The Ocean State took a step forward in promoting solar energy recently as Rhode Island Governor Lincoln D. Chafee signed §723 Sub A into law on June 29, 2011 to encourage the generation and use of renewable energy in the state.

The legislation requires at least 40 MWs worth of distributed generation projects in the small New England state by the end of 2014. The contracting shall be spread over 4 years based on annual targets set by the Board. Though the specific rules are still being sorted out, the program should proceed quickly as the first 5 MW are due to be contracted by the end of this year.

(1) By Dec 30, 2011, minimum 5 MW;
(2) By Dec 30, 2012, minimum aggregate of 20 MW;
(3) By Dec 30, 2013, minimum aggregate of 30 MW;
(4) By Dec 30, 2014, minimum aggregate of 40 MW.

The Board will recommend to the Commission the standard contract ceiling price by October 15 each year and it will be announced by December 15. The ceiling price for each technology should allow a private owner to receive a reasonable rate of return, based on recent reported and forecast information on the cost of capital and the cost of generation equipment. The reasonable rate of return shall include applicable state or federal incentives including but not limited to tax incentives.

This program represents the first statewide Feed-In Tariff law passed in the U.S. The implementation will be a key factor in how this program will ultimately impact the state. A target of 40 MW over 4 years is not very large, especially considering that a single wind turbine can be larger than 5 MW. All it would take is eight 5MW wind turbines (not wind farms; individual turbines!). Therefore, if Rhode Island has any ambition of developing a lasting industry, it is important that the program is designed in a way that provides access to a diverse group of participants rather than a few “winners” selected by the state and the utility companies.

To that effect, the legislation mandates that by Dec 31, 2012, there shall be at least 4 technology classes and of which, 2 shall be for solar generation technologies. A standard contract term is for 15 years. Besides distributed generation facilities having to be located within the Utility Company’s load zone, small projects shall have a nameplate capacity no larger than 500 kw for solar, 1.5 MW for wind and no more than 1 MW for other renewable energy. Large distributed generation projects may not exceed 5 MW and a project developer will not be allowed to segment a project into smaller sized projects in order to fall under the “small” definition. As long as electric distribution companies fulfill the required technology classes, they are free to mix and match small and large projects to achieve their goals.

Each electric distribution company shall conduct at least 3 standard contract enrollments during each program year except for 2011 where only 1 is required. During the two week enrollment period, the electric distribution company is required to receive standard short-form applications requesting standard contracts for distributed generation energy projects. Contracts for small distributed generation projects are awarded on a first-come first-serve basis. Contracts for large distributed generation projects will be awarded based on the lowest proposed prices received. Eligible systems that are net-metered may apply to sell excess output.