The world of renewable energy is rapidly expanding, growing faster than ever and showing new developments every day. Each month, Leyline covers hot topics in current events, tips for getting involved in renewable energy projects, and developments within the scope of our company. We love sharing with you all and helping accelerate a clean transition. As we move into the second half of the year, let's take a moment to recap what's happened thus far.
State Progress on Solar
Earlier this year, we projected top states for large-scale solar which included Virginia, Maryland, Illinois, Ohio, and Colorado. Let's take a look at how things have progressed:
Virginia has unfortunately experienced some setbacks in the past months, as Dominion Energy levied the highest minimum bill in the country on their shared solar program. Although the Virginia State Corporation Commission approved the rate, critics argued that the charges will discourage customers and developers from joining the program. The state saw other attempted environmental rollbacks from the Virginia General Assembly as well. A bill to repeal the Virginia Clean Economy Act was thankfully thwarted, though initiatives such as one to leave the regional carbon market (RGGI) are still up for grabs.
Maryland has recently tackled groundbreaking climate action. The state passed the Climate Solutions Now Act of 2022 back in April, which accelerates its former 40 percent emissions reduction goal to 60 percent reduction from 2006 levels by 2031. It also established a target of carbon neutrality by 2045, and was touted by the American Council on Renewable Energy (ACORE) as 'one of the nation's most robust climate and clean energy policies." This push to reduce and eliminate emissions is predicted to facilitate increased solar growth in the state. Maryland residential, commercial, and industrial customers alike continue to take advantage of the state's net metering policy, as well as a number of solar grants and community solar programming. The recently-passed HB 1039 and HB 440 created solar tax incentives, included provisions supporting low- and moderate-income households, and expanded the maximum allowed capacity for community solar projects.
Illinois has seen more positive solar growth and has brought a number of solar projects online in the past few months. Most recently, Pivot Energy began development on 10 new community solar projects totaling more than 17 megawatts (MW) of capacity. New procurements are ongoing, and plans are in the works to install solar and battery energy storage on the sites of several retired coal plants, which will hopefully bring fresh revenue and purpose to struggling coal communities.
Ohio continues to offer solar incentives to residential and commercial owners, such as renewable energy credits (RECs) and a state-wide net metering policy. Many new solar projects are underway across the state, and a number of counties and cities like Columbus have launched community co-op programs which boost community engagement in clean energy.
Demand for solar is blossoming in Colorado, which boasts a $4.9 billion solar industry that is expected to grow over the next few years. New solar projects are cropping up all across the state, including forays into agri-voltaics and community solar gardens. State solar incentives such as sales tax exemptions and net metering will continue to push development in the right direction.
The Future of Finance
Let's take another glimpse into the future of renewable energy finance. In early 2022, we anticipated three main challenges: tax finance deadlines/phase-outs, growing installation costs, and long interconnection queues.
Until recently, the solar tax credit carveout was set to phase out by 2024. With the passage of the Inflation Reduction Act of 2022, however, the tax credit was renewed to remain at 30 percent until 2033 when it will step down to 26 percent, then 22 percent in 2034.
The cost to build new solar and wind projects has indeed risen due to high materials costs and supply chain volatility. Nevertheless, demand for renewables has remained high and the price of fossil fuel-powered projects has skyrocketed 40 percent higher than wind and solar. Renewable installation costs on average have fallen over the past decades, and it is expected that future development expenses will decline rapidly over the long-term.
As projected, interconnection queues are long, but are chock-full of wind, solar, and storage projects. A recent study reported 1.1 terawatts of clean energy and storage were in the queue at the end of 2021. It also noted that projects are sitting in the queues longer than in the past-from around two years between 2000-2010 to close to four between 2011-2021. Though interconnection delays have created a temporary bottleneck, the anticipated growth of renewable connections holds promise for the future.
Former newsletters also looked into natural gas bans across the country. Natural gas, often touted as a "climate-friendly" fossil fuel, still emits greenhouse gasses, and the International Energy Agency (IEA) has recommended phasing out natural gas in buildings globally over the next few years. As of January, California and Washington state were on board, as well as New York City and a handful of cities in the Pacific Northwest. The State of New York also had a proposal to ban fossil fuel heating in new buildings, but it unfortunately stalled out in April and it is unclear if it will move again. Twenty states are on the other side of the spectrum, with laws in place to ban gas bans. Pennsylvania and Michigan have similar natural gas "banning bans" legislation under consideration.
On the business side, Leyline explored starting your own clean energy business, crafting project development strategies, and how we can support emerging renewables developers through our capital lending. To get started, we chatted with CEO and Founder of NovoHydrogen, Matt McMonagle, who outlined important strategies for potential business owners:
In another piece, we examined how developers can execute project development at a local level. Key steps include:
In particular, capital is key for those getting into the renewable development business. At the beginning stages, Leyline offers a Growth Capital product, which targets those who are new to development but have a track record of success elsewhere. We help you set up your project while it's still on the drawing board and move it through to the point of sale. To get a broad look at our other financial offerings, check out our lending tools here.
We've covered a lot since the year began - much more than we can review here. If you missed any of our newsletters and features, be sure to go back and take a look at our News page. Stay tuned at the end of each month for more insights. We'll be on the cutting edge!