A Democratic congressman has introduced a bill to create incentives similar to German’s feed-in tariffs, which require utilities to pay a 20-year fixed rate for solar energy produced.
Rep. Jay Inslee, D-Wash., introduced the Renewable Energy Job and Security Act Thursday, the latest move by federal and state legislators in the United States to promote renewable-power use in the country.
The new bill aims to promote the growth of small and mid-size energy producers. If passed, it would guarantee payments to those generating up to 20 megawatts of electricity. The program would apply only to new projects.
The bill comes the same week as news that the Bureau of Land Management has placed a moratorium on solar-power projects on public land, according to The New York Times. After opening up public lands to solar projects in 2004, the bureau has received more than 130 proposals for projects on more than 1 million acres of land, the newspaper reported. The bureau has put a hold on the program while it studies its environmental impact – a process expected to take about two years.
The U.S. Congress also has repeatedly failed to pass legislation that would extend a package of investment and production credits to renewable-energy companies, including solar as well as wind, geothermal and more. This week, Republican Senator John Ensign from Nevada tacked on the tax credit package to a housing bill introduced to help troubled homeowners. The move has stalled a vote on the bill.
The Senate’s incentive package has a larger scope than the one proposed by Inslee and would impact more renewable-energy players. Supporters of the incentive package said they need the government support to develop cutting-edge technologies and stay competitive in the global market.
But Inslee isn’t positioning his bill as a substitute for the tax credits.
Instead, Inslee hopes to replicate the success of Germany’s feed-in tariffs program. The program requires the utilities to buy solar power at a fixed 20-year price that is higher than what they would pay for conventional power.
The mandate has turned the country into a booming solar market, where numerous homeowners and businesses have installed solar panels on their roofs to make money from the program.
One downside of the feed-in tariffs is the higher energy bills that German consumers have had to pay. After all, the utilities have no interest in absorbing all the cost of the government mandate.
Would Americans be wiling to pay more for energy?
That’s unlikely, said Ethan Zindler, an analyst with New Energy Finance.
“It’s an election year. At the end of the day, somebody has to pay for feed-in program. If it’s consumers, then utilities might find it difficult to signing on,” Zindler said.
Under Inslee’s bill, renewable energy producers also would get a 20-year contract from utilities, which can then apply for reimbursements for the cost of paying more for power.
The Federal Energy Regulatory Commission (FERC) would oversee the new program and set the rates that would provide a 10 percent internal rate of return for investments on power generation facilities.
A private organization called RenewCorp would be set up to reimburse utilities for the cost of buying renewable energy, as well as upgrading their grids and networks. RenewCorp is supposed to figure out a system that would require electric consumers to help pay for the cost.
The bill doesn’t preclude utilities from setting up projects smaller than 20 megawatts. In effect, if the bill passes, utilities could build small electric-generating plants and take advantage of both the higher rates and the reimbursement rules – although smaller plants tend to cost more per watt.