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Solar Alliance Takes Positive Position on Feed-in Tariffs

By Paul Gipe, Contributing Writer
October 21, 2009 | 5 Comments

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Washington, D.C., United States [RenewableEnergyWorld.com] The Solar Alliance, the US industry trade association for solar PV manufacturers and project developers, has recently posted a position paper supportive of feed-in tariffs (FITs) to their web site.

The Solar Alliance's position paper begins with a simple statement: "FITs are often misunderstood but can be useful policy tools".

While the industry is portraying the move as a natural evolution of its position, outside observers see it as a major policy development in the US. Previously, board members were split on whether to take a position on feed-in tariffs. Some key industry players openly opposed supportive statements on the policy used so successfully in Europe to install thousands of megawatts of solar PV as well as other renewable energy technologies.

The Solar Alliance is one of several organizations promoting solar PV in the US. The Solar Energy Industries Association, which represents the broader solar industry, has yet to take a formal position on feed-in tariffs. The American Solar Energy Society, representing the professional and academic community, also has not taken a position.

The Canadian Solar Energy Industries Association has previously endorsed the use of feed-in tariffs. (See CanSIA Calls for Dramatic Growth of Solar PV in Ontario Through Higher Tariffs). CanSIA specifically has called for a system of feed-in tariffs to be used in Ontario to supply 10 percent of the province's electricity (~16 TWh per year) by 2025.

The Solar Alliance's position paper begins with a simple statement: "FITs are often misunderstood but can be useful policy tools."

The document goes on to reiterate the Alliance's continued support for net metering and traditional tax subsidies to reassure readers that their position on feed-in tariffs should, in no way, detract from existing programs. The policy paper says the generator should be given a choice of which program to use where feed-in tariffs and other policies are available simultaneously.

The Alliance then lays out the characteristics necessary for successful feed-in tariff policies. This is as succinct a statement of feed-in tariff best practice as found anywhere. For example, the Alliance states that contracts should be for 20 years, though they acknowledge that some states may offer shorter terms, and that tariffs should be differentiated by technology and project size. The recommendations also include provisions for developing green field sites and not just those by "site owners" or existing utility customers.

However, the position paper limits the Alliance's support for feed-in tariffs to projects only up to 20 MW. There are a number of solar PV projects larger than 20 MW currently operating in Europe and there are many wind and concentrating solar power projects greater than 20 MW as well that have been installed with feed-in tariffs.

The position paper also doesn't specifically mention that feed-in tariff best practice requires tariff setting based on the cost of generation plus a reasonable profit. The Alliance only says that the tariffs should recognize the value of Renewable Energy Credits separately from energy.

The Alliance's paper represents the first clear statement by the association that feed-in tariffs would be an acceptable policy in the US.

Solar Alliance Policy Recommendation: Feed-In-Tariffs

Solar Energy

5 Reader Comments

Comment
1 of 5

kevin-oneill-164870

October 22, 2009

Feed In Tariffs promote the actual production of energy. Tax Credits promote the construction of systems only, without consideration of power production or other performance characteristics. In a Feed In Tariff situation, a producer has the ongoing incentive to ensure that the system is efficient, is working well at all times, is monitored on a continual basis, and operates within specifications at all times.

Ontario will, after its renewable energy industry grows to a size required to satisfy the "Domestic Content" regulations, have a network of micro, small and medium sized renewable energy generating stations where the developers are driven to maximize the production of energy at all times.

To promote Tax Credits over Feed In Tariffs is to promote the sale of materials, not the generation of energy for which it is designed.

Comment
2 of 5

Anonymous

October 23, 2009

Tax credits are paid out of a bankrupt general fund and siphon off profits to the tax-equity investor who is not interested in solar at all. They are also subject of congress's whims.
FITs pay the premium price of solar out of slightly increased rates for all rate payers. That's about $1 per month per person in Germany. They encourage entrepreneurial activity at all size levels of solar and therefore are a democratizing policy that fits the American spirit better than hanging at the trough of tax subsidies.
What happens in FIT countries is the entrepreneurial creation of tens of thousands of new electric companies that produce clean energy. A lively market for solar technology is the result that rapidly creates cost reduction through invention.

FIT = Democracy + Markets

Chris Mentzel
FIT-Hawaii.com

Comment
3 of 5

Anonymous

October 23, 2009

On a microcosm, you can look at the Gainesville, FL city owned utilities decision to implement a FIT to see how it stimulates consumer demand. Paying an aggressive 32 cents per kWH, the program maxed out its $4M allocated budget almost instantly and the number solar installation firms and jobs has skyrocketed. Studies are underway to show the direct economic impact in jobs, tax revenue and energy savings which can be applied to business investment

Even beyond cap and trade, a national RPS and FIT will do more to expand the adoption of renewables than any other legislation, including tax credits. Energy policy is too vital to leave to state legislatures.

Comment
4 of 5

lee-bidgood-jr-69216

October 23, 2009

To get an effective FIT program, the powrful resistance of investor-owned public utility monopolies must be overcome. That happened in Germany, the FIT leader. Here in Gainesville, Florida we are fortunate to have a non-profit municipal utility, Gainesville Regional Utilities (GRU) that initiated the highly successful FIT program.

GRU isn't perfect, but is more interested in providing economical services than in making a profit. Florida's public utilities want to generate all electricity in large centralized plants and oppose distributed power production, such as rooftop solar because it would cut into their legal monopolies.
Lee Bidgood, Jr.

Comment
5 of 5

garthfreeman

October 27, 2009

For all of the good reasons cited by other comments, our experience is that Feed-In-Tariffs are the only way to go. All other incentives are inefficient and ineffective in creating a renewable energy industry.
Here in Australia we have almost followed the lead of Germany - except for a net Feed-in model, and at 60c (US$0.55) per kWh, the industry growth is exploding especially given the amount of sunshine we have all year round. The FiT recognises output, in other words, actual electricity generation which stimulates efficient design, operation and optimisation. Just like Germany, the FiT in not funded from tax revenue but by every electricity consumer adding cents to every electricity bill every month.
This is about getting the technology out there and the FiT is proven to be the best available way to do so.

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About: Paul Gipe has written extensively about renewable energy for both the popular and trade press. He has also lectured widely on wind energy and how to minimize it... more »