New Hampshire’s recently enacted state budget will divert a substantial portion of the state’s Renewable Energy Fund (REF) to the general fund through June 2027, effectively halving the available financing for clean energy projects. Signed by Republican Governor Kelly Ayotte last month, the budget reallocates approximately $15 million in accumulated surplus and all incoming annual revenue, typically ranging from $3 million to $7 million, leaving only $1 million per year for renewable energy initiatives.

This move represents a significant reduction in state support for clean energy development, particularly as New Hampshire already lags behind other New England states in renewable energy deployment. Nick Krakoff, a senior attorney with the Conservation Law Foundation, noted, “You’re basically only spending a quarter of what you normally fund. There’s going to be a lot less money for these programs.” The REF, designed to distribute $4 million to $5 million annually, had seen underspending by the Department of Energy in recent years, accumulating a surplus that became a target for lawmakers facing budget constraints.

The fund’s surplus grew to approximately $20 million, with $15 million unawarded, primarily due to the Department of Energy spending only about $2 million annually despite higher revenues from utility compliance payments under the state’s Renewable Portfolio Standard. The slashing of funds will disproportionately affect municipalities, school districts, and small businesses that have historically relied on REF grants for crucial clean energy upgrades, including heating projects, as many operate on tight budgets and cannot proceed without state assistance.

Recent distribution patterns underscore the impact: in 2023, the fund allocated $1.6 million for competitive grants and $1.3 million for residential rebates. The low-moderate income solar program alone received $1.6 million in 2024, a figure that now exceeds the entire annual allocation remaining. The budget language also introduces ambiguity regarding which specific solar programs will continue, though the residential solar rebate program was separately eliminated in 2024, not through this budget, due to its inefficiency.

While House Republicans initially proposed eliminating the REF entirely, a compromise was reached after pushback from senators and clean energy advocates. However, a retained bill, House Bill 224, aims to revive the proposal to rebate all REF money to ratepayers starting in fiscal year 2028. Rep. Michael Vose, Republican chair of the House Science, Technology, and Energy Committee, defends this approach as necessary relief for ratepayers facing rising energy costs, stating the transfer originated from the governor’s proposed budget.

Conversely, clean energy advocates argue the cuts are counterproductive. Nick Paul, director of legislative affairs for Clean Energy New Hampshire, asserted, “Raiding the Renewable Energy Fund only stops projects that shrink electric bills.” He emphasized that these projects reduce peak demand during critical periods, like recent heat waves, and attract private capital investment. Furthermore, a 2015 legal memo by Gordon MacDonald, now Chief Justice of the New Hampshire Supreme Court, suggests that converting utility fees, such as those funding the REF, into general taxes may violate the state constitution. Despite the significant policy shift, the direct impact on average residential ratepayers is modest, estimated at approximately 33 cents per month in bill reductions if the fund were eliminated entirely.