Renewable Portfolio Standards under attack

On June 7, a 7th Circuit Court decision cast doubt on the constitutionality of Michigan’s renewable portfolio standard (RPS) requirement for in-state generation. Similar in-state RPS requirements have been challenged for violating the Commerce Clause’s prohibition on discriminating against interstate commerce, including the Massachusetts RPS and the Colorado Renewable Energy Standard (RES). Attorney generals from Alabama, Texas, Nebraska, and North Dakota recently threatened to challenge California’s RPS.

In the face of these legal challenges, the Clean Coalition has put forth two specific solutions that state policymakers can utilize to protect renewable standards from these attacks. The Clean Coalition thanks Professor Timothy Duane, the author of a recent law journal article on this topic, for vetting these proposals.

The first solution is to compensate for the additional value of DG. DG provides increased value through avoiding transmission costs, increasing efficiency, speeding compliance with renewable energy targets, and enhancing energy system resilience. As a result, it should not be considered a violation of the Commerce Clause for a state to mandate that DG projects receive greater compensation for the additional value provided.

The second solution is to create a DG carveout within renewable energy mandates. Since DG provides additional value to utilities and ratepayers, it is substantially different and preferable to central generation. In other words, a local kilowatt is not the same as a remote kilowatt; therefore, a DG carveout is legally justifiable and should not be considered a violation of the Commerce Clause.

While these legal challenges represent an unfortunate delay in the transition towards renewables, the Clean Coalition is confident that its proposed solutions will enhance RPS laws by recognizing the true value of DG while reducing vulnerability to legal challenges.