Community Solar

The Commerce Clause, ZECs, and neighbors who smoke…

The Commerce Clause is a longstanding USA policy that leaves to State governments to regulate what the federal government doesn’t regulate abroad. It’s a long-winded way of saying each State has the right to its own electric policy, provided that policy doesn’t conflict with Federal environmental regulations.  It also explains why so many Federal renewable energy policies are like the Paris Climate Agreement, sometimes lofty yet with baby teeth.

The Commerce Clause plays a large role in USA renewables, touching items such as net-metering, renewable portfolio standards, and other kinds of green energy transaction standards. This article by details a process by which nuclear power “ZEC” purchases are mandated in the state of Illinois and New York.  In our community solar course, we cover Renewable Energy Credits, called RECs, used to conduct green energy accounting. The downside of this virtual exchange is that it works just as well for any form of energy, and in these cases, the states have similarly mandatory nuclear power purchasing laws on the books using ZECs.

Differences aside, we see the impact of the commerce clause, with out-of-state power generator plaintiffs arguing that these laws suppress the price of nuclear power (as the generators can also profit from the ZEC revenue), to the point of suppressing out-of-state electricity pricing while keeping that value for itself, as ZEC revenue.  This is what happens when an interconnected grid crosses state boundaries.

If ZEC markets have a higher price than REC markets, then we should have a serious debate on the value of renewables vs. nuclear against climate change, and the role of the Federal government to collect that revenue. Such a performance incentive is proven to distribute money back to its citizens, as evidenced by almost 50% of German solar being owned by individuals, whereas residential solar ownership in the USA is about half that.

Instead, we’re debating an emergency import tariff to save a few dozen jobs in manufacturing, at the expense of tens of thousands in installation. Cancun sure sounds nice.

Here’s the link: