Are Feed-in Tariffs a Possibility in California?

In a dramatic about face from previous policy, the California Energy Commission is expected today to recommend that the state adopt feed-in tariffs to spur renewable energy development.

The recommendation is contained within the Energy Commission’s 2007 Integrated Energy Policy Report. The Energy Commission is expected to approve the report December 5 at its regularly-scheduled meeting.

The 300-page report concludes in part that the state’s current programs have failed to deliver significant amounts of new renewable generation and California will not meet its renewable energy objectives unless corrective action is taken soon.

Feed-in tariffs are widely used in Europe, notably in Germany, France, and Spain.

Renewable sources of energy now supply nearly 12% of Germany’s electricity, much of which was installed as a result of the country’s groundbreaking Renewable Energy Sources Act or feed-in law.

Under the German program, renewable energy producers are paid a fixed-price for feeding their electricity into the grid. This has led to a boom in the construction of wind turbines, rooftop solar systems and on-farm biogas plants.

Feed-in tariffs “turn homes, farms, and businesses into entrepreneurs who will accelerate our path to clean energy,” says Terry Tamminen about the Energy Commission’s recommendation. Tamminen is a former Secretary of the California Environmental Protection Agency and was the Chief Policy Advisor to Governor Arnold Schwarzenegger.

The Energy Commission’s policy reversal follows the poor results from several years of unfulfilled expectations for renewable energy development in California. California’s Renewable Portfolio Standard, the state’s current program intended to develop renewable energy, was passed as SB 1078 in 2002 and set a target of 20% renewables by 2017. Though thousands of megawatts of new renewable generation have been contracted in the five years since the program was launched, only 242 megawatts (MW) has actually been built.

In 2006 alone, German farmers installed 300 MW of solar photovoltaics on barn roofs. German homeowners installed an equal amount. Altogether, Germans installed 4,000 MW of new renewables last year.

In contrast, California installed about 200 MW of wind energy in 2006, and 60 MW of solar photovoltaics.

The Energy Commission report concludes that at the current pace the state will not meet its target of 33% renewables by 2020. “To scale the program toward reaching the 33% goal,” says the report, “California must move to a new system, such as the expanded use of feed-in tariffs.”

The report recommends immediate adoption of feed-in tariffs for renewable energy projects of less than 20 MW, and that the Energy Commission and the California Public Utility Commission collaborate on a study of feed-in tariffs for larger projects.

“We have no time to lose if California is going to meet its renewable energy goals. The Energy Commission has called for a dramatic change in direction. The Sierra Club supports their call for feed-in tariffs. This policy has been remarkably successful elsewhere. It’s being used in Ontario, Canada and Michigan is considering it as well. We need this kind of policy leadership in California too,” says Carl Zichella, the Sierra Club’s regional field director for California, Nevada and Hawaii.

Paul Gipe is a wind industry analyst who has written extensively about wind energy for both the popular and trade press.

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