies, the uptake of renewable energy may follow as consumers become aware of what incentives are available. That wind turbine or the solar panels that you have been thinking about may look like a sweeter deal depending on what programs are in your state.