US: Rhode Island implementing FITs

The law passed the legislature and was signed by Governor Lincoln Chafee on June 29, 2011, thus making Rhode Island the second state in the Northeast to implement a FIT program and one of the few states in the U.S. to do so.

While not the first with a FIT, Rhode Island may set a record for the rapidity of implementation. Specific differentiated tariffs must be set by the end of September and the program launched in mid-October.

Rhode Island’s legislation, S723Aaa (as amended), calls for the state to offer 40 MW of what it calls Distributed Generation Standard Offer Contracts for wind energy, photovoltaics and biogas generators from anaerobic digestion.

The statute states explicitly the annual target of contracts for distributed generation:

  • December 31, 2011: 5 MW
  • December 31, 2012: 20 MW
  • December 31, 2013: 30 MW
  • December 31, 2014: 40 MW

The statute defines distributed generation as a renewable energy generator less than five MW. This is substantially less than the working definition in California, where Governor Jerry Brown has proposed FIT for distributed generation projects less than 20 MW.

Other terms of the Standard Offer Contracts specified in the statute include:

  • Term: 15 years
  • Program cap: 40 MW total by 2014
  • Project size caps: wind <1.5 MW; pohotovoltaics <500 kW; "Other"
  • technologies <1 MW
  • Biogas from anaerobic digestion included
  • Only In-state projects qualify
  • Cost recovery: ratepayers on the distribution system

The legislation specifically excludes biomass.

The law creates the Distributed Generation Standard Contract Board made up of various stakeholders who will determine contract details, pricing, and compliance with the act’s targets.

The Board is authorized to revisit pricing at any time to either raise or lower prices. This could prove useful if initial prices are set too low, but it can also be problematic for high-cost technologies like photovoltaics, where regulators sometimes panic when demand for contracts is high.

The law requires that the tariffs be "highly differentiated", says Jerry Almer, an attorney with the Conservation Law Foundation who worked on the legislation. For example, Almer suggested there could tariffs for both on-shore and off-shore wind.

For the program year 2012, the statute specifies that there must be at least four different technology classes and at least two of those will be for photovoltaics, and at least one for wind energy. The Board may add, delete, or adjust these classes as it sees fit.

Significantly, the state’s law directs the Board to set targets for each renewable energy class or tranche. This is the first state law to reflect the Federal Energy Regulatory Commission’s decision last fall on the question of whether FITs are legal in the U.S. The Commission decided that FITs are legal if they meet certain requirements. Rhode Island’s statute appears to have been written to meet those requirements.

Rhode Island has a more aggressive target – at least on paper – than California. The New England state’s Renewable Energy Standard is now a total of 40 percent of supply in comparison to the 33 percent target in California.

The state also requires utilities to enter long-term contracts for a portion of its Renewable Energy Standard. And of those long-term contracts 10 percent must be set aside for "distributed generation", including photovoltaics.

To date, it has developed 2.4 MW worth of wind energy and 0.06 MW of photovoltaics.