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Feed-in Tariff Breakthrough in Iowa?

Could the conservative heartland sate of Iowa breach the dam holding back feed-in tariffs for renewable energy in the US when self-styled "progressive" states such as California continue to dawdle? That is the possible implication of a vote by the Agriculture Committee of Iowa's state Senate Thursday, 7 March 2013.

Political observers and the media often overlook mid-western states in deference to presumably more trendsetting states on the west coast. However, many  of the progressive movements in US history have grown out of grassroots campaigns in the nation’s heartland. The same could be true for feed-in tariffs.

The bill, SSB 1234, has a long ways to go should it ever become law, and the odds against it, as in most other states, are very long as powerful forces begin aligning against it. Nevertheless, the bill now moves to the Senate floor.

Significantly, the bill passed the Agriculture Committee unanimously. That is, the bill not only received the support of Democrats in the Democratically controlled chamber, but also support by Republicans on the committee. This bodes well for at least consideration by the Republican controlled House should the bill pass the Senate.

In another departure for much of the current discussion across the country and in particular on proposals for feed-in tariffs, SSB 1234 is not about solar photovoltaics. No, the bill is aimed at distributed wind energy and is limited to projects less than 20 MW.

Iowa knows a lot about wind energy and it is comfortable with the technology. In 2012, Iowa produced 24.5 percent of generation by in-state wind energy, far more than the one-time leader California’s 5 percent. Even in absolute numbers, Iowa’s 14 TWh of wind generation exceeded that of California’s 10 TWh in 2012.

However, nearly all wind energy in Iowa is found in large wind power plants developed by multinational utility companies. Only a very small percentage of Iowa’s wind generation is produced by small, distributed projects and even less is owned by Iowans themselves.

The bill allows distributed wind projects to account for one-half of the annual growth in residential electricity consumption. One estimate is that this could be up to 60 MW per year. If true, Iowa’s proposal is four times greater than the much heralded, some would say over hyped, feed-in tariff program of Los Angeles’ Department of Water & Power that is limited to 20 MW per year.

Iowa’s SSB 1234 is a milestone in renewable policy proposals in the US since Tea Party reactionaries seized legislatures across the country in 2010. As one activist suggested, this could finally be a sign of brightening fortunes for feed-in tariffs.

Unlike advocates in other states, where solar only bills monopolize feed-in tariff discussion, renewable proponents in Iowa are more inclusive. Proponents of SSB 1234 hope to add biomass and solar once the bill reaches the floor of the Senate.

One of the bill’s key features is using the connecting utility’s regulated rate of return in calculating the tariff that would be paid under the standard offer contract. Renewable advocates have long proposed that distributed or locally-owned renewables should be paid a tariff that includes calculation of a rate of return equal to that granted electric utilities. In most countries and in most proposals in North America, however, regulators use a much lower rate of return for investment in distributed renewables than the utilities receive themselves. Sometimes the return acceptable to regulators for distributed renewables is half that received by regulated utilities.

Summary of Key Features

Program cap: ½ of annual retail electricity consumption growth

Project cap: 20 MW

Geographic limit: only on agricultural land

Interconnection: mandatory for utilities

Tariff determination: based on cost to utility, inclusive of the utility’s regulated rate of return

Contract term: 10 years

Review: biannual

Note: The Bill has been renumbered: SF 372.

SF 372 Contents

SF 372 Bill History

Lead image: Iowa sign via Shutterstock

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