Suggests Feed-in Tariff Design Best Practice
February 23, 2011
By Paul Gipe
In a new 61-page report, San Francisco Bay area activists call for developing the distributed generation of renewable energy in California through a system of feed-in tariffs.
The Bay Area’s Local Clean Energy Alliance published Community Power–Decentralized Renewable Energy in California to frame the debate about how the state can meet its renewable energy target as a new governor takes office.
During the Gubernatorial campaign, Governor Jerry Brown called for the development of 20,000 MW of new renewable energy capacity, 12,000 MW of which would be set aside for small, distributed projects.
Written by Bay Area activist Al Weinrub, Community Power considered projects from a suite of renewable technologies less than 20 MW in size.
Weinrub argues that decentralized renewable generation can be brought on line more quickly with less environmental impact than large, central station renewable energy projects, and thus, are better able to help the state meet its renewable energy targets.
Decentralized generation, Weinrub notes, also provides more local economic benefits than large central station projects.
In Germany, farmers and groups of citizen investors can own renewable generation directly without the need for “third-party” or corporate ownership as is common in the US. For example, half of all wind development in Germany is owned by farmers and cooperatives of people living in nearby communities.
Revenues from locally-owned projects go into the pockets of local residents who then use their profits to buy local goods and services and pay local taxes.
To implement Local Clean Energy Alliance’s vision of decentralized development of renewable energy, Community Power suggests two strategies: Community Choice Aggregation and Feed-in Tariffs.
Weinrub argues that policy action is needed because the state will fail to meet its renewable energy targets. He cites a 2009 California Public Utility Commission report that despite 129 contracts for more than 10,000 MW of large, central station renewable projects have been awarded, little has been built.
Based on experience in Germany, Denmark, and Spain, Weinrub describes the key features of successful feed-in tariff design. He says that a feed-in tariff program with these features is simple, stable, and importantly, fair.
A well designed feed-in tariff program, says Weinrub, allows non-taxable entities such as cities, counties, state government, cooperatives, and nonprofits, the opportunity to pursue renewable energy projects.
The report contrasts sharply with the inaptly named study by the Interstate Renewable Energy Council (IREC) on Model Program Rules for Community Renewables that omits discussion of both feed-in tariffs and renewables. Despite its title, the IREC report was directed solely at solar photovoltaics, ignoring other technologies. The report also only examine its preferred mechanism, net-metering, with an emphasis on third-party ownership.
Current policy in the US requires financial acrobatics to develop renewable energy with federal tax subsidies. Many projects developed locally have to sell ownership to a third party with a sufficient business tax to use the federal credits. Instead of IREC’s approach recommending third-party ownership, the Local Clean Energy Alliance’s report encourages more local ownership through feed-in tariffs.
According to a recent report, 51% of the 43,000 MW of renewable generation in Germany in 2009 was owned by farmers and individual investors. Germany uses a sophisticated system of differentiated feed-in tariffs that enable almost anyone to develop renewable energy.
Much of the rapid growth of renewable energy in Germany has occurred during the past decade when Advanced Renewable Tariffs were first introduced.
What’s New on Feed-in Tariffs
* Community Power Report Calls for FITs in California–In a new 61-page report, San Francisco Bay area activists call for developing the distributed generation of renewable energy in California through a system of feed-in tariffs. . .
* Gainesville Installs More Renewables than Vermont’s Speed Program in 2010–The city of Gainesville, Florida installed more renewable generating capacity under its feed-in tariff program in 2010 than the state of Vermont under its SPEED program. . .
* Tables of Renewable Tariffs or Feed-In Tariffs Worldwide–Updated with revised Nova Scotia ComFIT proposed tariffs . . .
* Feed-in Tariffs Needed After Grid Parity another hard-hitting critique by Craig Morris–A few weeks ago, US solar market analyst Paula Mints published an article essentially arguing that solar is about to reach an “un-incentivized future.” Don’t hold your breath. . .
* Rocky Road for Clean Energy, Views Still Great by Anne butterfield–“This is a classic example of why you need surety in the marketplace,” said Mike Bowman, globetrotting leader of the rural clean energy group 25×25 and former Colorado State Senate candidate. “There’s no surety left in the marketplace, and a well designed feed-in tariff for distributed generation would fix all that.” . .
* CLEAN Contracts for Indian Country by Bob Gough–Also, innovative federal policies need not require any new federal spending, as renewable purchases can be rate-based, just as retail, spot market coal purchases are today. A new national report entitled: “CLEAN Contracts: Making Clean Local Energy Accessible Now” describes an innovative policy change called a “CLEAN contract,” modeled somewhat on European standard offer feed-in tariffs. It allows energy project owners to sell their electricity to utilities at a predetermined, fixed price for a predictable and extended period of time. . .
* Power by the people by Deidre Pike–Schools with solar panels could make money to fund student activities. Universities could get paid for renewable energy production. Businesses and factories might turn industrial waste into power. A plan headed to the Nevada Legislature creates a structure to pay institutions, companies and individuals for generating electricity. Advocates say the plan could create potentially a couple of thousand jobs and lure companies—folks who manufacture, say, solar panels—to the Silver State. . .
* Solar Server: Pathways Towards a 100% Renewable Electricity System–The German Advisory Council on the Environment has published a Special Report which shows how a reliable, affordable and completely renewable power supply can be achieved in Germany and in Europe. The report also makes recommendations for the further development of the German feed-in-tariff law, especially in view of promoting a cost- optimized renewable electricity portfolio by 2050. . .
* Kennedy Joins the Fray: Offers Support for Solar Feed-in Tariffs in Los Angeles–Respected environmentalist and clean-energy pioneer Robert F. Kennedy, Jr. today added his voice to the chorus in support of the CLEAN LA solar proposal, which would harness rooftop solar power to create the largest program of its kind in the nation. Kennedy joined dozens of business, labor, community and environmental leaders who have signed on to the plan that was created jointly by the Los Angeles Business Council and UCLA. . .
* North German State to Double Wind Energy on Land–Conservatives Increasing New Renewables from 50% to 100% of Electricity. . . With one of the highest concentrations of wind generating capacity in Europe–if not the world–the north German state of Schleswig-Holstein plans to double the amount of wind energy it generates from wind turbines on land. . .
* Status of Feed-in Tariffs in Europe 2010–The use of feed-in tariffs (FITs) to pay for renewable generation now overwhelmingly dominates European renewable energy policy, according to the most recent meeting of the International Feed-in (tariff) Cooperation council (IFIC). . .
* Ontario FIT Price Determination Summary–How Did They Do It–Several people have asked how the province of Ontario, Canada determined the price of each individual tariff in its Feed-in Tariff program and how were stakeholders involved. . .