| Program Name
|| Alternative Energy Resource Standard
| Program Type
|| Renewables Portfolio Standard
| Incentive Types
|| CHP/Cogeneration, Solar Thermal Electric, Photovoltaics, Landfill Gas, Wind, Biomass, Hydroelectric, Geothermal Electric, Fuel Cells, Municipal Solid Waste, Anaerobic Digestion, Microturbines
|| Utility, Electric Distribution Utilities and Electric Service Companies
The Public Utilities Commission of Ohio (PUCO) issued rules to implement Ohio's Alternative Energy Resource Standard in April 2009; additional comments are expected. These rules likely will not be final until the third quarter of 2009. At that point, this summary will be updated accordingly.
In May 2008, Ohio enacted broad electric industry restructuring legislation (S.B. 221) containing alternative energy and renewable energy generation and procurement requirements for the state's electric distribution utilities and electric service companies (hereafter referred to as utilities). This definition encompasses all retail electricity providers except municipal utilities and electric cooperatives.
Under the standard, utilities must provide 25% of their retail electricity supply from alternative energy resources by 2025, with specific annual benchmarks for renewable and solar energy resources (see details below). Alternative energy resources include all renewable and advanced energy resources. Eligible renewable resources are defined to include the following technologies: solar photovoltaics (PV), solar thermal, wind, geothermal, biomass, biologically derived methane gas, landfill gas, certain non-treated waste biomass products, fuel cells that generate electricity and qualified hydroelectric facilities.* Distributed generation systems used by customers to generate electricity using the aforementioned eligible renewable resources are also included.
Generally, advanced energy resources are defined as any process or technology that increases the generation output of an electric generating facility without additional carbon dioxide emissions. The definition of advanced energy resources explicitly includes clean coal; generation III advanced nuclear power; distributed combined heat and power (CHP); fuel cells that generate electricity; certain solid waste conversion technologies; and demand side management or energy efficiency improvements. Additionally, new or existing mercantile customer-sited advanced energy resources and renewable energy resources that the customer commits into a utility's demand-response, energy efficiency or peak demand programs are also eligible “advanced energy” resources. This designation generally includes any advanced or renewable technology that would be eligible if it were owned by a utility, but is also specifically includes waste heat resources, energy storage technologies, and resources that improve the relationship between real and reactive power.
In order to qualify under the standard, all alternative energy and renewable energy facilities must have a placed-in-service date of January 1, 1998, or later. The Public Utilities Commission of Ohio (PUCO) is authorized to classify any new technology as an alternative energy or renewable energy resource.
The renewable benchmarks begin in 2009 and increase annually towards an eventual target of 12.5% of retail electricity sales by year-end in 2024 and thereafter. The requirement also contains a carve-out for solar-energy resources with an ultimate solar target of 0.5% of the total electricity supply in 2024 and thereafter. The total renewable percentage requirement includes the solar specific portion (i.e., the solar requirement is not added on top of the specified renewables requirement). The detailed schedule of annual compliance benchmarks appears below. The law does not identify annual benchmarks for the overall alternative energy standard.
! align="left" | Year
| Renewable (%) Benchmark
|| Solar (%) Benchmark
At least 50% of the renewable energy requirement must be met by in-state facilities, and the remaining 50% with resources that can be shown to be deliverable into the state.
A utility's obligation under the alternative energy standard is calculated using the average of a utility's total retail sales (sold under standard service offer) during the preceding three calendar years as a baseline. PUCO may reduce this baseline to account for new economic growth in a utility's certified territory or in a company's service area. The annual benchmark obligations may be met through the purchase of qualified renewable energy credits (RECs), which are defined as the fully aggregated environmental attributes associated with one megawatt hour of electricity generated by a renewable energy resource. Under the standard, RECs have a lifetime of five years following their purchase or acquisition. The utility utilizing RECs for compliance must be a registered member with PJM’s generation attribute tracking system (GATS) and/or Midwest Independent Transmission System Operator (MISO) generation attribute tracking system, and/or other credible tracking system PUCO subsequently approves. Only RECs generated after the effective date of S.B. 221 (July 31, 2008) may be used for compliance.
PUCO is also tasked with annually reviewing compliance with the renewable and solar energy benchmarks and imposing penalties if the benchmarks are not met. The alternative compliance payment (ACP) for the renewable portion is initially set at $45/megawatt-hour (MWh) but will be adjusted annually by PUCO according to the federal Consumer Price Index. The initial level also serves as a minimum for future adjustments. The Solar Alternative Compliance Payment (SACP) is set at $450/MWh in 2009, reduced to $400/MWh in 2010 and 2011, and will be reduced by $50 every two years thereafter to a minimum of $50/MWh in 2024. Compliance payments will be deposited into the Ohio Advanced Energy Fund, which provides financial support to renewable energy and energy efficiency projects within the state. Utilities may not pass along the cost of compliance payments to their customers.
The law contains clauses for cost limitations and allowances for non-compliance for reasons beyond a utility's control (i.e., force majeure). Utilities are not required to comply with the annual benchmarks if it is "reasonably expected" to raise their costs by 3% or more above what they would have otherwise been. The PUCO may require the utility to make solicitations for renewable energy resource credits before the utility may request a force majeure determination. PUCO is authorized to reduce a utility's obligation under the standard if it receives a petition for such treatment from the utility and determines that resources sufficient to meet the obligation are not reasonably available. Under these circumstances a utility may be required to make up the shortfall with additional purchases in subsequent years.
PUCO must submit compliance reports to the Ohio General Assembly on an annual basis. These reports must allow and consider public comments prior to submission.
S.B. 221 also requires utilities to implement energy efficiency and peak demand reduction programs that achieve a cumulative energy savings of 22% by the end of 2025, and reduce peak demand by 1.0% in 2009 and 0.75% annually thereafter through 2018. These requirements are separate and distinct from the Alternative Energy Resource Standard.
*In order to be considered a renewable resource for the purposes of the renewable resource standard, a hydroelectric facility must meet a series of requirements regarding its environmental impact. However, these requirements do not include a size limitation (e.g., 30 MW) of the type frequently found in state RPS laws.