Should small renewable energy producers get the same deal as big corporate energy producers? The Clean Local Energy/Feed-in Tariff (FiT) policy is designed to do just that by insuring a fair financial return to investors in local, decentralized rooftop PV, wind and other renewable energy.
A new bill introduced by Senator Schwartz and Representatives Vigil and Massey (HB 11-1228) to the Colorado Assembly would promote economic development through the use of distributed renewable energy generation. The bill directs the office of economic development to commission a study of the potential benefits of adopting incentives, such as a CLEAN/FiT style policy, to “increase the amount of distributed generation included in utilities’ portfolios for the purpose of job creation and economic development”.
The bill requires the study to look at the potential for job creation by region, type of renewable energy source, attraction of new businesses and new capital, expansion of revenue streams for farmers, ranchers, and retirees, and creation of additional tax revenue for the state. The study will be conducted by an independent entity and funded through gifts, grants, and private donations.
The policy tool has spurred a virtual explosion in renewable energy installations in Germany, Spain, the United Kingdom and now Canada. Germany installed a record 8 Gigawatts in solar power in 2010 alone.
Adoption of a FiT has been much slower in the US, due to strong resistance from investor-owned utilities, including Xcel Energy.
At a 2009 renewable energy conference in Minneapolis, Xcel Energy representatives told the audience, “the honest truth is we earn our returns by building plants and putting them into rate base and making profits on them”. A feed-in tariff “takes away that opportunity of utilities to earn on their investments”.
Another reason FiTs have not gone over so well in the US is the name. The term “Feed-in tariff” has led some to misunderstand the policy. FiTs are not a tax but rather a redistribution of utility funds to provide a fair return to small energy producers. By avoiding the cost of new transmission, power plants and hefty built in profit margins for utilities, it can save ratepayers plenty, despite its name.
Local renewable energy advocates in the US are grappling with a new name for FiTs, because of the vulnerability of the term “tariff” to attack from anti-tax activists and others who either don’t understand, or outright oppose parity for small energy producers.
According to FiT expert John Farrell, with the Institute for Local Self-Reliance, those who oppose FiTs, “will say this is going to be very expensive. They’ll say you’re going to pay 10 times more for electricity”, thus feeding misconceptions of costly taxation.
The alternative term, “Clean Local Energy Accessible Now” (CLEAN), has been adopted by some policy proponents in an attempt to avoid these pitfalls and describe the policy more accurately.
The study called for won’t be the first study on CLEAN/FiT incentives. In fact, FiTs have been studied extensively in the US. Some would say almost to death.
Earlier this year the Los Angeles Business Council released a study on how to design an effective FiT based on its application throughout Europe and in a growing number of US communities to accelerate renewable energy development and Co2 reductions.
Unbeknown to many, our own Colorado Public Utilities Commission (PUC) Staff prepared a report on FiTS in 2009 that concluded:
“A FiT can be used to accomplish the legal and policy goals of an RPS and can be the driving mechanism enabling utilities to meet their renewable requirements”.
The report also concludes that an effective FiT could create jobs, benefit rural areas through community-based renewable energy development, and avoid the need for costly new transmission.
Not to be outdone, the National Renewable Energy Lab (NREL) in Golden, Colorado also has a lot to say about FiTs. See: NREL Analysts Dig FiTs
Despite utility opposition, the policy is catching on in a growing number of municipalities and states in the US. No matter what we call it, if Colorado gets it right, it could finally have the policy incentive we need to ignite a real renewable energy revolution that includes all renewable energy producers, large and small and fulfills the green job promise we’ve all been waiting for.
Ceal Smith is an ecologist, researcher, writer and founder of TIERRA Consultants, the San Luis Valley Renewable Communities Alliance, and a founding member of Solar Done Right. Ceal works from Colorado’s rural San Luis Valley where she lives with her teenage son, dog and 2 cats. She has lived and worked throughout the Southwest and Latin America. She can be reached at: email@example.com.
This article first appeared at: http://slvrenewablecommunities.blogspot.com