Can the U.S. or California Institute a Feed-In Tariff?

As a member of the FIT coalition I strongly agree with Ted that only a reasonble FIT program for WDG can allow CA to reach the requirement for the 33% RPS standard.

Ted and Craig and the FIT coalition need everyone’s help to make better legislation happen in CA in 2010.

We must certainly keep this valuable movement in mind as we approach the states new election cycles. Fit’s are the only positive economic way to move into renewable energy. Lenders will also get on board with agressive program potentials for the populace.
Any program to move in a new direction that threatens the status quo will seem to have a monetary cost and must include the call to see the bigger picture of long term sustainability and peaceful outcomes.
Remember, the ego does not want peace, and will find any way to summon the thoughts of fear. There can be no lack in a peaceful world seen with a peaceful mind.

Ko makes some great points about cost effectiveness of WDG.  However, shouldn’t states act independently to enact FITs?  I expect many states low population and/or relatively low electricity prices to view a national FIT as a regressive tax.

Well,  the FIT rate increase can always be passed on to the consumer and there are some big benefits….for example, peak power load spikes tend to occur on warm sunny days where solar energy provides an offset…fewer blackouts.

Here’s one more FIT program to add to the list (CPS Energy in San Antonio, TX):

http://www.cpsenergy.com/Services/Generate_Deliver_Energy/Solar_Power/Solartricity/index.asp

States and municipalities will need to lead the way here. The Federal government doesn’t have the scope to enact a Federal FIT. I don’t even think SEIA is lobbying for one.

The solar energy industry can not compete in the power market, so let’s subsidize them (aka “bailout”).  After all, consumers and taxpayers have deep pockets. Oops, not anymore. Lot’s of them are now out of work, compliments of pinhead federal and state politicians.

Some up front help with financing is reasonable, but after that sink or swim in the marketplace.

The California and FIT issues bring up comparisons between U.S. and EU progress in renewable energy. The U.S. has a generic problem of short-range, single-issue thinking in comparison with that in leading EU nations*. 

Germany’s feed-in tariff helped it gain world leadership in solar photovoltaic energy development - in spite of less favorable solar irradiation than the U.S. But U.S. policymakers have apparently seen FIT and other foreign advances major as “magic bullets” for possible application here. Broader German policies that made the growth in solar PV possible are ignored.

The reality is that the Germans were under no illusions that solar, wind, and biomass, etc. would catalyze a “new self-sustaining green industry” as the case continues to be made in the U.S. Their primary motivation was concern about global climate change - heightened after the Greens joined coalitions in parliament. They were able to afford the major investments and subsidies, which they sought to apply intelligently and in consistent ways (no on and off policies as in the U.S. ),  because of Germany’s revenues from conventional industry.

Unlike the U.S.‘s unilateral policies regarding environment, Germany and the other 26 EU nations have adopted the “sustainable development”  concept popularized by the U.N. Brundtland Commission Report of 1987. It recognizes that only prosperous nations can afford the large investments and intensive research needed for progress in reducing greenhouse emissions. So, for example there are some 20 German universities with major programs in machine tool production. Their close ties with private industry help maintain German world leadership in this critical area of manufacturing.

In contrast, the U.S. Congress responded to a 1970s sense of environmental crisis by selectively imposing a labyrinthine regulatory system on U.S. manufacturing, industry, and land use. Along with a stigma on “conventional industry”, the costs and increased legal and political risks in these areas diverted U.S. business talents and money to less affected areas like real estate, finance and foreign investments, including import-based marketing.

These policies have now boomeranged on U.S. global climate change policies - impeding renewable energy initiatives which - if they are to be implemented at all - need to be implemented with imported products.

Europe gets an unjustified bad press in the U.S. I predict that things will not get better until we take off the America-centric blinders and start learning from the experience of other nations - as the U.S. was willing to do in the past.

*The Conflict over Environmental Regulation in the United States: Origins, Outcomes, and Comparison with the EU, 321 p., Springer 2009.

California gets a bad wrap as some sort of socialist hive but they pull their weight just fine.

http://www.taxfoundation.org/blog/show/1397.html

Our team monitors all tariffs continually and updates where required to ensure our tariff information is accurate and comprehensive. German Wholesale

I wouldn’t mind a national FIT that was phased out as solar penetration grows.  A modest 20-22c/kwh nationwide FIT (i.e. 2x the national average price), that is reduced in steps after we get 1% of our power from solar and completely goes away after we reach ~5%.

California had a Feed in Tariff.  The rate was set too low so it didn’t work.  For almost 10 years California has had net metering with rebates or performance based incentives.  As a result, California is by far and away the biggest solar market in the U.S.  New Jersey is second — also with net metering and rebates/RECs.

FITs work in Germany for two simple reasons.  First, the rate is set VERY high — so high that a “solar” investment is better than just about any other financial instrument.  Second, the German government provides automatic loans through the KfW bank to offset the initial costs of any solar system.

If in the U.S. we decide to set a FIT at a very high rate then the policy could work.  But legislators and utilities don’t want to do this — instead, they want to set rates at less than the existing retail rate of electricity.  A low FIT won’t generate demand, and a high FIT will cost a lot to ratepayers (much more than a comparable tax credit without the long term burden).  Second, the U.S. government would have to create an automatic financing mechanism for FIT systems.  That way customers could afford the up front capital.

A FIT without automatic financing will fail — or will simply provide advantages to solar financing companies.  A low FIT will simply fail, and if implemented at the expense of successful tax credit and rebate programs, it will stall the solar market.

FIT’s are a disaster both for business progress and for ratepayers.

While the RPS process has some issues—the tight credit market has squeezed out players who didn’t allow for it—by putting market power in the utilities hands it creates competition which drives innovation and lowers prices.  The 20x drop in the cost of wind power is a great result.

The market already prices time-of-delivery so that solar technologies are being carried forward by the RPS.  With more than 6000 MW of PPAs signed for California utilities, calling the RPS a “failure” is deceptive at best.

Sure, if I was in the rooftop PV business I’d love to see the same kind of market conditions as Germany.  But we can either have a lot of low-cost renewable power, or a much smaller amount of high-price power.

The FIT crowd are shills for Big PV.  Zero benefit to climate, innovation, or the economy going down this route.

@ Jim - Fully agreed!

The German FİTs were a sop to the green party when it was in the governing coalition and now that they are gone the rates will be reduced as rapidly as possible.

The fundamental issue remains. Why should the taxpayer/consumer be forced to provide money (i.e. a feed-in tariff) to cover the operating costs of power producers who are unable to compete in the marketplace? Simply drives up costs for the monetary benefit of a few while eroding everyone else’s ability to earn a profit.

The German FiT moreorless single-handedly led to the development of a dedicated supply of polysilicon… It has led to production of panels expanding dramatically which by extension to the cost of PV falling precipitously… It has shown the world how cheap installation can get once you insert competition and maintain stable policies… All these things are because of Germany’s FiT. Was it expensive? Yes, but the rewards of PV make the risk look frivolous. Here’s a technology that can displace at least 5 to 10% (bare minimum) of the most expensive electricity we use and we don’t need to change much except to mount an appliance on our roofs. There are also a ton of potential applications in the developing world - an absolute ton.

”..and now that they are gone the rates will be reduced as rapidly as possible.”

That’s not what’s going on. Competition drove the price of PV down dramatically in 2009. The FiT is/was too rigid to adapt to the new price levels and had to be adjusted to market conditions. Had the previous administration stayed in power they would have had to institute a similar correction.

There are over 200 GW of wind projects in the queue. Are they all getting built? Not a chance… There are a half dozen COLs out for new nuclear builds. Are any of those plants getting built? Doubtful. PG&E has signed a deal for space power. Is that going to happen? No way. Press releases are deceptive at best.

As proponents of RE, we must be clear why we are promoting RE before settling down with a particular RE technology.  I hope that as proponents of RE, we are interested in abating climate change and energy independence on a wide scale and as soon as possible.  So we must bet on solutions that meet the following conditions - a) the technologies must be providing Renewable energy as needed (heat or electricity) to run today’s infrastructure base at household and industrial levels…that is, provide solar heat to hot water heaters on roof tops, provide solar heat for heating/cooling of HVAC and process heat for industries, and provide solar electricity as needed…rooftops, fields, and deserts…all must be leveraged so as to minimize energy loss, maximize solar energy capture, and provide energy at cheap costs.  b) the technologies must be able to produce energy at such a cost that the consumers themselves find it promising to use them (without requiring on-going subsidies and feed-in-tarrif as suggested by this article). A free lunch for welcoming may be OK, but there is no free lunch for ever.  c) technologies are easily fabricated by a large number of companies commercially without requiring them to switch over to new capital infrastructure or having any upstream bottlenecks of limited supply of materials or parts (such as rare earth element, mining of special ores and minerals, etc.)

Solar thermal concentrators surely beat solar PV on all these accounts.  Solar Thermal concentrators can be ‘distributed energy generation’ (heat or electricity as needed) or roof-top installations to heat the hot water needs (and thus avoid double penalty of electric hot water heaters), and can be globally fabricated, installed, and operated.  Their costs are close to coal-produced energy (as seen by the consumers as well as by energy producers).   

It is too bad that the Solar PV folks dominate and the DOE listens to them.