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RESULTS OF FEED IN TARRIFS POLICY

House Democrats Introduce National Feed-in Tariff for Renewable Energy Projects

Timothy B. Hurst

Representatives Jay Inslee (D-WA), Bill Delahunt (D-MA), Jim McDermott (D-WA), and Mike Honda (D-CA) introduced landmark legislation [PDF] on Thursday that will provide security for investments in the renewable-energy sector by guaranteeing rates for renewable-energy generation. This policy mechanism, also known as a national feed-in tariff, may be the single most effective tool to expand renewable energy development that we know of. Feed-in tariffs have been introduced in several U.S. states, but none have the bills have been passed into law.

The International Energy Agency, the European Commission and the United Kingdom’s Stern Review have determined that feed-in tariff policies in Germany, Spain, France and other European Union countries have achieved larger renewable energy deployment at lower costs, compared with policies in other European Union countries.

The legislation has two principle titles. The first would streamline interconnection standards and the patchwork of policies currently governing interconnection. The second title addresses the actual process of setting of renewable energy tariffs, and what would qualify. This bill would not only apply to the mom and pop backyard wind turbines, and rooftop solar - the tariff extends to projects as large as 20 megawatts!

As it is currently written, the tariff would be revisited no later than one year after it is enacted and every two years thereafter, thus incorporating a ratcheting mechanism that allows the rate-setters to adjust for technological advances, bottlenecks in supply chains, changes in demand, and other unforeseen stimuli that might necessitate a rate revision.

According to a statement released by the bill’s co-sponsors:

“Enacting a federal renewable-energy payments policy would streamline what could become a patchwork regulatory structure and an unstable investment climate for the U.S. domestic renewable energy market. It also would complement incentives for renewable-energy deployment, such as existing federal-tax credits as well as proposed plans to cap carbon emissions and set federal renewable-electricity requirements, among others.”

Governor Jim Doyle's Task Force on Global Warming

August 12, 2008

by Paul Gipe

Governor Jim Doyle's Task Force on Global Warming has called for implementation of Advanced Renewable Tariffs to encourage the development of the state's renewable energy resources.

The recommendation is contained in a massive new report on how Wisconsin can reduce its emissions of global warming gases. The call for Advanced Renewable Tariffs, or renewable energy payments, is but one of many measures recommended.

However, the recommendation is the first time that an advisory committee to a U.S. governor has formally endorsed the policy common in continental Europe. It follows on the California Energy Commission's proposal of feed-in tariffs as a remedy for the failures of the state's Renewable Portfolio Standard, and premier Gordon Campbell's call for feed-in tariffs in the Canadian province of British Columbia.

The action is another sign of growing acceptance of the policy mechanism that has fueled the rapid growth of Germany and Spain's renewable energy industry.

Implicit in the task force's recommendation is that Wisconsin's Public Service Commission has the authority to establish feed-in tariffs without specific enabling legislation. The PSC has already initiated a proceeding that may explore how to design the program.

Support for inclusion of the recommendation in the Task Force's report came from RENEW Wisconsin and Clean Wisconsin. RENEW Wisconsin was the first non-governmental organization in the U.S. to propose a policy of Advanced Renewable Tariffs when it filed testimony with the PSC in the fall of 2006. At the time, RENEW Wisconsin's Michael Vickerman argued that renewable tariffs should be based on the cost of generation. His filing was a significant departure from the position of most American NGOs involved in renewable energy rate cases, putting RENEW in line with its Canadian and continental European colleagues.

Governor Doyle's task force accepted this reasoning and specifically recommends "that these advanced renewable tariffs should be based upon the specific production costs of each particular generation technology, include a return comparable to the utilities' allowed returns, and be fixed over a period of time that allows for full recovery of capital costs."

Projects developed under Wisconsin's proposed renewable tariff program will be limited to 15 MW.

The task force "recognized that Advanced Renewable Tariffs would likely result in increased costs per unit of electrical output compared to utility-scale renewable projects, but that these costs are justified by the economic and environmental advantages from encouraging distributed small-scale generation."

For more information contact Michael Vickerman, RENEW Wisconsin, at 608 255 4044.