G/TRIMS/W/129  
 
4 October 2013  
(13-5344)  Page: 1/4  
Committee on Trade-Related Investment Measures  Original: English  
 
CERTAIN LOCAL CONTENT REQUIREMENTS IN SOME OF THE 
RENEWABLE ENERGY SECTOR PROGRAMS  
REPLIES FROM THE UNITED STATES TO  
QUESTIONS POSED BY INDIA1  
The following communication, dated 2 October 2013, is being circulated at the request of the 
Delegation of the United States. 
 
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A. Michigan: Renewable Ener gy Credits under the Clean, Renewable, and Efficient 
Energy Act (Public Act 295) 
 
On 6 October 2008, Public Act 295 was signed into law. This Act, known as the Clean, 
Renewable and Efficient Energy Act, estab lished a Renewable Energy Standard for the 
State of Michigan. The Renewable Energy Stan dard requires Michigan electric providers 
to achieve a retail supply portfolio that in cludes at least 10% renewable energy by 
2015.  In its 2013 Act 295 Renewable Energy Report to Legislature
2, the Michigan Public 
Service Commission (MPSC) informed that  Michigan had experienced significant 
investment in renewable energy since the passage of Public Act 295 of 2008. 
Conservatively, over $1.79 billion had been invested to bring 895 MW of new renewable 
energy projects online in Michigan through 2012.  
 The said report further notes on page 22,  
 
"It appears that the Michigan incentive REC pr ovision is meeting its intended purpose to 
encourage developers to maximize utilizat ion of Michigan equipment and labor."  
 
The Clean, Renewable, and Efficient Energy Act (Public Act 295), s. 39 (2) states that: 
 "Subject to subsection (3), the following a dditional renewable energy credits, to be 
known as Michigan incentive renewable ener gy credits, shall be granted under the 
following circumstances: …. 
(d) 1/10 renewable energy credit for each me gawatt hour of electricity generated from 
a renewable energy system constructed us ing equipment made in this state as 
determined by the commission. The additional credit under this subdivision is available 
for the first 3 years after the renewable ener gy system first produces electricity on a 
commercial basis.  
 (e) 1/10 renewable energy credit for ea ch megawatt hour of electricity from a 
renewable energy system constructed using a workforce composed of residents of this 
state as determined by the commission. The a dditional credit under this subdivision is 
available for the first 3 years after the renewable energy system first produces 
electricity on a commercial basis." (emphasis provided)  
                                               
1 G/TRIMS/W/117.   
2 http://www.michigan.gov/mpsc/0,4639,7-159-16400_17280-295134--,00.html  G/TRIMS/W/129 
 
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  1. In view of the local content requirements  (underlined above), the United States 
is requested to explain how these prov isions governing grant of Michigan 
incentive renewable energy credits are no t in violation of Article 2 of TRIMs 
Agreement read with Article III:4 of GATT 1994? 
 
2. The United States is requested to info rm if the Michigan incentive renewable 
energy credit will be gran ted to the applicant in case  the requirement indicated 
in the text underlined above is not fulfilled. 
 
3. What is the legal status, constitution, composition and functions of the 
Michigan Public Service Commission? What is the role of the Michigan Public 
Service Commission in the formulation,  approval, implementation, grant and 
allotment, etc. of the Renewable Energy Credits?  
4. What is the process and criteria used by the Commission for determining 
whether a system is a ' renewable energy system constructed using equipment 
made in this state' ? 
 
5. What are the additional conditions (if any) apart from gene rating electricity 
from a ' renewable energy system constructed using equipment made in this 
state as determined by the commission ', in order to avail the additional 
incentive as provided in s.39 (2) (d) of  the Clean, Renewable, and Efficient 
Energy Act (Public Act 295)? Under what circumstances can the granting authority deny applications for the gr ant of additional incentive, despite 
fulfilling the laid down criteria? 
 
6. The United States is requested to provide details regarding the method of 
grant, transfer and trading of renewable energy credits  granted under the 
Clean, Renewable, and Efficient Energy Act (Public Act 295). 
 Reply 
 Michigan – Renewable Energy Incentive Credit  
Michigan’s Renewable Energy Standard is part of  the 2008 Clean, Renewable and Efficient Energy 
Act (Act). The Renewable Energy Standard requires Michigan electric providers to achieve a retail 
supply portfolio that includes at least ten percent renewable energy by 2015. The Act also includes 
annual interim compliance requirements starting in 2012. Electric providers demonstrate 
compliance with renewable energy requirements through the purchase and/or production of 
Renewable Energy Credits (RECs). RECs are issued tracked and traded through the Michigan Renewable Energy Certification System (MIRECS). 
 
A REC is created for every MWh of electricity generated by a renewable energy system. RECs can come from, but are not limited to, facilities that are fueled by: biomass, solar and solar thermal 
energy, wind energy, kinetic energy of moving wa ter, geothermal energy, municipal solid waste, 
and landfill gas. A REC can be separated from the associated energy and traded, sold, or otherwise 
transferred. It may also be “bundled” with th e energy and handled in the same manner. A REC 
expires after it has been used to comply with any renewable energy credit standard or after a 
period of three years, whichever comes first. An  energy provider may also create a Michigan 
Incentive Renewable Energy Credit (IREC) in addition to the base REC earned for every MWh of electricity produced from renewable energy resource s. There are a variety of bases for creation of 
these credits, such as use of a solar system, a systems that produces electricity during peak 
demand times, or a system that produces and stores electricity during low demand times using advanced electric storage technology or hydr oelectric pumped storage. Among the bases for 
creation of an IREC is use of a renewabl e energy system constructed using equipment 
manufactured or assembled in Michigan. An IREC earned on this basis is equivalent to 1/10 of a REC, although pro rata IRECs can be earned fo r energy systems based on the dollar amount of 
equipment and materials manufactured or assembled in the State. An energy system containing a 
threshold level of 50% Michigan made equipment will earn a full 1/10 IREC. Renewable energy 
systems are only awarded Michigan equipment IRECs for 3 years after commercial operation 
begins.  G/TRIMS/W/129 
 
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  In 2012 there were 4,378,587 RECs generated. In addition, there were 920 such IRECs generated 
in that year. At a value of 1/10 of a REC, the IREC’s accounted for 0.0021% of the renewable energy credits granted in 2012.  
 
For further information, please refer to the 15 February 2013 Renewable Portfolio Standard 
Report: http://www.michigan.gov/documents/mpsc/im plementation_of_PA295_r enewable_energy_411615
_7.pdf  
 
D. Texas: Austin Energy  
D.1 Commercial Solar Photovoltaic Pe rformance-Based Incentive Program 
 The Commercial Solar Photov oltaic Performance-Based Incentive Program Guidelines 
and Qualifications issued by Au stin Energy, under the heading " Incentive Funding " 
states that: 
 
"The current rate Austin Energy is offering for the PBI is $0.14 per kWh. In an effort to 
promote solar technologies and economic gr owth, qualifying equipment at least 60% 
manufactured or assembled in Au stin Energy's electric servic e area may qualify for a PBI 
at a rate not to exceed $.175 per kWh. "Ma nufactured or assembled" does not include 
installation of the system."  (emphasis provided) 
 
1. In view of the local content requ irement (underlined above), the United 
States is requested to explain how this provision is not in violation of 
Article 2 of the TRIMs Agreement re ad with Article III:4 of GATT 1994 ? 
 
2. The United States is requested to  inform whether the performance based 
incentive at a rate not exceeding $0. 175 per kWh will be provided to the 
applicant if the requirement indicated in the text underlined above is not 
fulfilled? 
 
3. The United States is requested to info rm if this incentive program is backed 
by some federal or state or local pub lic law or by some mandate/guidelines 
of the electricity regulator. If yes,  details of the same may kindly be 
provided.  
 
4. What is meant by ' qualifying equipment' ? What are the conditions that an 
equipment has to fulfill to be recognized as 'qualifying equipment'? Is there a list of 'qualifying equipment'? If yes,  the same may kindly be provided.  
 
5. Can the United States cl arify whether an entity is required to fulfill any 
additional condition apart from 'qualifying equipment at least 60% 
manufactured or assembled in Austin  Energy's electric service area' in order 
to avail the incentive up to $ 0.175 per kWh? If yes, please provide 
information regarding these additional conditions. Under what circumstances 
can the granting authority deny applicatio ns for grant of additional incentive, 
despite fulfilling the laid down criteria? 
 
6. The United States is requested to  provide information regarding budget 
allocation and disbursement by the Austin Energy towards the 
Commercial Solar PV Performance-Based Incentive Program for the years 
2010-11, 2011-12 and 2012-13, in particular with respect to the additional incentive up to $ 0.175 per kWh. 
 
Reply 
 
Austin Energy, a municipal utility, offers incentives to its commercial and residential customers for 
electricity generated by qualifying photovoltaic (PV) systems. Eligibility for a commercial incentive is limited to Austin Energy customers with a commercial account number (this can include multifamily residential facilities). Austin Energy solar incentives for commercial and multifamily 
customers do not involve up-front rebates but rather payment over a 10-year period for each G/TRIMS/W/129 
 
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  kilowatt-hour of electricity produced by solar photovoltaic (PV) systems. The current rate Austin 
Energy is offering (as of May 2013) is $0.12 per kWh. Customers must apply for the incentive based upon new installation of a PV system, and acceptance is contingent on sufficient budget. 
Similarly, Austin Energy offers solar photovoltaic (PV) rebates to encourage residential customers 
to install solar energy systems. The current solar rebate level for residential customers is 
$1.50 per Watt effective 7 May 2013. A previously mentioned incentive for use of equipment manufactured or assembled in the Austin Energy service area has subsequently been removed 
from the guidelines for qualification for the rebates. 
 For further information, please see the program guidelines at: https://www.austinenergy.com/E nergy%20Efficiency/Pro grams/Rebates/Sola r%20Rebates /solarRe
bateGuidelines.pdf  
 
 
 
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