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Feed-in Tariffs will Allow Home Owners to Sell Solar Generated Electricity back to the Grid & Accelerate Growth of Solar Energy Adoption

Feed-in Tariffs will Allow Home Owners to Sell Solar Generated Electricity back to the Grid & Accelerate Growth of Solar Energy AdoptionAt a meeting of representatives of the state and regional solar industry associations at Intersolar North America, the premier solar industry exhibition and conference held in San Francisco recently, the state solar industry associations agreed that it is time for Feed-in Tariffs, the policies that have proved to be wildly successful in Europe in accelerating the growth of solar and other renewables, to be adopted widely in the U.S. The consensus among state and regional solar industry associations from across the country was that the time for Feed-in Tariffs to be adopted widely in the U.S. is long overdue.

“The growth of solar in the U.S. in recent years has been spurred by state-level policy initiatives,” said Sue Kateley, Executive Director of California Solar Energy Industries Association (CalSEIA). “State and regional solar industry associations have been at the forefront of creating, and advocating for, these policies.

CalSEIA’s membership includes international, national and local solar companies doing business in California.

“The time is right to accelerate the use of renewable energy in the U.S.”, said Gary Gerber, President of CalSEIA. President Obama called for determined action to end reliance on fossil fuels. States can take action now. States can grow local renewable industry businesses and create local jobs. Feed-in Tariffs are simple, easy to use, stable, and effectively drive the costs of renewables down quickly.”

Feed-in Tariffs are in place in approximately 64 jurisdictions throughout the world, and have been responsible for the creation of the largest and fastest-growing solar markets, like Germany and Italy. According to a recent report by the European Commission, “well-adapted feed-in tariff regimes are generally the most efficient and effective support schemes for promoting renewable electricity”(1). According to Mark Fulton, Managing Director, Global Head of Climate Change Investment Research for DB Climate Change Advisors, “There is strong evidence that Advanced Feed-in Tariff (FiT) programs that exhibit Transparency, Longevity and Certainty (TLC) can clearly reduce project risk, allow renewable energy developers to obtain a lower cost of capital, and create new jobs.” A recent report by DB Climate Change Advisors states, “Indeed, we believe that Lord Stern’s view that feed-in tariffs ‘achieve larger deployment at lower costs’ has a lot of merit”(2)(3).

In August of 2009, the California Legislature overwhelmingly approved SB 32, which authorized the California Public Utilities Commission to implement a statewide Feed-in Tariff for projects less than 3 megawatts, with a total program cap of 750 megawatts. According to Ms. Kateley, “The design of the program will encourage local projects at residential, commercial, and municipal sites. This will create construction jobs for solar companies throughout California.” Several other U.S. states are developing Feed-in Tariff programs.

“Oregon launched its version of the Feed-in Tariff on July 1, and the initial allocation was fully subscribed in less than 15 minutes,” claimed Glenn Montgomery, Executive Director of OSEIA (Oregon). “The demand is clearly present.”

Experience with Feed-in Tariffs has been contrasted with incentive systems based on tradable market commodities. “Reports by such entities as Ernst & Young, the International Energy Agency, and our own National Renewable Energy Agency have indicated that Feed-in Tariffs have been more successful than incentives based on tradable market commodities at achieving renewable energy goals in Europe. Furthermore, they have done so at a lower cost,” said Lyle Rawlings, President of MSEIA (New Jersey, Pennsylvania, and Delaware). “In New Jersey, the second-largest solar market in the U.S., a tradable market commodity system of incentives was adopted that has driven up the cost of solar power to more than double the cost that a Feed-in Tariff would produce, while falling about 50% short of the legislated goals for solar.”

“A Feed-in Tariff can work as a highly effective complement to many other existing solar policies, including net metering, and serve as a means of achieving many existing state renewable portfolio standards,” said Janet Gagnon, a Board member of COSEIA (Colorado). “Even in jurisdictions where Feed-in Tariffs are not favored due to electric market structure similar policy structures often can be implemented,” said John Hoffner, President of TXSEIA (Texas). An example in Texas comes from CPS Energy, a municipal utility serving the City of San Antonio, which recently opened its Solartricity program offering solar developers long-term contracts for clean energy produced.

Feed-in Tariffs complement existing policy initiatives and fill a policy gap that currently exists for local solar generation plants. Feed-in Tariffs support strong acceleration in the solar energy market and rapid achievement of state-level goals, while keeping the costs of solar power relatively low without compromising safety and reliability, and promoting diversity in the industry.

“These goals – rapid acceleration toward the state solar targets, achieving cost reductions that benefit ratepayers, safety and reliability, and maintaining diversity of business opportunity and customer segments served – are the goals that our industry members want us to achieve,” said Mr. Rawlings.

According to Ms. Kateley, “If Feed-in Tariffs can be adopted widely in the U.S., we have the opportunity to re-take the lead in the world in transforming energy markets to clean, renewable energy.”

States represented at the meeting:

1. Arizona

2. California

3. Colorado

4. Florida

5. Hawaii

6. Maryland-DC

7. Massachusetts

8. New Jersey

9. New York

10. Oregon

11. Pennsylvania

12. Texas

13. Virginia

(1) Commission of the European Communities, COMMISSION STAFF WORKING DOCUMENT:The support of electricity from renewable energy sources, Jan. 1, 2008

(2) Deutsche Bank Group/DB Climate Change Advisors, Deutsche Bank Global Climate Change Policy Tracker: An Investor’s Assessment – October, 2009

(3) Lord Nicholas Stern, The Economics of Climate Change, p. 366.

Tags: according to mark, California, california public utilities, california solar, calseia, City, clean energy, climate change, climate change policy, Delaware, energy goals, energy industries association, gary gerber, Germany, global head, industry associations, industry businesses, industry exhibition, international energy agency, intersolar, investment research, Italy, Lyle Rawlings, New Jersey, Pennsylvania, policy initiatives, public utilities commission, renewable electricity, renewables, San Antonio, san francisco, solar companies, solar energy, solar energy industries, Solar Energy Industries Association, solar energy market, solar industry, solar power, System, Texas, u.s.

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