RENEWABLE ENERGY PAYMENTS (REPs)

What are REPs?

Since 1991, Germany, Spain, Denmark, and over 40 other nations, states, and provinces, have pioneered legislation that have proven to promote the fastest, cheapest, and widest growth of renewable energy. In many of these countries these policies are called "Feed-In Tariffs" (FITs). Producers of renewable energy are paid a premium rate or "tariff" for each kilowatt of energy they "feed into" the grid. Here in North America FITs are being called, "Renewable Energy Payments" (REPs). The name has changed but the fundamental principles of these policies stay the same:

Everyone who produces renewable energy is guaranteed that they can connect to the power grid and sell their energy to their utility company. There is no limit to the amount of renewable energy that can be sold to utility companies.
Utility companies sign 15-20 year contracts with all their renewable energy producers. All contracts are transparent and open for inspection.
The contracts include long-term agreed upon prices that the utility companies will pay for the energy they buy.
The prices are set high enough to be an incentive to new producers and for existing producers to expand their production capacities. Prices vary according to the source of the energy (i.e, sun, wind, water, bio-mass, etc.) and the size of the energy-producing installation.
The utility companies can recoup their increased costs of paying higher prices for renewable energy by spreading these costs among all their customers.
An Independent Review Board is established by the government that periodically sets the prices and terms for new contracts.

How do REPs work?

Renewable Energy Payments are the mechanisms or instruments at the heart of specific state, provincial or national renewable energy policies. REPs are incentives for homeowners, farmers, businesses, etc., to become producers of renewable energy, or to increase their production of renewable energy. As such, they increase our overall production and use of renewable energy, and decrease our consumption and burning of fossil fuels.

Why REPs?

There are many reasons why Renewable Energy Payments (REPs), in Europe called Feed-in Tariffs (FITs), are the most successful renewable energy (RE) incentive in the world. Here are a just a few:

JOB CREATION Germany introduced this type of legislation in 1991 and it has made them the world’s leading producer of RE technology. FITs are credited with creating at least half of their quarter-of-a-million RE jobs. These jobs increased 40% between 2004 and 2006 alone. Most of these new jobs are in the former East Germany, an area being revitalized by their renewable energy economy. All levels of jobs are created including high-skilled positions in engineering, manufacturing, agriculture, and electronics.

SIMPLICITY One important reason REPs have been so successful is their simplicity. With REPs, when anyone generates power from a RE system that is passed through to their local grid, the utility company cuts them a check! RE businesses find this model especially appealing because it makes anyone with a viable RE site and a willingness to invest in their future an electricity entrepreneur. REP laws by their very nature are easy to support because they need little explaining and are relatively simple for utilities to implement and operate. This is true whether the RE producer is a residential homeowner with a small solar system or a huge commercial business with thousands of panels on their roof.

STABILITY & INVESTMENT SECURITY REP incentives also have massive appeal to investors and lenders. This is because the incentives are fixed for long time horizons, typically 20 years, which provides a guaranteed revenue stream that can be borrowed against easily. Unlike Renewable Energy Certificates (RECs) which have annually fluctuating values through a trading mechanism, REP incentives never change and never require any administration or additional cost. As long as the RE system is generating electricity it continues to make the system owner a guaranteed return on their investment. With revenue stability of this caliber and a market that is not constrained in size, institutional investors can accurately model the financial risk and returns associated with investing in RE technologies and fund the industry where the best market opportunities exist in real time. In Germany, FIT policies have generated 3.3 billion Euros of investment in RE, with a return on the investment estimated to be 9.3 billion Euros.

STAY-AT-HOME REVENUE With REPS, the revenue from producing renewable energy will stay in the state or province where it is produced. This will create "local wealth" and stimulate the local economy.

FAIRNESS Critics in the US often complain that REPs are too socialistic by design because they “fix the price” instead of letting the market dictate their value. Yet this couldn’t be farther from the truth. In fact, REPs actually allow us to make a FAIRER comparison of the true costs for traditional energy sources such as nuclear, natural gas, coal, and oil. Rather than attempt to figure out how much environmental damage they each do respectively, the REP incentive simply allocates a fair “avoided cost” to RE technologies for the total environmental impact that would otherwise be borne by society by not using them. So in reality the REP is providing an incentive that brings parity to the incentives, tax breaks, and environmental damage done by traditional energy sources that are never reflected in their market prices.

EQUALITY REPs create a level playing field for all different sizes of renewable energy producers. It encourages individuals, small businesses and larger businesses to become RE producers and rewards them all. By ‘democratizing’ and spreading out energy production, REPs stimulate the green market economy and keeps a few large corporations from controlling the market and the profits. With REPs in place, everyone can profit from creating renewable energy.

REPs WILL SPEED UP OUR SHIFT FROM FOSSIL FUELS TO CLEAN RENEWABLE ENERGY. IN THIS WAY, REPs WILL ALSO:

PROTECT OUR HEALTH We will be putting less particulates into the air since we will be burning less oil, coal and natural gas. This will mean less suffering from asthma and other breathing disorders and reduced medical and health insurance costs.

REDUCE GLOBAL WARMING Burning fossil fuels releases 75% of the greenhouse gases that are heating the planet. It is estimated that by switching to renewable energy we can cut CO2 emissions in half by 2030. In 2006, with REPs in place, Germany alone saved 100 million tons of CO2 from entering the atmosphere.

REDUCE CONFLICTS OVER ENERGY The world’s demand for energy is increasing faster than expected, while our supplies of oil, coal and natural gas are declining. As nations compete for energy, there may well be more conflicts, wars and violations of human rights. Increasing the production of renewable energy will help states and nations meet their own energy needs.

CREATE ECONOMIC SECURITY Renewable energy production will lesson a community’s or nation’s vulnerability to increasing fossil fuel prices and will increase self-reliant economic growth. Those who install renewable energy the soonest will save the most. The prices of fossil fuels and nuclear energy are expected to rise as their supply diminishes, and the costs of extraction, environmental protection and cleanup increase. The costs for renewable energy are expected to decline due to economy of scale and technological progress.

INCREASE HUMAN SECURITY The natural disasters triggered by climate chaos are responsible for 150,000 deaths each year, and cause millions of people to seek refuge elsewhere. There are currently more ‘environmental refugees’ than ‘political refugees’. The Intergovernmental Panel on Climate Change (IPCC), recipients of the 2007 Nobel Peace Prize, predict 50 million environmental refugees by 2010, and 150 million by 2050. The hardships and financial costs for the refugees and those who provide aid will be staggering.

STABILIZE ENERGY COSTS Communities that use locally produced renewable energy have more stable energy costs. Once the systems are set up, their renewable fuels such as sun and wind are low cost or free. Overall, energy costs will be more predictable and controllable, creating economic stability.

CREATE FLEXIBILITY Green energy resources such as sun, wind, water, geothermal, and biomass can be combined depending on their availability. They can provide heating, cooling, electricity, and fuel for machinery, vehicles and other transportation. Renewable Technologies can be flexibly designed to fit the landscape, architecture, machines, and vehicles—increasing efficiency and autonomy.