OPPORTUNITIES TO INCREASE
CORPORATE ACCESS TO
ADVANCED ENERGY: A
NATIONAL BRIEF
August 2016
Meister Consultants Group
Commissioned by Advanced Energy Economy Institute
Coverphotocredits:
Topleft:BloomEnergy
Middleright:MichaelDurham,www.durmphohto.com
TABLE OF CONTENTS
ExecutiveSummary.........................................................................................................................1
Introduction....................................................................................................................................4
Methodology...................................................................................................................................5
PolicyPathways...............................................................................................................................7
PolicyPathway1:AllowingLargeOffsitePurchases...................................................................................7
PolicyOpportunity:UtilityRenewableEnergyTariffs....................................................................................9
PolicyOpportunity:Back-to-BackUtilityPPA.................................................................................................9
PolicyOpportunity:DIrectAccessTariffs.......................................................................................................9
PolicyPathway2:EnablingDistributedEnergyResources........................................................................10
PolicyOpportunity:RaisingDistributedEnergySystemLimits....................................................................11
PolicyOpportunity:Third-PartyOwnership.................................................................................................11
PolicyOpportunity:AllowVirtualorAggregatedMetering.........................................................................12
Conclusion.....................................................................................................................................13
EXECUTIVE SUMMARY
Formanycompanies,theabilitytocontrolenergycostsandsourcesisakeyfactorwhendecidingwheretolocateor
expand their operations. Advanced energy sources that use little or no fuel, such as wind, solar, hydropower, fuel
cells, and energy storage create opportunities for corporations to capture savings and hedge against energy price
volatility.Thepriceofadvancedenergysourceshasdecreaseddramaticallyduringthepastdecade,andcompanies
areincreasinglyseekingtopurchasepowerfromtheseresourcesinordertoincreasecompetitivenessandachieve
corporateresponsibilitytargets.Agrowingnumberofcorporationshavesetformalgoalsforpurchasingrenewable
energy,whichtheyareintegratingintotheiroperationsanddecisionmaking.
Whilecompaniesacrossthecountryarepurchasingadvancedenergyatanunprecedentedrate,policyandregulation
in many states constrains certain types of purchases. In some states, legislators, utilities, or utility regulators have
enacted policies to expand corporate access to advanced energy.
Suchpoliciesallowstatestosupportcorporategoalsandattractor
retain a strong corporate presence. At the same time, states that AccesstoAdvancedEnergy:BytheNumbers
unlock corporate investment in advanced energy also stand to
grow their advanced energy industry without expending state
resources. Those states that choose to enact policies allowing newrenewablecapacityundercontractwitha
corporatepurchasesofadvancedenergywillbenefitmostfromthe renewablepurchaserin2015
investment, tax revenue, jobs, and infrastructure upgrades that
comewiththeresultingprojects.
3.1GW
450GW
Tounderstandtherolethatpoliciestoexpandcorporateaccessto renewableenergycapacityneededtomeethalf
theelectricityneedsofcommercialandindustrial
advanced energy could play across the country, this report first
customers
identifies policy options that states are using to enable corporate
advanced energy purchases. The report then considers where
these policies have the greatest potential to expand corporate
access to advanced energy, assessing the regulatory and policy ofcompaniessurveyedby
environment, potential market size for corporate purchases, and PricewaterhouseCoopersin2016areactively
pursuingadvancedenergypurchases.
renewableenergypotentialofall50states.Fromthisanalysis,11
states emerged among the top 5 for one or more of the policies
profiledonthebasisofitspotentialtoincreasecorporateaccesstorenewableenergy:Alabama,California,Florida,
Georgia, Indiana, Kentucky, Michigan, Minnesota, North Carolina, Ohio, and Texas. By the same metrics, an
additionalsevenstatesemergedamongthetop10foroneormoreofthesepolicies:Louisiana,Iowa,Missouri,South
Carolina,Tennessee,Virginia,andWisconsin.
72%
The six policies considered in this report have been enacted in one or more states across the country, and were
specifically selected as policies that allow companies to go beyond renewable energy certificate (REC) purchases.
Thesepoliciescanbebroadlygroupedintothosethatsupportpurchasesfromoffsitepowerplants(e.g.,large-scale
wind and solar facilities), and those that enable the installation of advanced energy on corporate property (e.g.,
rooftopsolar,fuelcells,energystorage,andsmall-scalewind).Thesixpoliciesareoutlinedbelow,alongwithabrief
explanationofthecriteriausedtoidentifystatesinwhicheachpolicywouldparticularlyincreasecorporateaccessto
advancedenergy.
Policies to enable companies to purchase electricity from large offsite advanced energy projects. In states that
allow customers to choose their electricity providers, companies already have several options to pursue offsite
P a g e |1
purchases.Inverticallyintegratedelectricitymarkets,statesareusingthreepolicy-enabledpurchasingpathwaysto
allowcompaniestoaccessoffsitegeneration:1
Ø Utilityrenewableenergytariffs:Utilityrenewableenergytariffprograms,sometimesreferredtoas“green
tariffs,” allow customers to opt-in to a portfolio of competitively procured renewable energy supplied
through their utility. In contrast to REC-based utility programs, which typically add a simple premium to
customertariffs,renewableenergytariffsarepricedaccordingtothepriceofrenewableenergyprocuredfor
programneeds,suchthatparticipatingcustomerscouldrealizesavingsovertime.
Ø Utility-enabledback-to-backpowerpurchaseagreements(PPAs):Sometimesgroupedtogetherwithutility
renewable energy tariffs, back-to-back (or “sleeved”) PPAs allow companies in traditionally regulated
markets to contract for renewable energy, with the utility agreeing to act as an intermediary between a
customerandaspecificrenewableenergyproject.
Ø Direct access tariffs: Direct access tariffs allow certain customers in traditionally regulated states, most
frequently large energy users, to choose to purchase power from an energy supplier rather than the local
distribution utility. Direct access tariffs do not necessarily have a renewable energy requirement, but this
pathwaydoescreatetheopportunityforrenewableenergypurchases.
While these policies enable different purchasing pathways, they all address the same regulatory barriers, and the
criteriatoidentifystateswithhighpotential(andthereforethestatesidentified)arethesameforallthreepolices.
Stateswereonlyconsideredforthesethreepoliciesiftheydonotcurrentlyallowelectricitychoice.Topstatesfor
expanding corporate access to offsite projects were distinguished by their strong commercial and industrial sector
andstrongresourcepotential.
Policiestoenablecompaniestopurchaseadvancedenergyfromdistributedenergyresources.Moststatesaround
the country currently have policies in place that support distributed advanced energy, but not all of them are
structured to enable the participation of larger corporate users. Through discussions with corporate purchasers,2
threepolicydesignswerehighlightedasimprovingaccess:
Ø Raising system size limits: Restrictive distributed energy system capacity limits prevent large consumers
fromusingtheseprojectstoserveasignificantportionoftheirdemand.
Ø Allowing third-party ownership: In states allowing third-party ownership, corporations can partner with
thirdpartiestomakeprojectfinancingandoperationofdistributedresourcesmuchsimpler.
Ø Allowing virtual or aggregated metering: Virtual or aggregated metering allow companies to apply the
output from one or more distributed energy facility to multiple corporate meters (or buildings), serving
companieswhoseneedsarenotmetbyasingleonsitesystematasinglebuilding.3
Stateswereconsideredforoneofthesepoliciestoenabledistributedgenerationiftheyhaveanestablishedmeans
tocompensatedistributedenergyresources,andiftheycurrentlylackedoneormoreofthethreepolicysolutions.
States highlighted as candidates for expanding corporate access to these projects were identified by their strong
commercial and industrial sector load at facilities capable of hosting onsite resources, and by their strong solar
potential,sincedistributedgenerationiscurrentlydominatedbysolarPV.
1
Thisreportdoesnotconsiderpathwaysthatarenotdirectlyassociatedwithpotentialstatepolicies.Thisincludesoptionswhichdonot
requireanyspecificstatepolicyinordertobeutilized,suchassyntheticPPAs,andoptionsgenerallyonlyavailableinrestructuredelectricity
markets,suchasdirectPPAswithcompetitivesuppliers,sincethisreportdoesnotassumethatstateswilladjusttheiroverallutilityregulatory
frameworks.
2
PoliciesenablingrenewableenergypurchaseswereinitiallyidentifiedthroughaseriesofconversationsbetweenAdvancedEnergyEconomy
andleadingcorporatepurchasersandnon-governmentalorganizations,whichwerethenrefinedtoselecttheissuesdiscussedhere.Thissetof
policiesisnotintendedasanexhaustiveaccountofthewaysinwhichstatesmaytakeactiontoenabledistributedenergyprojects,buttofocus
onasmallnumberofspecificpoliciesthathavebeenimplementedtovaryingdegreesinsupportofcorporateaccessacrossthecountry.
3
Virtualnetmeteringisoftendiscussedasakeyenablerofcommunity/sharedrenewableenergymodels,whichareoftenusedtoincrease
renewableenergyaccessforresidentialorsmallcommercialcustomers.Forlargecorporatepurchasers,thisreportcontemplatesvirtualnet
meteringprimarilyasameansofdevelopingarenewableenergyprojectthatisusedtooffsettheenergyloadsatmultiplemetersona
corporatecampusorin-statecorporatelocations.
P a g e |2
The analysis reviewed the potential to serve large corporate load with renewable energy purchasing mechanisms
enabledbythesevariouspolicies.Thetopstateswithpolicyopportunitiesforincreasedcorporaterenewableenergy
access—determinedbyanindexthatcombinedcorporateenergyconsumption,in-staterenewableenergyresources,
and the existence of supporting policies—are listed in Table 1.4 The Table also lists the total annual electricity
consumption by large corporations and the equivalent renewable energy capacity that would be required to serve
thatdemand.
Table1–Statesrankedamongthetop5statesforoneormoreoftheidentifiedpolicies,basedonpotentialto
increasecorporateaccesstoadvancedenergy
Highly Ranked by Purchasing Pathway
Enable Virtual
Metering
Annual Large
Corporate
Consumption
(GWh/yr)
Corresponding
Renewable
Energy Capacity
(MW)
X
106,945
40,876
78,504
28,909
X
49,414
19,078
X
48,888
19,674
X
39,876
15,842
X
38,225
14,859
36,697
14,216
X
30,608
12,317
Kentucky
X
29,845
11,830
Alabama
X
X
28,154
10,982
X
20,591
8,133
State
Large Offsite
Purchasing
Texas
Raise DG
System Cap
Enable Third
Party
Ownership
X
California
X
Florida
X
X
X
Ohio
Indiana
X
X
Georgia
North Carolina
Michigan
Minnesota
X
X
X
4
Itisimportanttonotethatthisindexdidnotaccountforfactorssuchpoliticalfeasibility,economiccostsandbenefits,orotherstakeholder
concerns.Thepurposeofthislistisnottoidentifyallstateswherepolicyimplementationwouldbebeneficial,ortoidentifystateswhere
policiesarelikelytobeenacted,butinsteadtoidentifystateswheresuccessfulimplementationandmarketresponsecouldbeexpectedto
extendadditionaladvancedenergyaccessopportunitiestoservethelargestamountofcorporatedemand.
P a g e |3
INTRODUCTION
Inanincreasinglycompetitiveglobalizedeconomy,anyopportunitytocontrolenergycostsisanobviousadvantage
forbusinesses.Withmultipleoptionstopursueeitheronsiteinstallationsorcontractforoffsitepower,advanced
energyoffersjustthat.Aspricesforwind,solar,energystorage,andothertechnologiescontinuetofall,advanced
energyprovidesnotonlygreatercontroloverenergybudgets,butalsoabreakfromvolatileelectricitycosts.
CorporationsacrossAmericahaverecognizedthisopportunityandactedaccordingly,contractingfor3.1gigawatts
(GW)ofrenewableenergyin2015—doubletheamountprocuredbycorporatepurchasersthepreviousyear.5
Recentcorporatepurchasesaretheproductofamuchlargercommitmentbycompaniestopursuerenewable
energy,drivenbybotheconomicsandcorporatecommitmentstomaketheirbusinessoperationsmore
environmentallysustainable.In2014,43%ofFortune500companiesand60%ofFortune100companieshadset
climateand/orcleanenergytargets,andin2016,72%ofcompaniessurveyedbyPricewaterhouseCooperswere
activelypursuingadvancedenergypurchases.6Nationally,ifevenhalfofcommercialandindustrialelectricity
demandweremetbyrenewableenergy,thiswoulddrivedevelopmentofnearly450gigawatts(GW)ofrenewable
energy—morethanfourtimesthecurrentcapacityofwindandsolar,andequivalenttotheelectricityrequiredto
powerover100millionhouses.7
Despiteimpressiveprogresstodate,thepathtocorporaterenewableenergypurchasesisoftenlessthanclear.
Marketactivityhasbeendominatedbyasmallgroupofcompaniesthathavethedeterminationandresourcesto
navigatecomplicatedregulatorywaters.Opportunitiesalsovarysignificantlyacrossthecountry,andcompaniesin
somestatesareleftwithfewoptions—ifany—topursueadvancedenergy.Inthesestates,companieswithfirm
advancedenergycommitmentsareforcedtoexploreotheroptions,suchasfindingalternativelocationsfortheir
operationsorleavingtheirutilityserviceprovider.
Ascompaniesmaketheirintentiontopurchaseadvancedenergyincreasinglyclear,policymakersinsomestateshave
developedsolutionsthatallowutilitiestomeetcustomers’changingneeds.Thesepoliciesenablestatestoretainand
attractastrongcorporatepresencewhilealsoleveragingcorporateinvestmentstohelpgrowthestate’srenewable
energyindustry.
Tounderstandtherolethatpoliciestoexpandcorporateaccesstoadvancedenergycouldplayacrossthecountry,
thisreportfirstidentifieskeypolicyoptionsavailabletostates.Thereportthenconsiderswherethesepolicieshave
thegreatestpotentialtoexpandcorporateaccesstoadvancedenergy,assessingtheregulatoryandpolicy
environment,potentialmarketsizeforcorporatepurchases,andrenewableenergypotentialofall50states.From
thisanalysis,11statesemergedamongthetop5foroneormoreofthepoliciesprofiledonthebasisofitspotential
toincreasecorporateaccesstorenewableenergy:Alabama,California,Florida,Georgia,Indiana,Kentucky,Michigan,
Minnesota,NorthCarolina,Ohio,andTexas.Bythesamemetrics,anadditionalsevenstatesemergedamongthetop
10foroneormoreofthesepolicies:Louisiana,Iowa,Missouri,SouthCarolina,Tennessee,Virginia,andWisconsin.A
fullexplanationofthemethodologyusedtoidentifythesestatesisdescribedbelow.
5
BloombergNewEnergyFinance,2016SustainableEnergyinAmericaFactbook(Feb.2016),http://www.bcse.org/wp-content/uploads/BCSE2016-Sustainable-Energy-in-America-Factbook_Executive-Summary.pdf.
6
DavidGardiner&Associates,etal.,PowerForward2.0:HowAmericanCompaniesAreSettingCleanEnergyTargetsandCapturingGreater
BusinessValue(2014),http://www.pwc.com/us/en/corporate-sustainability-climate-change/publications/corporate-renewable-energyprocurement-survey-findings.html.
7
Basedon2014commercialandindustrialelectricitysales,assumingthatthiselectricityisdeliveredfromrenewableenergyfacilitiesoperating
ata30%capacityfactor,seeU.S.EnergyInformationAdministration,EIA-861,2014TotalElectricIndustrySales
http://www.eia.gov/electricity/sales_revenue_price/pdf/table2.pdf;currentinstalledcapacityasoftheendof2015,seeFederalEnergy
RegulatoryCommission,Dec.2015InfrastructureUpdate,http://www.ferc.gov/legal/staff-reports/2015/dec-infrastructure.pdf;averagehouse
electricityuseseeU.S.EnergyInformationAdministration,HowmuchelectricitydoesanAmericanhomeuse?(Oct.
2015),https://www.eia.gov/tools/faqs/faq.cfm?id=97&t=3.
P a g e |4
Thesixpoliciesconsideredinthisreporthavebeenenactedinoneormorestatesacrossthecountry,andwere
specificallyselectedaspoliciesthatallowcompaniestogobeyondrenewableenergycertificate(REC)purchases.
Thesepoliciescanbebroadlygroupedintothosethatsupportcorporatepurchasesofelectricityfromoffsitepower
plants(e.g.,large-scalewindandsolarfacilities),andthosethatenabletheinstallationofadvancedenergyon
corporateproperty(e.g.,rooftopsolar,fuelcells,energystorage,andsmall-scalewind).Thenextsectionexplainsthe
methodologyusedtoassessthepotentialtoincreaseaccesstoadvancedenergythrougheachpolicyacrossall50
states.Foreachpolicy,thereportidentifiesfivestatesinwhichthepolicyholdssignificantpotentialtoexpand
corporateaccesstoadvancedenergy.
METHODOLOGY
Theanalysisfirstidentifiedkeypoliciestoexpandcorporateaccesstoadvancedenergybasedoncurrentpracticesin
states,corporatebuyer’sstatedpreferences,andexistingbarrierstocorporatepurchases.Prioritypolicieswere
initiallyidentifiedthroughconversationswithleadingcorporatepurchasersandnon-governmentalorganizations,
whichwerethenrefinedtoselecttheissuesdiscussedhere.8Thissetofpolicieswasdevelopedbasedonthe
assumptionthatstatepolicygoalswouldtargetandprioritizeenablingbroadcorporateaccesstorenewableenergy
purchasingoptions—inpractice,statesmayfacecompetingorconflictingpolicyobjectivesthatmakethesepolicies
lessattractive.
Foreachstate,theanalysiscalculatedtheannualenergyconsumptionofthelargecorporatesector(definedhereas
companiesemployingover500workersinagivenstate),andsubdividedbyindustry.9Anindexwasthendeveloped
toranktheopportunityineachstateforeachpolicyinterventionaccordingtothreefactors,whicharealso
summarizedinTable2below:
1. Regulatoryandpolicystatus,indicatingwhetheragivenpolicywasmeaningfulgivenastate’sregulatory
regime;10
2. Marketsize,asmeasuredbylargecorporateelectricityconsumptioninthatstate;and
3. Availableresources,measuringtheavailablerenewableenergyresourcepotentialinastate.11
8
Theresultingsetofpoliciesisnotintendedasanexhaustiveaccountofthewaysinwhichstatesmaytakeactiontoenablein-statedistributed
energyprojects,buttointroducetheopportunityforasmallnumberofspecificpoliciesthathavebeenimplementedtovaryingdegreesacross
thecountry.
9
Thisanalysiswasconductedbycombiningseveralfederally-maintaineddatasets.Estimatesofaverageper-facilityconsumptionbystatewere
compiledfromtheCommercialBuildingEnergyConsumptionSurveyandManufacturingEnergyConsumptionSurveydatasetsavailable
throughtheU.S.EnergyInformationAdministration.SeeU.S.EnergyInformationAdministration,ManufacturingEnergyConsumptionSurvey
(2010),http://www.eia.gov/consumption/manufacturing/data/2010/andCommercialBuildingsEnergyConsumptionSurvey(2010),
http://www.eia.gov/consumption/commercial/.Theseestimatesweremultipliedbythenumberoffacilitiesineachindustryandstateincluded
intheU.S.CensusBureau’sStatisticsofU.S.Businesses(SUSB)databasetocalculateapreliminaryestimateofelectricityconsumptionby
industryandstate(asSUSBsubsetsdatabytotalin-stateemployment,aseparateestimateforthelargecorporate—i.e.morethan500
employeesinagivenstate—sectorwasalsocalculated).SeeU.S.CensusBureau,StatisticsofU.S.Businesses,
http://www.census.gov/programs-surveys/susb.html.Thesepreliminaryestimateswerethenscaledsothatthesumequaledactual
commercialandindustrialsectorsretailsales,knownthroughtheEIAForm-861ElectricPowerSalesdatabase.SeeU.S.EnergyInformation
Administration,FormEIA-861,Table5.4.A.,https://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_4_a.
10
Forexample,policiestoenablesomeformofPPAareonlyrelevantwherecompaniescannotpursuetraditionalPPAs(suchasinmany
verticallyintegratedmarkets),andmodificationstoonsitemeteringpoliciesareonlymeaningfulinterventionsinstatesthathaveenacted
someformofcompensationforonsitegeneration.Additionally,statesthathadalreadyenactedaparticularpolicywereexcluded.Thisanalysis
assumedthattherewouldbenochangeinanystate’soverallregulatoryframework(i.e.thatnoadditionalstateswouldderegulateorreregulatetheirutilitysectors).
11
Asreportedin:NREL(2012).U.S.RenewableEnergyTechnicalPotentials:AGIS-BasedAnalysis.Availableat:
http://www.nrel.gov/docs/fy12osti/51946.pdf.
P a g e |5
Foreachoftheenablingpoliciesevaluated,theseopportunityindiceswereusedtoidentifythestateswhere
significantopportunitiesarepresenttoenableincreasedaccesstorenewableenergythroughpolicy.12Thisreport
describesthetop-fiverankedstatesforeachenablingpolicy.Itisimportanttonotethatthestatesprofiledinthis
reportarenottheonlystatesthatcouldexpandaccesstocorporaterenewableenergypurchasesbyenactingoneor
moreofthepoliciesoutlinedinthisreport;nordothepoliciesidentifiedforeachstaterepresenttheonlywayfor
the11statesprofiledheretoincreasecorporateaccesstoadvancedenergy.
Table2–Criteriaforidentifyingstateswithhighpotentialtoexpandcorporateaccess,brokendownbypolicy
Purchasing
Pathway
Criteria for identifying states with the largest potential to
increase corporate access to advanced energy
Policy
Corporate Electricity
Demand
In-State
Renewable
Energy Potential
Regulated utility
market;
No current electric
choice / renewable
energy purchasing
option
High corporate
electricity demand
Significant instate renewable
energy resources
CA, FL, IN, MI, MN
Raise system
capacity limits
Policies in place to
compensate DERs;
Low onsite system
capacity limits
High corporate
electricity demand
at sites with
adequate rooftop
space14
Significant instate solar
energy
resources15
TX, CA, MI, AL, KY
Allow third-party
ownership
Policies in place to
compensate DERs;
Third party ownership
presently not
allowed
High corporate
electricity demand
at sites with
adequate rooftop
space
Significant instate solar
energy resources
IN, FL, NC, AL, MN
Allow virtual or
aggregated
metering
Policies in place to
compensate DERs;
Virtual or
aggregated
metering presently
not allowed
High corporate
electricity demand
Significant instate renewable
energy resources
TX, FL, OH, IN, GA
Utility
Renewable
Energy Tariff
Large Offsite
Project13
Top 5 opportunity
states based on
criteria
considered
Utility Back-toBack PPA
Regulatory and
Policy Status
Direct Access
Tariff
Distributed
Energy
Resources
12
Itisimportanttonotethatthisindexdidnotaccountforfactorssuchpoliticalfeasibility,economiccostsandbenefits,orotherstakeholder
concerns.Thepurposeofthislistisnottoidentifyallstateswherepolicyimplementationwouldbebeneficial,ortoidentifystateswhere
policiesarelikelytobeenacted,butinsteadtoidentifystateswheresuccessfulimplementationandmarketresponsecouldbeexpectedto
extendadditionaladvancedenergyaccessopportunitiestoservethelargestamountofcorporatedemand.
13
Whilethesepoliciesenabledifferentpurchasingpathways,theyalladdressthesameregulatorybarriers.
14
Itwasassumedthatincreasingsystemcapacitylimitsandenablingthirdpartyownershipwouldprimarilyenablecorporaterooftopsolar
installations.Rooftopsolarpotentialwascalculatedbyapplyinganindustry-specificestimateofthesharebuildingswithadequatesolarroofspacetotheprojectedannualenergyconsumptionofthatindustryineachstate.
15
Itwasassumedthatincreasingsystemcapacitylimitsandenablingthirdpartyownershipwouldprimarilyenablecorporaterooftopsolar
installations.
P a g e |6
POLICY PATHWAYS
Theinterestincorporateaccesstoadvancedenergyspansdifferentindustries,andcompaniesseekingtopurchase
advancedenergyhavevaryingcostconstraintsandenergyneeds,andtheyoperatewithinandacrossstateswith
differentregulatorystructures.Theirpurchasesmaybemotivatedbyadifferentsetofgoals,andevaluatedagainst
differentmetrics.
Unsurprisingly,thereisnoone-size-fits-alltransactionorcontractstructuretomeetthesevaryingneeds.Therange
ofpurchasingoptionsstartswithsimple,low-commitmentoptionslikepurchasingrenewableenergycertificates
(RECs)oroptingintoautility“greenpowerpurchasingprogram”tohaveRECsincludedwithutility-delivered
electricity.However,companieshaveincreasinglyexpressedastrongdesireforpurchasingoptionsthatgobeyond
strictlyREC-basedpurchases,sinceRECsdonotgeneratesavingsorconferlong-termprice-orfuel-hedgingbenefits,
nordotheynecessarilysupportnewor“additional”projectdevelopment.16
Theremainingoptionsforcompaniescanbedividedintotwoprimarycategories:largeoffsiteprojectsand
distributedenergyresources.Forlargeoffsiteprojects,inrestructuredstatesorstatesthatallowelectricchoice,
companieshavetheoptiontopursuePPAs,ortopurchaseelectricityfromacompetitiverenewableenergysupplier.
Fordistributedenergyresources,inalmostallstates,companiesalsohaveanoptiontogenerateelectricityand/or
installenergystorageonsite.However,therearebarriersthatpreventcompaniesinmanystatesfromaccessing
advancedenergyalongoneorbothofthesepathways.Thenexttwosectionsexploreeachofthesepathwaysinturn,
withafocusonpoliciesthatfacilitatethesepurchasingoptions.
POLICY PATHWAY 1: ALLOWING LARGE OFFSITE
PURCHASES
Manycompanieswanttoinvestmoredirectlyinadvancedenergywhilealsotakingadvantageofthepotential
financialbenefitstheseprojectsoffer,includingcostsavingsovertimeandtheabilitytohedgeagainstprice
uncertainty.Bothutility-scalefacilities(describedhere)anddistribution-scaleprojects(describedbelow)offerthese
benefits.Utility-scaleprojectsareaparticularlyattractiveoptionforcompanieswithhighelectricityuseandinstates
withgoodrenewablepotentialandfavorableeconomicsforlargeprojects.
Themainbarriertoaccessinglargeoffsitepurchasesistheelectricitymarketstructureinthestatewhereacompany
orfacilityislocated,andinparticularwhetherutilitiesareverticallyintegratedorrestructured,asexplainedbelow
(see“ElectricityMarketStructure”).
16
WorldResourcesInstitute,CorporateRenewableEnergyBuyers’Principles(Dec.2015),
http://www.wri.org/sites/default/files/Corporate_Renewable_Energy_Buyers_Principles.pdf.
P a g e |7
ElectricityMarketStructure
Manystateelectricitymarketsareverticalintegrated.Traditionally,verticallyintegratedutilitieshaveownedalllevelsofthe
supplychain:generation,transmission,distributionandretailsales.However,someverticallyintegratedutilities,likethebig
threeinCalifornia,ownonlyaminorityof
thegenerationthatservestheircustomers,
andinsteadprocuretherestfrom
independentpowerproducers.
Historically,allutilitieswerevertically
integrated,butstartinginthe1990s,
restructuringchangedthistraditionalmodel
insomestatesbytakingawayutilities’
exclusiverighttosellpower,instead
introducingmarketcompetition.In
restructuredstates,powerproviders
competetoprovidecustomerswith
electricity.Inthesestates,mostutilitieswere
alsorequiredtodivesttheirgeneration
assetsandcompetitivewholesalemarkets
wereestablished.Inessence,onlythe
transmissionanddistributionofelectricity
remainednaturalmonopolies.
Thekeydifferencebetweenvertically
integratedandrestructuredmarketsforthe
purposesofthispaperistheavailabilityofretail
Figure1:StatusofElectricRestructuringintheUnitedStates.
choice.Whileverticallyintegratedutilities
generallyretainamonopolyoverelectricitysalestotheircustomers,restructuredutilitiesgenerallyonlysellretailelectricityasa
defaultservicetocustomerswhooptnottoselectacompetitivesupplier.Inotherwords,withafewexceptions,thecustomersof
verticallyintegratedutilitiescannotchoosetheirelectricitysupplierwhereascustomersinrestructuredmarketscan.
Oneexceptioniswherestateshaveenactedlimitedretailchoiceforcertaincustomerclasses,oftentermeddirectaccess.This
optionisexplainedinfurtherdetailbelow.Figure1providesanoverviewofthestatusofelectricrestructuringinall50states.
Companiesthatdonothaveaccesstoelectricchoicecannonethelesspurchasegenerationfromutility-scale
advancedenergyprojectsifstateshaveenactedpoliciestoenablesuchpurchasesthroughutilityprogramsortariffs.
Thefollowingsectionsexplorethethreeprimarypolicyopportunitiestoenablecorporateaccesstoutility-scale
purchases:first,UtilityRenewableEnergyTariffs,sometimescalled“GreenTariffs,”whichwouldallowutility-scale
purchasesfromaportfolioofcompetitively–procured,utility-deliveredprojects;second,Back-to-BackUtilityPPA
Tariffs,whichallowutility-scalecontractswithspecificprojects;andthird,DirectAccessTariffs,whichallowlimited
electricchoicetocertaincustomers.
Becausethesepoliciesalladdressthesamebasicregulatorybarrier,thesamecriteriafordeterminingthetopstates
foropportunitiestoexpandcorporateaccessadvancedenergywouldapplytoeachofthesethreepolicies.
Accordingly,thelistoffivestatesisprovidedattheconclusionofthissection,ratherthanaftereachpolicy
opportunity.
P a g e |8
POLICY OPPORTUNITY: UTILITY RENEWABLE ENERGY TARIFFS
UtilityRenewableEnergyTariffsareemergingasanewpolicypathwaythat,whenwelldesignedandimplemented,
combinethesimplicityofagreenpowerpurchasingprogramwiththelong-termpricestabilityandpotentialcost
savingsofcompetitiveprojectselection.Inordertomeetcustomerneedsandsupportsignificantmarketdemand,
thesetariffsmustmeettwobasiccriteria.First,successfulUtilityRenewableEnergyTariffsshouldrelyonsome
degreeofcompetitiveprocurement,ratherthanbeingservedthroughutility-ownedprojectsalone,inorderto
ensurethatcustomerspaycompetitivemarketprices.Theutilityshouldprocuretheseprojectstomatchthelevel
anddurationofcustomercommitments.Second,ratherthanchargingasetpremium,theseprogramsshouldbe
pricedaccordingtothelong-termpowerpurchasepricesoftherenewableenergycontractsenteredintobythe
utility.Assuch,participatingcustomerscouldrealizesavingsimmediatelyorovertime,aselectricitypricesincrease
relativetothecontractprice.
Whileafewstateshaveadoptedutilityrenewableenergytariffsorhavesuchaprogramunderconsideration,in
somecasesthesepoliciesdonotmeetthecriteriadescribedabove,andassuchdonotprovideameaningful
opportunityforaccesstoadvancedenergy.17Whileanassessmentoftheefficacyofexistingrenewableenergytariffs
isbeyondthescopeofthisanalysis,insomestatesamendingexistingtariffstomakethemmorecompetitiveand
ensurethatbenefitsarepassedthroughtoparticipantslikelyalsopresentsapolicyopportunity.
POLICY OPPORTUNITY: BACK-TO-BACK UTILITY PPA
Companiesareincreasinglyturningtospecificutility-scaleoffsiteprojectstooffsetloadattheirfacilities.However,
companiesinverticallyintegratedmarketshavenotbeenabletoaccessthisopportunity;indeed,91%ofcorporate
dealsin2015-2016havebeensignedinrestructuredmarkets.18
Back-to-BackUtilityPPAs,offeredthroughutilities,provideonepolicyoptiontoovercomeregulatorybarriersthat
keepcompaniesfromenteringintotraditionalPPAs.Back-to-back(or“sleeved”)PPAsarespecializedtariffswhereby
electricutilitiesagreetoprocurepowerfromaspecifiedadvancedenergyfacilityonbehalfofalargecommercial
customer,andadjusttheratechargedtothecustomeraccordingtothecostofthecontractedpricenegotiatedby
thecustomerandtheadvancedenergyfacilityowner.
POLICY OPPORTUNITY: DIRECT ACCESS TARIFFS
Severaltraditionallyregulatedstatesdooffersomedegreeofretailchoice,oftentermedDirectAccess,allowing
certaincustomers,generallylargeenergyusers,tochoosetopurchasepowerfromanenergysupplierratherthan
thelocaldistributionutility.Whiledirectaccesstariffsarenotspecificallydesignedtoallowaccesstoadvanced
energy,companiesinterestedindoingsocouldpursuePPAsand/orpurchaseelectricityfromacompetitive
renewableenergysupplier.
StateswithPolicyInterventionPotentialforLargeOffsitePurchases
Table3displaysthefivestatesthatwererankedhighestonthepolicyopportunityindex(describedabove)foroffsite
purchases.Thesearestateswithregulatedelectricitymarkets,nocurrentlyavailableoptionsforthethreepurchasing
pathwaysdescribedabove,highin-statecorporateenergyconsumption,andsignificantin-staterenewableenergy
resources.Bythesamemetrics,Alabama,Missouri,Iowa,Kentucky,andSouthCarolinarankedinthetop10.
Foreachstate,Table3showsthecalculatedin-stateannualenergyconsumptionbylargecorporations,aswell(to
provideasenseofscale)astheamountofrenewableenergycapacitythatwouldbedevelopedifthisenergyneed
wereentirelymetbynewrenewableenergyresources.19
17
WorldResourcesInstitute,EmergingGreenTariffsinU.S.RegulatedElectricityMarkets(Feb.2016),http://buyersprinciples.org/wpcontent/uploads/15_IB_GreenTarrif_CHARGE_v9-1.pdf.
18
RenewableEnergyBuyersAlliance,PerspectivesontheMarket(May2016),http://rebuyers.org/wp-content/uploads/2016/05/2016-REBASummit-Fireside-Chat.pdf.
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Table3–Top5rankedstatesforpoliciestoallowlargeoffsitepurchases,basedonpotentialtoincreasecorporate
accesstoadvancedenergy
Annual Large Corporate Consumption
(GWh/yr)
Corresponding Renewable Energy
Capacity
(MW)
California
78,504
28,909
Florida
49,414
19,078
Indiana
39,876
15,842
Michigan
30,608
12,317
Minnesota
20,591
8,133
State
POLICY PATHWAY 2: ENABLING DISTRIBUTED
ENERGY RESOURCES
Manycompanieswishtoprocurepowerfromlocal,distributedresources.Thisoptionisappealingforcompanies
thathavemanylocationsspreadacrossastateoracrossthecountry,andisparticularlyattractiveinregionswith
strongdistributedenergypotential(generallysolar).Asdistributedenergysystemcostscontinuetodrop,customers
areabletoactuallysavemoneybyinvestingindistributedenergysystems.
Distributedgenerationprojectsareagoodoptionforcompaniesthathaveappropriatespaceattheirfacilitiestohost
aproject.Forcustomer-facingbusinessessuchasretailstores,onsitegenerationalsoallowsacompanytodirectly
communicateitscleanenergycommitmenttocustomers.Distributedgenerationsystemscanbeeithercustomerownedorthird-party-owned,withthird-partyownershipofferingsignificantbenefitsintermsofloweringupfront
systemcostsandreducingoperatingrisktothecompanyovertime.Distributedgenerationprojectscanalsobeused
tomeetloadatmultiplefacilitiesthroughvirtualoraggregatedmetering;bywhichacorporatepowerpurchasercan
useasinglerenewableenergyprojecttomeetenergyneedsatmultiplefacilities.
Inorderforeitheroftheseoptionstopresentanattractivepurchasingpathwayforlargecorporatecustomers,there
mustbeamechanisminplacetocreditcustomersforthegenerationfromdistributedenergyresources.20Evenin
stateswithsuchamechanisminplace,theremaystillbebarrierstodeployment.Policiesthatmitigatethesebarriers
couldinclude:raisingsystemsizelimitations,allowingthird-partyownership,andallowingvirtualoraggregated
metering.Addressingthesebarriersinstateswheretheyexistwillopenopportunitiesforincreasedcorporateaccess
todistributedenergyresources.
19
Thiscalculationassumesthatwindenergywillamounttotwo-thirdsofnewcapacity,andsolarenergywillamounttoone-third.Awind
capacityfactorof33.9%isassumed.SeeU.S.EnergyInformationAdministration,2014windenergyproductiondata,
http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_6_07_b.Asolarcapacityfactorspecifictoeachstateisused.See
NationalRenewableEnergyLaboratory,U.S.RenewableEnergyTechnicalPotentials:AGIS-BasedAnalysis(July2012),
http://www.nrel.gov/docs/fy12osti/51946.pdf.
20
Whileallofthesestateshavesomemechanisminplacetocompensatedistributedenergyresources,thisreportisfocusedonaccess,and
thereforedoesnotconsiderwhethersuchpoliciesarecurrentlywell-structuredoreffectiveatfacilitatingdeployment.
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POLICY OPPORTUNITY: RAISING DISTRIBUTED ENERGY SYSTEM LIMITS
Manystatesimposelimitsonthesizeofprojectsthatcanqualifyfordistributedgenerationprograms.Theselimits
restricttheusefulnessofdistributedenergyresourcesinthecorporatesector,sincemanylargecompanieshave
electricityneedsthatwouldrequireasystemwellover1MWinsize(ascomparedtoatypicalhome,whichcould
completelymeetitsneedswitha5-10kWsystem).Ifastatehasrestrictivelimitsonsystemsize,acompanyinstalling
asystemlargeenoughtomeetanysignificantportionofitsenergyneedswouldnotbeabletobenefitfromnet
meteringorothercreditingmethods,reducingthesystem’svalue.Raisingnetsystemcapacitylimitswouldenable
greatercorporateaccesstodistributedgenerationsector,thoughstatesmaywishtobalancethisagainstcompeting
orconflictingpolicyobjectives.
Raisingsystemlimitspresentsapolicyopportunityinstatesthathavealreadyimplementedamechanismfor
compensatingdistributedgenerationsystemowners,butwherethelimitationsonthesizeofsuchsystemsmaylimit
widespreadcorporateparticipation.Thisbarriercouldbeaddressedbyeliminatingcapacitylimits,raisingcapacity
limitstoahigherlevel(e.g.,5MW),ortyingcapacitylimitstoelectricityuse.Forexample,anumberofstates—
includingArizona,Colorado,Georgia,NewJersey,andOhio—simplystipulatethatagivenfacilitycannotgenerate
moreelectricitythancouldbeconsumedonsiteoverthecourseofayear.Thiscreatesadditionalmarket
opportunitiesbecauseitmakesitmucheasierforlargeenergyuserstomeettheirneeds.
Table4displaysthefivehighest-rankingstatesonthepolicyopportunityindexforincreaseddistributedenergy
systemlimits.Thesearestateswithmechanismsinplacetocreditdistributedenergyprojectsforgenerated
electricity,distributedgenerationsystemcapacitylimitsthatmayrestrictwide-scalecorporaterenewableenergy
purchases,highin-statecorporateenergyconsumptionatsiteswiththepotentialforonsitegeneration,21and
significantin-statesolarenergyresources. 22 Bythesamemetrics,Indiana,Tennessee,Wisconsin,Missouri,and
Louisianarankedinthetop10.
Table4–Top5rankedstatesforpoliciestoraisesystemcapacitylimits,basedonpotentialtoincreasecorporate
accesstoadvancedenergy
State
Annual Large Corporate Consumption
Corresponding Renewable Energy
Capacity
(GWh/yr)
(MW)
Texas
106,945
40,876
California
78,504
28,909
Michigan
30,608
12,317
Alabama
28,154
10,982
Kentucky
29,845
11,830
POLICY OPPORTUNITY: THIRD-PARTY OWNERSHIP
Third-partyownershiphasbeenausefultoolinexpandingdistributedenergyinboththeresidentialandcommercial
markets.Third-partyownershipcreatestheopportunityforlargecommercialfacilitiestoprocurepowerfrom
distributedenergyresourcesthroughrate-basedPPAsratherthanrelyingonthefacility’sowncashreservesand
21
Tocreateestimatesofcorporateconsumptionatsiteswithgoodcandidacyforonsitegeneration,theanalysisweightedenergyconsumption
byanindustry-specificfactorthatestimatedthepercentageofsitesinthatindustrywhichwouldbeabletoaccommodatesignificantonsite
renewableenergygeneration.
22
Itwasassumedthatallonsitegenerationwouldbesolarenergy,givencommonfeasibilityandregulatoryconstraintsforonsitewind.
P a g e |11
debtcapacity.Third-partyownershipcanbeparticularlyeffectiveinaddressingfinancingbarriersamongcorporate
powerpurchasers,andhasbecomeanincreasinglypopularpurchasingoptioninthecommercialsectorinrecent
years.23
Table5displaysthefivehighest-rankingstatesonthepolicyopportunityindexforincreaseddistributedenergy
systemlimits.Thesearestateswithmechanismsinplacetocreditdistributedenergyprojectsforgenerated
electricity,nocurrentmechanismsallowingthird-partyownershipofdistributedenergyresources,highin-state
corporateenergyconsumptionatsiteswiththepotentialforonsitegeneration,24andsignificantin-statesolarenergy
resources. 25 Bythesamemetrics,SouthCarolina,Kentucky,Tennessee,Wisconsin,andMissourirankedinthetop
10.
Table5–Top5rankedstatesforpoliciestoallowthird-partyownership,basedonpotentialtoincreasecorporate
accesstoadvancedenergy
State
Annual Large Corporate Consumption
(GWh/yr)
Corresponding Renewable Energy
Capacity
(MW)
Indiana
39,876
15,842
Florida
49,414
19,078
North Carolina
36,697
14,216
Alabama
28,154
10,982
Minnesota
20,591
8,133
POLICY OPPORTUNITY: ALLOW VIRTUAL OR AGGREGATED METERING
Somecompaniesmaybenefitfromdevelopingasingledistributedrenewableenergyprojectandusingtheelectricity
generatedtoservetheenergyneedsofmultiplesites,whichcanbeamoreefficientandcost-effectivemeansto
utilizedistributedenergyresources.Inmanystates,restrictivepoliciesarounddistributedenergycreditingprevent
theseflexibleoptions,buttherearestraightforwardsolutions.
Virtualenergymeteringandmeteraggregationaremechanismsthatenablecustomerstogenerateenergyata
singleprojectanduseitasacreditagainstenergyconsumptionatoneormorefacilities(ormeters)controlledbya
singlecustomer,allowingacorporationtoefficientlyserveenergyneedsacrosssites.Typically,suchpoliciesactasan
expansionofnetenergymeteringregulations
Table6displaysthefivehighest-rankingstatesonthepolicyopportunityindexforincreaseddistributedenergy
systemlimits.Thesearestateswithmechanismsinplacetocreditdistributedenergyprojectsforgenerated
electricity,nocurrentmechanismsallowingvirtualoraggregatedmetering,highin-statecorporateenergy
consumption,andsignificantin-staterenewableenergyresource.Bythesamemetrics,NorthCarolina,Michigan,
Alabama,Virginia,andMissourirankedinthetop10.
23
GreenTechMedia,AsMoreCorporationsgoSolar,HowAretheDealsStructured?(April2016),
http://www.greentechmedia.com/articles/read/corporations-go-solar-increasingly-through-third-party-financing.
24
Tocreateestimatesofcorporateconsumptionatsiteswithgoodcandidacyforonsitegeneration,theanalysisweightedenergyconsumption
byanindustry-specificfactorthatestimatedthepercentageofsitesinthatindustrywhichwouldbeabletoaccommodatesignificantonsite
renewableenergygeneration.
25
Itwasassumedthatallonsitegenerationwouldbesolarenergy,givencommonfeasibilityandregulatoryconstraintsforonsitewind.
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Table6–Top5rankedstatesforpoliciestoallowvirtualoraggregatedmetering,basedonpotentialtoincrease
corporateaccesstoadvancedenergy
State
Annual Large Corporate Consumption
(GWh/yr)
Corresponding Renewable Energy
Capacity
(MW)
Texas
106,945
40,876
Florida
49,414
19,078
Ohio
48,888
19,674
Indiana
39,876
15,842
Georgia
38,225
14,859
CONCLUSION
Thisreporthighlightstheconsiderablepotentialforadvancedenergygrowthandeconomicdevelopmentin
satisfyingthegrowingdesireoflargecorporationstodirectlypurchaseelectricitytopowertheirfacilitiesfrom
renewableenergygeneratorsratherthanrelyonthemixofresourcesprovidedbyelectricutilities.Corporationsmay
choosetoaccessadvancedenergyvialargeoffsiteprojects,orfromdistributedrenewableenergyprojects,butin
somestates,regulatorystructuresandpolicyframeworkspreventcorporationsfromenteringintosomeorallof
thesearrangements.Theselimitationsconstraincompanies’abilitytoobtainrenewablepowerfortheiroperations
andlimittheeconomicbenefittotheirhoststatesthatcomeswithimprovedcorporatecompetitivenessandwith
renewableenergydevelopmentmorebroadly.Thisreportidentifiessixenablingpoliciesthatstatesareusingto
expandcorporateaccesstoadvancedenergy.
Threepolicyoptionswouldallowaccesstoutilityscaleprojectsandbenefitstatesthatdonotallowretailchoice:
UtilityRenewableEnergyTariffs,whichcombinethesimplicityofagreenpowerpurchasingprogramwiththelongtermpricestabilityandpotentialcostsavingsofcompetitiveprojectselection;Back-to-BackUtilityPPAs,whichgive
corporationstheabilitytocontractforrenewableenergyevenintraditionallyregulatedutilitymarkets;andDirect
Access,whichallowscorporationstopurchasepowerfromcompetitivesuppliers,whichmayormaybesourcedfrom
renewableenergysources.
Statesthatalreadyprovideeffectivemeansofcreditingdistributedenergycanalsoenablecorporateinvestmentin
distributedenergyinstallationsbyraisingdistributedgenerationsystemlimits;permittingthird-partyownership;
and/orallowingvirtualoraggregatedmetering.
Thereportidentifiesstateswiththegreatestpotentialtoexpandcorporateaccesstoadvancedenergybyassessing
theregulatoryandpolicyenvironment,potentialmarketsizeforcorporatepurchases,andrenewableenergy
potentialofall50states.Fromthisanalysis,11statesemergedamongthetop5foroneormoreofthepolicies
profiledonthebasisofitspotentialtoincreasecorporateaccesstorenewableenergy:Alabama,California,Florida,
Georgia,Indiana,Kentucky,Michigan,Minnesota,NorthCarolina,Ohio,andTexas.Bythesamemetrics,an
additionalsevenstatesemergedamongthetop10foroneormoreofthesepolicies:Louisiana,Iowa,Missouri,South
Carolina,Tennessee,Virginia,andWisconsin.
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