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119-s-5434119th CongressWALLET

American Renewable Energy Act of 2026

Sponsored By: Senator Welch, Peter [D-VT]

Introduced

Summary

Federal Renewable Electricity Standard (FRES) would create a national standard requiring large retail electricity suppliers to secure rising shares of renewable power and track compliance using a new Federal renewable electricity credit (FREC) system.

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  • Retail electricity suppliers face rising annual targets that start at 20.0% in 2027 and ramp to 70.0% by 2036. Suppliers must submit FRECs by March 31 each year or make alternative compliance payments. Civil penalties include double the ACP plus the quantity of missing credits.
  • The bill forces investment in local generation and environmental justice by requiring at least 15% of credits from distributed generation and 15% from impacted communities in 2027–2030, rising to 20% each in 2031–2036. At least 50% of alternative compliance payment funds must directly benefit impacted communities.
  • It creates a national FREC trading market with not fewer than six regional markets, sets a base alternative compliance payment of $50 per MWh adjusted for inflation, and directs ACP funds to State programs for renewable deployment, storage, and efficiency.

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Bill Overview

Analyzed Economic Effects

4 provisions identified: 1 benefits, 1 costs, 2 mixed.

New supplier targets and rules

If enacted, large retail electricity suppliers (those that sold at least 1,000,000 MWh last year) would have rising renewable targets and reporting rules. The bill would set annual targets from 20.0% in 2027 to 70.0% in 2036 and require suppliers to submit credits by March 31 following each year. It would also require at least 15% (2027–2030) then 20% (2031–2036) of required credits to come from small distributed projects and the same floors for generation in impacted communities. Suppliers who fail to submit required credits or equivalent payments would owe a civil penalty equal to twice the ACP rate per MWh times the unsubmitted MWh for the year.

Federal renewable credits and tracking

If enacted, the bill would create Federal renewable electricity credits (one FREC per MWh) for eligible renewable generation after December 31, 2026. FRECs would get unique serial numbers, be tradable, and be banked for up to two years, with rules to prevent double counting. Special rules would cover State-supported projects, pre-enactment power contracts, qualified hydropower, mixed-resource facilities, and small farm anaerobic digesters. The Commission would also be able to require suppliers, generators, or others to provide any information it needs to run the program.

Option to pay instead of credits

If enacted, a supplier could satisfy some or all of its obligation by paying an alternative compliance payment (ACP) of $50 per MWh (indexed after 2026) instead of submitting a credit. ACPs would be split to States based on where the supplier sells electricity and placed in a State fund to deploy renewable generation, storage, or cost-effective energy efficiency. States would have to ensure at least 50% of ACP funds directly benefit impacted communities and must report to the Commission within one year of first receipt and each year until funds are spent. If a State materially fails to follow the rules, the Commission could direct future ACPs to the U.S. Treasury.

State production incentive clarification

If enacted, this would clarify that State-approved production incentive programs may require utilities to buy renewable electricity at a set rate and that facilities may voluntarily join those programs. The change would not be limited by other PURPA or Federal Power Act provisions and would preserve State authority to set rates for participating facilities.

Sponsors & CoSponsors

Sponsor

Welch, Peter [D-VT]

VT • D

Cosponsors

  • Sen. Van Hollen, Chris [D-MD]

    MD • D

    Sponsored 9/17/2026

Roll Call Votes

No roll call votes available for this bill.

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