What is a solar carve-out?

Updated

a literal solar carve-out
Solar carve-outs ensure a state gets a certain percentage of its total electricity from solar power.

A solar carve-out is the part of a state’s Renewable Portfolio Standard (RPS) that sets a specific goal for electricity generation from solar panels. 

Current solar carve-outs in the United States call for between 0.3% and 14.5% of all energy generation in a state to come from solar, with target dates ranging from 2025 to 2041. Laws that establish solar carve-outs often include incentives that reward solar owners for the energy their panels generate.

Those incentives usually come in the form of Solar Renewable Energy Credits, or SRECs, which system owners earn for each megawatt-hour (MWh) of electricity generated by their panels. 

Utility companies buy the SRECs as “proof of renewable generation,” which helps them meet their goals under the RPS and solar carve-out. If those goals aren’t met, the utilities are subject to huge fines, which is what gives SRECs their value—it’s cheaper to buy clean energy credits than it is to plan, gain approval for, and build large-scale solar installations.

Another kind of incentive under a solar carve-out is called a performance payment (aka feed-in tariff), which are payments for each kilowatt-hour (kWh) of energy generated; either instead of SRECs or in exchange for turning over all SRECs generated by the system. These more direct payments skip the middleman—in this case an SREC broker or bundler—and reward solar panel owners directly on an ongoing basis.

It’s worth noting that SRECs or performance payments are not necessarily the product of a solar carve-out. There are states without carve-outs (such as Rhode Island) that have performance payments for solar even though they have no RPS.

It’s also worth noting that SRECs and performance payments are not the only incentives available in states with solar carve-outs. Delaware and Maryland also offer rebates in addition to their SREC programs.

How important is a solar carve-out?

Solar carve-outs are highly correlated with solar development, and many states that have used them are in the top states for solar energy per capita

But these successful policies are becoming less popular as the economics of solar power become more favorable. In fact, seven states that had solar carve-outs with target dates before 2021 allowed those dates to pass without renewing or expanding the carve-outs.

Simply put, building new large-scale solar generation is so cheap now, the only barriers to having more solar built are time, transmission infrastructure, and, eventually, a need for energy storage.

Below is a table that shows all current state solar carve-outs in alphabetical order. In addition, we’ve included a column outlining the solar incentives available in these states. No other states have current solar carve-outs.

Table. States with solar carve-outs
State Carve-out Incentives
Delaware 10% by 2035 Rebates and SRECs
Illinois 1.5% by 2025 plus at least 5,500,000 MWh/year Up-front SREC payments and low-income solar program
Maryland 14.50% by 2030 Rebates and SRECs
Massachusetts 3,200 MW with no deadline Performance Payments
Nevada 1.5% by 2025 Storage incentives
Washington DC 10% by 2041 SRECs and low-income solar program

In addition to the states listed above, the seven states whose carve-out deadlines have passed are Minnesota, Missouri, New Jersey, New Mexico, New York, North Carolina, and Pennsylvania.

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 - Author of Solar Reviews

Ben Zientara

Solar Policy Analyst and Researcher

Ben is a writer, researcher, and data analysis expert who has worked for clients in the sustainability, public administration, and clean energy sectors.

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