Clean Energy Funds. Fourteen states around the U.S. have established clean energy funds to promote renewable energy and clean energy technologies: Arizona, California, Connecticut, Illinois, Massachusetts, Minnesota, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Washington, and Wisconsin. For more information, visit the Clean Energy States Alliance website:

Sales Taxes: Fourteen states exempt wind energy equipment from sales taxes: Several states have property tax incentives for wind energy.

Investment Tax Credits. Only a handful of States still have these credits. These include Hawaii, Massachusetts, Montana, North Carolina, Oregon and Utah.

Property Tax Reductions. Reductions in property taxes can be used to promote renewable energy development by decreasing the tax burden associated with owning a microhydro facility. The tax burden is relatively high compared to fossil energy because of the greater land requirements per unit of output. This policy is an effective incentive in a number of States. For example, it is estimated that in Minnesota, where property taxes are high, property tax exemptions could reduce levelized costs by 1.0 cent per kilowatt hour in some cases.(12) The disadvantage of this mechanism is that it produces an incentive for development, not a market per se.

Accelerated Depreciation. Tax depreciation is a non-cash expense meant to approximate the loss of asset value over time, and is defined as the portion of an investment that can be deducted from taxable income in any given year. The Tax Reform Act of 1986, which established the modified accelerated cost recovery system (MACRS), set the current rules for federal tax depreciation. Under MACRS, wind property is currently provided a depreciation life of 5 years, substantially shorter than the 15 to 20 year depreciation lives of non-renewable power supply investments. Faster depreciation results in tax benefits early in a project's life, and is preferred by investors because an after-tax dollar is worth more today than in later years.

Direct Production Incentives. Although similar to a production tax credit, direct production incentives provide cash income directly. At the Federal level, Section 1212 of Energy Policy Act of 1992 (EPACT) provides a "Renewable Energy Production Incentive" (REPI) of 1.5 cents per kilowatthour to non-profit organizations that own microhydro energy facilities.

Direct Investment Incentives (Grants). These include programs like the Department of Energy's Turbine Verification Program in which cost sharing with utilities permits early development of renewable energy systems preceding full-scale deployment of turbines. It also includes State monies used for seed grants to conduct resource assessments and feasibility studies.

Net Metering or Net Billing. Under this system, utility customers are guaranteed a market for their power by being permitted to operate a "reversible meter." When customers use more electricity than they generate, they pay for the additional electricity at retail prices as usual. Conversely, when customers generate more electricity than they use, the electric utility is obliged to purchase the additional electricity. The prices customers receive for their excess electricity varies widely by State and region and between wholesale and retail levels. So far, experience for net metering is limited.

Renewable Portfolio Standard (RPS). The terms of renewable portfolio standards vary among States, but an RPS generally requires every retail power supplier to provide a certain minimum percentage (or floor) of electricity from specified renewable sources for a given time period. A RPS can operate in tandem with a credit trading system, so suppliers sell credits for extra renewable power they generated or vice versa. If they are short of renewable power they can purchase credits to make up the difference to settle their account.(13) Legislation establishing some sort of renewable portfolio standard has passed in a number of states including Arizona, Maine, Massachusetts, and Nevada.

Renewable Setasides. In California, a recent ruling provides for a 0.7-percent surcharge on electric bills to support renewables during the four-year transition to a competitive market.  Already, some 300 megawatts of new wind energy projects have won the opportunity to receive California Energy Commission financial incentive funds.

Auctioned Contracts. Increasingly, electric utilities have acquired renewable energy competitively by issuing request for proposals (RFP's), which generator owners can bid on. In effect, the bidder guarantees to provide a given amount of electricity under specified terms for a given price. To date, most of these RFP's were issued as renewable only or technology specific only.

Green Marketing/Pricing. These are voluntary programs in which customers agree to pay a premium to purchase "environmentally friendly" or "green" electricity. This encourages development of a market for renewable power, wind included. So far, public response has been limited. It is estimated that only 1 to 4 percent of residential consumers will participate in the near future in California's green pricing program. Although there is some difficulty in determining what the premium should be, utilities like Sacramento Municipal Utility District and Traverse City Light and Power have begun to use green pricing to stimulate renewables development. In Sacramento, customers pay an additional $4 per month special premium to have a photovoltaic system installed and operating on their rooftop.

State Mandates. These provisions differ for each State. In Minnesota, the State legislature has required Northern States Power to phase in construction of 425 megawatts of new wind capacity by 2002 as compensation for being allowed to store nuclear waste on site. In Iowa, the Alternative Energy Law (AEL) requires investor-owned utilities to purchase a combined total of 105 megawatts of their generation from renewable and small hydropower sources. The majority of needed capacity will be from wind power and biomass applications.