G/TRIMS/W/129/Rev.1  
 
29 October 2013  
(13-5977)  Page: 1/8  
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  
Revision 
The following communication, dated 23 October 2013, is being circulated at the request of the 
Delegation of the United States. 
 
_______________ 
 
 
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 
                                               
1 G/TRIMS/W/117.   
2 http://www.michigan.gov/mpsc/0,4639,7-159-16400_17280-295134--,00.html  G/TRIMS/W/129/Rev.1 
 
- 2 - 
 
  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. 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'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 10% 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 fuelled 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 G/TRIMS/W/129/Rev.1 
 
- 3 - 
 
  systems are only awarded Michigan equipment IRECs for 3 years after commercial operation 
begins.   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/ implementation_of_PA295_renewable_energy
_411615_7.pdf  
 
B. California: Los Angeles Department  of Water and Power (LADWP) - Solar 
Photovoltaic Incentive Program 
 
On its website, while describing program status and incentive levels for the solar 
incentive program, the LADWP notes that,  
"*LAMC – Los Angeles Manufacturing Credit : Customers who purchase & install PV 
components from a manufacturing facility loca ted within the City of Los Angeles or who 
install building integrated photovoltaic systems (BIPV) may qualify for a higher 
incentive rate." 
 
The LADWP Solar Photovolta ic Incentive Program Guidelines state that,  
 
"…………. Additionally, the LADWP currently provid es a Los Angeles Manufacturing Credit 
(LAMC) for qualifying PV equipment manufac tured in Los Angeles as approved by the 
LADWP according to Section 8.0 of these guide lines. The goal of the LAMC is to promote 
local economic development through manufacturi ng and job creation within the City of 
Los Angeles and to reduce costs throug h increased volume and competition…………… ". 
 The guidelines further provide as follows: 
 
"8.3 Minimum Requirements to Qualify for LAMC  
 
8.3.1 Manufacturing Location and Controls 
 
1. To qualify for the LAMC, PV modules and solar power equipment must 
be manufactured within the limits of  the City of Los Angeles. The 
manufacturer must have received wr itten approval from the LADWP as 
qualifying for the LAMC.  
 
2. For installations that use this product, the manufacturer must certify to 
LADWP by means of documentatio n, inventory control summaries, 
physical plant visits, and other me ans necessary, as determined by 
LADWP, sufficient to document loca l manufacturing before any LAMC 
payment will be made. The LADWP re serves the right to audit the 
records and inspect the premises of manufacturers requesting the 
LAMC. 
 3. To qualify for the LAMC and be considered locally manufactured, a 
minimum of 50% of the components of the finished PV modules or 
qualifying equipment must have b een manufactured and/or assembled 
within the City of Los Angeles. 
 
4. Alternatively, LAMC status may be  obtained through the submission of 
and acceptance of the manufacturer' s local business plan by LADWP. 
Such local business plan should clearly demonstrate and document the 
use of local workforce, locally-manuf actured components, or other local 
economic resources such that 50% or more of the manufactured 
product's wholesale value is derived from the aforementioned local 
resources. Business plans submitted shall be current, and must be G/TRIMS/W/129/Rev.1 
 
- 4 - 
 
  renewed annually. Quarterly financial and labor business reports may 
be required." (emphasis provided) 
 
1. In view of the local content requirem ents (underlined above), the United 
States is requested to explain how thes e provisions specifying eligibility for 
grant of LAMC are not in violation of Article 2 of TRIMs Agreement read with 
Article III:4 of GATT 1994? 
 
2. The United States is requested to inform  if the LAMC will be provided to the 
applicant in case the requirements indi cated in the text underlined above are 
not fulfilled jointly or separately. 
 
3. The LADWP Solar Photovolta ic Incentive Program Guidelines states that ' The 
LADWP retains sole discretion to dete rmine if a manufacturing process or 
manufactured equipment qualifies for the LAMC and only those that receive 
written approval from LA DWP may receive the LAMC '. What is the criteria 
used by the LADWP in its determination? 
 
4. What are the conditions for fulfilment of criteria of ' PV modules and solar 
power equipment must be manufactured within the limits of the City of Los Angeles ' as used in the LADWP Solar Photovoltaic Incentive Program 
Guidelines? 
 
5. What are the conditions for fulfilment of criteria of ' a minimum of 50% of the 
components of the finished PV modules or qualifying equipment must have 
been manufactured and/or assembled within the City of Los Angeles ', as used 
in the LADWP Solar Photovoltaic Incent ive Program Guidelines? Which are the 
qualifying equipment? If there is a list of the qualifying equipment, the same 
may kindly be provided. 
 
6. What are the conditions for fulfilment of criteria of ' other local economic 
resources such that 50% or more of the manufactured product's wholesale 
value is derived from the aforementioned local resources ' as used in the 
LADWP Solar Photovoltaic  Incentive Program Guidelines? What can be 'other 
local economic resources'  other than local workforce and locally-
manufactured components? 
 
7. Is an applicant required to fulfil an y additional condition apart from those 
stated in LADWP Solar Phot ovoltaic Incentive Program Guidelines 8.3 to be 
eligible for the LAMC? If yes, the Un ited States is requested to provide 
information regarding these additional conditions.  
 
8. What is the amount/rate/percentage of  incentive payment available for each 
applicant, with respect to LAMC and the method of determination of the 
same? What is the financial contribution made on this account by LADWP for 
the years 2010-11, 2011-12 and 2012-13, including the method of transfer (cash, cheque, bank transfer, credit on customers' bill, set-off etc.)? 
 
Reply 
 The LADWP Solar Photovoltaic (PV) Incentive Program provides financial incentives to LADWP 
customers who purchase or lease, and install their own solar power systems. To receive an 
incentive payment from the LADWP, customers must apply for and receive a Confirmed Reservation from LADWP prior to operating thei r solar system. Individual solar power systems 
must meet the requirements contained in the Sola r Photovoltaic Incentive Program Guidelines, the 
most recent version of which was published on 15 May 2013. The LADWP estimated performance-based incentive is a one-time payment calculated by multiplying the proposed system output by 
the incentive level and the ratio of the proposed solar system's expected solar production over the 
simulated solar production of an optimal reference system in optimal conditions.  Additionally, the Los Angeles Manufacturing Credit (LAMC) provides an additional incentive 
payment for PV modules manufactured in the City of Los Angeles that have a confirmed LADWP G/TRIMS/W/129/Rev.1 
 
- 5 - 
 
  Solar Incentive Program reservation. To qualify for the LAMC and be considered locally 
manufactured, a minimum of 50% of the components  of the finished PV modules or qualifying 
equipment must have been manufactured and/or assembled within the City of Los Angeles. 
Alternatively, LAMC status may be obtained through the submission of and acceptance of the 
manufacturer's local business plan by LADWP. Such local business plan should clearly demonstrate 
and document the use of local workforce, locally-manufactured components, or other local economic resources such that 50% or more of the manufactured product's wholesale value is 
derived from the aforementioned local resources. Business plans submitted shall be current, and 
must be renewed annually.    Further information about the LADWP Photovoltaic Incentive program can be found at 
https://www.ladwp.com . 
 
C. California : Self Generati on Incentive Program (SGIP) 
 
Initiated in 2001, the SGIP offers incentives  to customers who produce electricity with 
wind turbines, fuel cells, various forms of combined heat and power and advanced 
energy storage. Originally set to expire at the end of 2011, SB 412 of 2009 amended the 
Public Utilities Code to allow incentives  to be available through 1 January 20163 
 The handbook for SGIP
4 provides that, 
 
"3.1.1 Incentives for Technologi es from a California Supplier 
 
An additional incentive of 20 % will be provided for the installation of eligible 
distributed generation or Advanced Energy  Storage technologies from a California 
Supplier. "California Supplier" means any sole proprietorship, partnership, joint venture, 
corporation, or other business entity  that meets the following criteria: 
 A) The owners or policymaking officers are domiciled in California and the permanent 
principal office, or place of business from which the supplier's trade is directed or 
managed, is located in California. 
 Or 
 
B) A business or corporation,  including those owned by, or under common control of, 
a corporation that meets all of the following criteria continuously during the five years 
prior to providing eligible distributed genera tion technologies to an SGIP recipient: 
 i) Owns and operates a manufacturing facility located in California that builds or 
manufactures eligible distribu ted generation technologies. 
 
ii) Is licensed by the state to conduct business within the state. 
 
iii) Employs California residents for work within the state. 
 
For purposes of qualifying as a California Supplier, a distribution or sales management 
office or facility does not qualify as a manufacturer. " 
 
1. As per the above guideline, an addition al incentive of 20% is made available 
subject to installation from a ' California supplier' . The United States is 
requested to explain how this provisio n specifying eligibility for grant of 
additional incentive is not in violatio n of Article 2 of TRIMs Agreement read 
with Article III:4 of GATT 1994 ?  
 
2. Is there an approved list of 'California Suppliers' ? If yes, the same may kindly 
be provided. Which authority is re sponsible for approving status as 'California 
Supplier' ? 
                                               
3 http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=CA23F&re=0&ee=0  
4 http://www.cpuc.ca.gov/NR/rdonlyres/0DDABA86-9DF1-41C7-AD08-
FF5B255155FA/0/2013_SGIP_Handbook_v1.pdf  G/TRIMS/W/129/Rev.1 
 
- 6 - 
 
   
3. Is there a list of ' eligible distributed generation  or Advanced Energy Storage 
technologies'? If yes, the same may kindly be  provided. Which authority is 
responsible for maintaining or making changes to this list? 
 
4. What is the meaning of 'installation'  in the above guidelines? Does it mean that 
the various equipment or components of the eligible distributed generation or 
energy storage technologies should be manufactured or assembled by the 
approved supplier in California? Is it possible to source the physical systems 
components from out of Calif ornia and still be eligible for this 20% additional 
incentive? If yes, under what conditions? 
Reply 
 
The California Public Utilities Commission (CPUC) oversees the Self-Generation Incentive Program 
(SGIP). The SGIP provides incentives to support  the installation of new distributed energy 
resources that are installed on the customer's side of the utility meter. Qualifying technologies 
must meet targeted reductions in greenhouse gas emissions, and include: wind turbines, waste heat to power technologies, pressure reduction turbines, internal combustion engines, 
microturbines, gas turbines, fuel cells, and adva nced energy storage systems. The SGIP – with 
627 completed projects for a total capacity of 299 megawatts - is one of the longest-running and most successful distributed generation incentive programs in the United States. In 2011 alone, these facilities provided over 760,000 MWh of electricity to the California, enough electricity to 
meet the needs of over 116,000 homes. The incentive levels under SGIP range from $0.48 to 
$3.83 per watt. An additional incentive of 20% will  be provided for the installation of eligible 
distributed generation or Advanced Energy Stor age technologies from a California Supplier.  
 
Further information about the SGIP can be found in the 2013 Self-Generation Incentive Program Handbook 
(http://energycenter.org/sites/default/files/ docs/nav/programs/sgip/2013%20SGIP%20Handbook
%20V2.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.  
 G/TRIMS/W/129/Rev.1 
 
- 7 - 
 
  4. What is meant by ' qualifying equipment' ? What are the conditions that an 
equipment has to fulfil 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 clarify whethe r an entity is required to fulfil 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. 
 
D.2 Austin Energy Residentia l Solar PV Rebate Program 
 The Austin Energy Residential Solar PV Re bate Program Guidelines under the heading 
'Rebate Funding ' states that: 
 
"The standard rebate level for qualifying eq uipment is $2.00 per Watt. In an effort to 
promote solar technologies and economic gr owth, qualifying equipment at least 60% 
manufactured or assembled in AE's electric service area may qualify for rebates at a 
level not to exceed $2.50 per watt. "Manuf actured 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 if the above rebate at a level not 
exceeding $2.50 per watt will be provid ed to the applicant in case the 
requirement indicated in the text un derlined 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 fulfil 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 clarify whethe r an entity is required to fulfil 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 additional rebate under this  provision ? If yes, please provide 
information regarding these additional conditions. Under what circumstances 
can the granting authority deny applicat ions for grant of additional rebate, 
despite fulfilling the laid down criteria? 
 
6. The United States is requested to  provide information regarding budget 
allocation and disbursement by the Au stin Energy towards, the residential 
Solar PV Rebate Program for the years 2010-11, 2011-12 and 2012-13, in 
particular with respect to the additional rebate up to $ 2.50 per watt. 
 G/TRIMS/W/129/Rev.1 
 
- 8 - 
 
  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 
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 sola r 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  
 
 
__________