European Delegation Touts Feed-in Tariffs in Florida

This week, a group of European solar professionals will be in Florida, sharing best practices about how to implement a FIT in the state and around the country. Companies such as Isofoton, Phoenix Solar, Q-Cells, SMA, SolarWorld and others will be represented.

As states and municipalities consider how to promote solar other than with limited rebate programs, FITs are looking like a more attractive option in certain markets, especially as job creation becomes a more important part of the picture, say U.S. supporters.

FITs are long-term payments to owners of qualified renewable energy systems for every kilowatt-hour (kWh) of electricity they produce. Instead of relying on tax payers for funding, the payments come from utilities, which spread the cost of the program to all ratepayers.

Over the course of the last year and a half, FITs have taken a more prominent role in the conversation around renewable energy incentives. There are now 14 states considering FITs as a way to rapidly expand deployment of renewables. Last week, RenewableEnergyWorld.com reported that both Indiana and Wisconsin introduced FIT legislation. Leading the pack, the city of Gainesville, Florida has decided to implement a FIT for solar photovoltaics (PV), which has excited supporters of the policy.

“The momentum is definitely picking up,” said Mike Antheil, Executive Director for the Florida Alliance for Renewable Energy. “We have been working very hard to get this on the table, and it's only getting stronger here in Florida.”

Antheil hopes that this week's series of meetings between Europeans and Americans will keep the conversation about the support mechanism strong.

Tuesday's meeting in Tallahassee will bring together a prominent line-up of state and federal government officials, U.S. and European business representatives and a range of advocacy organizations to talk broadly about the policy. Then there will be a meeting in Gainesville on Wednesday to discuss the details of that city's FIT, which is the first such policy to be introduced on the municipal level.

In October of last year, Gainesville Regional Utilities (GRU) announced support for a solar FIT that will pay PV-system owners US $0.32 for every kWh of electricity they feed into the grid. The estimated cost to ratepayers will be about $1.30 each month.

Florida's Public Service Commission approved a Renewable Portfolio Standard earlier last month that will require the state's utilities to generate 20 percent of electricity from renewables by 2020. Solar and wind will make up 25 percent of that overall goal. As the legislature considers the nuts and bolts of the $300 million program, FIT advocates are hoping to use this week's conferences as a way to highlight the benefits of the European-refined policy.

The European group — put together by the European Photovoltaic Industry Association (EPIA) — will be joining their American counterparts to talk about how to structure tariff rates, digression schedules and length of contracts. Helping Floridians understand these policy details is crucial to building a sustainable program, said Adel El Gammal, Secretary General of EPIA.

“It's wonderful to see such interest in Feed-in Tariffs in the U.S.,” said El Gammal. “However, there is a lot to the process of designing such a support scheme. Europeans have a lot of experience in refining the different elements, so we hope to share those and make sure that we can do it correctly in in the U.S.”

Indeed, with such a complicated and scattered energy landscape, implementing FITs in the U.S. is likely to be a more difficult task. That is why advocates have focused on the state and city level — areas often seen as simpler targets.

Florida is one of many states considering new options that will get the industry beyond limited rebate programs, which are considered a good way to jump-start a market but not a good way to sustain the market over the long-term. In many cases, funds run out just as the market starts to get going. Last week, the state of Maine announced that it had run through its 2009 budgeted $500,000 solar PV rebate program after just two weeks, adding to the list of states that have exhausted their programs over the last year.

In Florida, as the rule-making process for the RPS moves over to the legislature, there are a number of options on the table for how to spend the US $300 million proposed for wind and solar development.

Three types of support schemes for solar are being considered in Florida. The first is a pure-play solar renewable energy certificate (SREC) market. Under this program, solar-system owners pay back their investment by selling SRECs — which are not physical electricity, but the “environmental value” of one megawatt-hour of solar electricity produced — on an open market. Utilities have to acquire a certain number of SRECs to meet their procurement targets under the RPS. The actual electricity would be purchased through a net-metering program.

The next is a standard offer contract, a hybrid between a FIT and an SREC program. A standard offer contract sets up long-term, fixed price contracts with utilities for the SRECs, ensuring the system owner has a more predictable payback period.

And finally, there's the FIT, which focuses on putting a higher value on the actual electricity fed into the grid by simply paying system owners a premium for the electricity they produce.

As Florida examines this array of options, many businesses are eyeing the state to see what it will choose. The choice could play a role in how other states decide to structure their programs.

“I wouldn't say that everyone is watching us, but people are very curious to see what will happen here,” said FARE's Antheil. “Legislators are considering a number of policies, and it's somewhat open at the moment. This series of conferences will allow us to give a more serious look at [FITs] and determine if they are right for Florida and perhaps for other states.”