Solar carve-outs: What you need to know

More than thirty states in the United States currently have renewable energy policies. Most of these goals, targets, and mandates allow for compliance with various types of renewable energy technologies. In a few cases, however, states have included a technology-specific mandate in their renewable energy policies. One such policy mechanism is a solar carve-out.

Renewable portfolio standards (RPS) are policy-makers' go-to option for helping to grow the renewable energy industry within their state. By requiring increasing percentages of in-state electricity generation or consumption to come from renewable resources, state legislators can send a strong signal to the industry that renewable energy is a priority.

However, renewable portfolio standards and clean energy targets allow for compliance from a wide range of renewable or zero-carbon technologies, such as wind, hydropower, solar, geothermal, and biomass. To ensure that a certain portion of the renewable energy target is met by a specific technology, policymakers will "carve out" a piece of the overall renewable energy target for one technology. As such, a solar carve-out is a mechanism that requires a specific portion of a state's renewable energy target to be met by just solar energy.

Renewable energy targets are typically set in one of two ways: either as a percentage of electricity consumption that must be met by renewable energy or as a specific amount of electricity–expressed in terms of megawatt-hours or kilowatt-hours–that must come from renewable resources. In each scenario, a solar carve-out explicitly requires that a portion of the target be met by solar.

For instance, if a state has a renewable portfolio standard that mandates that 10% of electricity is renewable in 2021, a solar carve-out would say that 1% of the state's electricity must come specifically from solar. Thus, the solar carve-out is not an additional, additive renewable energy policy but rather a policy approach that functions within the bounds of pre-existing renewable energy targets.

The following states have passed renewable portfolio standards that include a solar carve-out.

Source: DSIRE.org

In order to provide low-cost electricity to their ratepayers, utilities are incentivized to procure electricity from the least expensive resources possible. The same holds true for when utilities decide which renewable energy technologies to purchase to serve their consumers’ demand.

When renewable energy targets were first being introduced by state governments, wind energy was far and away the least expensive renewable resource that utilities could procure. As a result, states that wanted to develop the local solar industry used solar carve-outs as a way to ensure that solar played a role in meeting state targets even if it was not the lowest-cost renewable energy resource. As with subsidies and incentives in all industries, the solar carve-out was a way to kick-start the industry with a clear legislative signal of intent.

In recent years, the cost of solar has decreased substantially, making it increasingly competitive with not only wind but traditional, fossil-fuel-fired resources. Solar is now an attractive investment for many utility companies even in the absence of additional subsidies. As such, solar carve-outs are diminishing in both necessity and popularity among policymakers.

Solar carve-outs are a way for state policymakers to express their intent to help grow the local solar industry. In order to do so, solar carve-outs are often accompanied by favorable solar incentives and policies to make it a more attainable investment for property owners. If you live in a state that has a solar carve-out, it’s likely that you will have great local incentives to go solar. To see how much you could save by going solar in your state, check out the free EnergySage Solar Calculator. If you’re ready to get quotes for solar to take advantage of current state-level solar incentives, register for an account on the EnergySage Marketplace to get free quotes from local, pre-screened solar installation companies.