Federal Policies Around Renewable Energy
In recent years, Americans have become increasingly aware of the importance of renewable electricity sources. With the Biden-Harris Administration’s objective to hit net-zero greenhouse gas emissions by 2050, the stage is set for the greatest sustainability revolution of all time.
And with carbon emissions of 4,970 million metric tons in 2022, the United States is one of the world’s largest emitters of greenhouse gasses, second only to China. This worrying statistic gives us a special responsibility to lead the way in the battle for a clean energy future.
A core aspect of Biden’s ambitious plan is America’s switch to sustainable power. Using renewable energy sources, such as ground and rooftop solar, wind, and hydroelectricity, reduces our dependence on fossil fuels, which account for over 75% of global greenhouse gas emissions.
The opportunity for change lies in the hands of America’s corporations, businesses, and homeowners. By incorporating renewable energy projects into your home, you can reduce your energy prices, lower your carbon footprint, and play your part in America’s green future.
The barriers previously preventing America’s citizens from switching to renewable technologies are falling. Lower installation costs and several federal policies incentivizing renewable sources have made renewable domestic energy production more affordable and accessible.
SunPower aims to be at the forefront of the green revolution as a leading provider of high-quality, cost-effective residential solar solutions.
We’ve put together this article to shed some light on the federal policies which are helping to make the transition to sustainable energy solutions easier and more beneficial than ever before.
United States energy facts
America still faces a long road to net-zero emissions. According to a U.S. Energy Information Administration study, fossil fuels accounted for 79% of the nation’s energy use in 2021, compared with 8% for nuclear power and 12% for renewable sources. This marks only a 1% decrease from an 80% fossil fuel dependence in 2019.
That said, recent growth in renewable energy technologies offers a sunnier outlook for the future. Wind and solar power accounted for 14% of total electricity generation in 2022, an increase from only 8% in 2014. Solar energy, in particular, has experienced enormous growth in recent years, accounting for 46% of new generation capacity in 2022, compared to only 4% in 2010.
Renewable energy development is the spearhead behind America’s objective to achieve net zero. Let’s explore how it became a crucial part of our sustainability goals.
Renewable energy in the United States
Over the last decade, the U.S. has witnessed remarkable growth in renewable energy use. Rising electricity costs, support from federal policies, increased energy demand, and the threat of climate change have fueled this expansion. Technological advancements and financial incentives have made getting started with renewable technologies more accessible than ever. The future of green energy looks bright.
California and Texas lead the way for solar energy adoption, with over 39% of total solar energy in the U.S. generated from these two states (27.5% and 11%, respectively). As more states get involved and push toward renewable energy, America is set to establish itself as a world leader in sustainability.
Federal policies promoting renewable energy in the United States
Several local, state, and federal level policies exist to encourage renewable energy use in the U.S. and provide financial incentives to go green. Each renewable energy policy offers something different. Let’s explore what they are, how they work, and how they can benefit you.
Investment Tax Credit (ITC)
The Investment Tax Credit (also known as Federal Income Tax Credit) provides a tax credit equivalent to 30% of the cost to purchase solar panels, to qualified homeowners who invest in solar energy. This means you can save on your federal income taxes when you install solar panels on your property.7 The federal tax benefits you receive depend on the money you spend on the solar energy project.
Additional 10% ‘adder’ credits are also available to owners of select renewable energy projects if they meet certain criteria. For example, one adder credit is available for projects that pay workers specific wage requirements or provide apprenticeship opportunities. Additional credits are available for those who provide low-income energy programs or build in specified energy areas. See energy.gov for more information.
The Public Utility Regulatory Policies Act (PURPA) of 1978
PURPA is a 1978 federal policy that mandates and encourages electric utilities to purchase renewable energy from smaller-scale renewable energy producers, known as qualifying facilities (QFs). The act states that electricity must be purchased at just and reasonable rates. This ensures that QFs receive fair energy prices for the power they generate.
PURPA encourages small-scale businesses to set up renewable energy farms, promoting energy sector diversification and increasing competition. This prevents large-scale investor-owned utilities from setting high energy prices, keeping the cost of electricity down and making renewable energy systems affordable for the end consumer.
Renewable Portfolio Standards (RPS)
The renewable portfolio standard is legislation requiring and encouraging municipal utilities, cooperative utilities, and investor-owned utilities to generate a set percentage of their power from renewable resources such as wind, solar, geothermal, biomass, and hydropower.
RPS policies set specific targets and timelines for renewable energy use. Electric utilities must either generate the specified amount of renewable energy, buy it from other electricity suppliers, or purchase Renewable Energy Credits (RECs) to meet their targets. Setting these targets creates demand for renewable energy systems and stimulates investment in renewable energy projects.
Energy Policy Act of 2005
Enacted by Congress in 2005, the Energy Policy Act covers nearly all aspects of energy production in the U.S.
A core aim of the policy is to provide federal tax incentives, loan defaults, and loan guarantees for different types of renewable energy production. For example, the act provides tax credits for electricity providers producing alternative fuels, such as wind and geothermal energy. It also offers additional loan payments and guarantees for innovative technologies that avoid greenhouse gases. It even incentivizes those who drive low or zero-emission vehicles, such as electric and hybrid vehicles.
The Energy Policy Act is the fundamental building block of our battle for sustainability. It covers multiple aspects and provides excellent incentives for those moving toward green energy.
American Recovery and Reinvestment Act of 2009
The American Recovery and Reinvestment Act (ARRA), also known as the Stimulus Package, was enacted to stimulate economic activity, create jobs, and encourage renewable energy adoption.
The bill included a commitment of over $80 billion to support the implementation of clean energy solutions. This funding supported clean energy innovation, created valuable jobs in the renewable energy sector, and helped develop the infrastructure needed for a sustainable future. The ARRA also expanded on existing tax benefits and credits for those transitioning to green energy.
What renewable energy challenges could the U.S. face in the future?
While the future of renewable energy is optimistic, there are still many hurdles to overcome. Let’s explore a few of these roadblocks in more detail.
Grid Integration: Improvements in energy infrastructure are essential if America hopes to meet energy demands with renewable sources. The current grid structure must adapt to renewable domestic energy production. These changes take time and money to implement.
Energy storage: The key to unlocking the potential of renewables is energy storage devices. We must be able to store excess energy during periods of high generation to provide power when our renewables aren’t generating enough power. Achieving this is the path to more renewable energy independence.
Regulatory and policy barriers: Restrictive regulatory and policy barriers, such as cumbersome permit processes, location restrictions, and a lack of supportive legislation, make it harder to adopt renewable energy at scale. Overcoming these barriers ensures that renewable energy is accessible to everyone.
These barriers are not insurmountable. With hard work and commitment, America can become a world climate leader and pave the road to sustainability.
The future of renewable energy looks bright
Despite the hurdles in place, the future of renewable resources in the United States shows strong potential. Renewable energy is currently the fastest-growing energy source in the U.S., increasing 90% from 2000 to 2020. This trend shows no sign of slowing down. U.S. renewable power consumption is expected to grow at an annual rate of 2.4% over the next 30 years, faster than any other energy source.
According to the U.S. Department of Energy, the government is poised to invest more than half a trillion dollars in climate action and cleaner energy sources over the next decade. The U.S. government will invest a large portion of this money into its many policies, which are now in place to incentivize businesses and homeowners to adopt renewable energy.
With long-term investment and policy support from the U.S. government, renewable electricity is poised to become every American's most efficient, affordable power source.
The goal of a greener America requires a collaborative effort. Implementing renewable energy projects in your home or business can save money on electricity bill payments, reduce taxes, and lower carbon dioxide emissions. Your commitment to choosing renewables puts America one step closer to green electricity production and a net-zero future.
Ready to learn more about how you can power your home with clean, renewable solar energy?
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Schedule your free, no-obligation consultation with SunPower by calling 1-800-SUNPOWER. Or click the Get Started button and we'll get in touch with you! Our team of Solar Advisors is here to help make your transition to a sustainable lifestyle.
FAQs - Federal policies around renewable energy
How do federal policies impact the growth of renewable energy in the U.S.?
Federal policies play an enormous role in the growth of renewable energy. Financial incentives such as tax credits, low-interest loans, and rebate programs promote the adoption of renewable energy technologies. Federal-level policies also establish mandatory standards, such as Renewable Portfolio Standards (RPS), which stimulate innovation and encourage the expansion of renewable energy infrastructure.
What is the role of technology in promoting renewable energy adoption?
The role of technology in renewable energy cannot be understated. Technological advancements, battery storage systems, and grid integration solutions pave the way to more efficient renewable energy sources. This allows electricity providers to cope with increasing energy demand. As the technical potential of renewables continues to improve, renewable energy will grow more affordable and accessible to all.
What is the role of states in promoting renewable energy adoption?
State participation plays a vital role in the promotion of renewable energy. They have the authority to set their own policies and regulations to support renewable energy adoption within local communities. Collaborating with businesses, offering financial incentives, and providing grants help to promote involvement in the renewable revolution. The Database of State Incentives for Renewables & Efficiency provides a helpful map for finding policies and incentives by state. You can also learn about active Solar Energy Technologies Office projects.
Where can I find more information on renewable energy policies?
To learn more about renewable energy and the policies available for homeowners, businesses, and corporations, check out these informational resources:
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3 Based on reviews from BBB, Yelp, ConsumerAffairs, BestCompany, Google, SolarReviews and EnergySage review scores as of 3/11/24.
4 Based on public solar providers in the U.S. Includes average of BBB, Yelp, ConsumerAffairs, BestCompany, Google, SolarReviews and EnergySage review scores as of 3/11/24.
7 Tax credits subject to change. SunPower does not warrant, guarantee or otherwise advise its customers about specific tax outcomes. Consult your tax advisor regarding the solar tax credit and how it applies to your specific circumstances.
