The Dernogalizer

September 22, 2009

Feed-in Tariff Column

Filed under: Energy/Climate — Matt Dernoga @ 5:00 pm
Tags: ,

I have a column out today on why a feed-in tariff the a great policy for generating renewable energy that should be considered locally and nationwide.  Also, here is another source for more information on feed-in tariffs.  A couple of corrections, the editors got a little trigger happy here…

-The 1st sentence of the 3rd paragraph was nixedcompletely so, I’m randomly saying “suddenly” with no prior sentence talking about but difference between a feed-in tariff and net metering.  It now looks like I’m talking about net metering in the 3rd paragraph when I’m not.  The first sentence said “Under a feed-in tariff policy, utilities are obligated to buy renewable electricity generated by small-scale installations at a premium rate set by the government over a long period of time.”

– The paragraph on Gainesville got changed in a confusing way, it originally said this..  “Gainesville County in Florida became the first local government with a feed-in tariff.  Less than a week after introducing the policy, Gainesville hit its cap of 8 megawatts for those 2 years.  For such a small area, that’s solar production on steroids.  The cost to Gainesville’s ratepayers to subsidize the program is 74 cents a month.”

Energy: Feeding the beast

There’s a popular policy in many parts of Europe called a feed-in tariff. Most Americans, even environmental activists, have never heard of it. Under a feed-in tariff policy, utilities are obligated to buy renewable electricity generated by small-scale installations at a premium rate set by the government over a long period of time.

Right now, if I put solar panels on my house, net-metering keeps track of the power I produce versus the power I consume from the utility and charges me for the net amount of power I consume over a certain period of time. The solar power I produce is only worth as much as the electricity the utility is selling to me. What happens if I produce more energy than I consume? I’ll get paid a low price for the excess electricity I’m feeding back to the grid.

Suddenly, the solar panels on my house are making me into a renewable energy entrepreneur, and I have a predictable payback for many years, allowing greater certainty for investment decisions. The entire payback rate and return on investment is now turned upside down.

In cloudy Germany, a homeowner with a rooftop solar system can be paid four times as much for their electricity as a coal-fired power plant. The feed-in tariff’s establishment in 1999 saw Germany producing almost half the world’s solar energy by 2006, with 15 of the largest 20 solar photovoltaic plants located in Germany. Spain set their feed-in rate so high in 2007, projects were getting 575 percent more than the average electricity price. The result was a tidal wave of solar installations, causing Spain to overshoot its 2010 goal of 400 megawatts by installing 3,000 megawatts in 18 months.

The feed-in tariff has just started to take root in the United States. Vermont recently passed a feed-in tariff policy for small-scale renewable energy projects. Some of Wisconsin’s utilities offer feed-in tariffs for certain technologies. California has a version as well. Washington, Oregon, Minnesota, Michigan and Indiana are among states that have recently considered passing feed-in tariff legislation here.

Gainesville, Fla., became the first local government with a feed-in tariff — the city surpassed its 4-megawatt cap for 2009 before the policy officially began. For such a small area, that’s solar production on steroids. The cost to Gainesville’s ratepayers who sign up in the first two years to subsidize the program is 32 cents per kilowatt.

Compared to other incentives for renewable energy, studies by major economic and energy institutions have found the feed-in tariff in European countries has achieved the largest renewable energy deployment at lower costs than other incentives such as tax credits and renewable electricity standards have. As more states consider and pass feed-in tariff policies, the feed-in tariff will become the next major piece of federal clean energy legislation by early next decade.

Maryland should join the fray and pass its own feed-in tariff policy with specific caps, parameters and rates that make sense for our state. The first step would be for a legislator to introduce a bill and start the conversation. This is an opportunity to decentralize energy production and make the clean energy revolution a product of the people. Germany and Spain made up 72.6 percent of demand for worldwide solar production in 2008 — that’s how it’s done.

Matt Dernoga is a senior government and politics major. He can be reached at dernoga at umdbk dot com

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3 Comments »

  1. Great article ! Feed-in Tariffs are a good way of helping to promote micro-renewable energy.

    Find out about our blog on Feed-in Tariffs here: http://www.bettergeneration.com/trying-to-understand-feed-in-tariffs.html

    Thanks !

    Comment by Richard Musi — September 23, 2009 @ 4:25 am | Reply

  2. […] Energy/Climate — Matt Dernoga @ 12:28 am Tags: clean energy, feed-in tariff, Ontario I had a column out about the incredible potential of the feed-in tariff for the US.  According to Grist writer […]

    Pingback by Ontario finalizes Awesome Feed-in Tariff « The Dernogalizer — September 26, 2009 @ 12:28 am | Reply

  3. […]  A feed-in tariff to paint a brighter financial picture for residents who want to invest in localized clean […]

    Pingback by If Portugal can do it, can’t America? « The Dernogalizer — August 20, 2010 @ 12:59 am | Reply


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