North American feed-in tariff policies take off
by Ben Block – World Watch Institute – August 12, 2009

Clean energy advocates in Europe have long considered the feed-in tariff as an antidote to the industrial world’s fossil fuel dependency. Now, the United States and Canada are starting to catch on as well.

Feed-in tariffs (FITs) guarantee that anyone who generates electricity from a renewable energy source—whether they are a homeowner, small business, or large electric utility—is able to sell that electricity into the grid and receive long-term payments for each kilowatt-hour produced. Payments are set at pre-established rates, often higher than what the market would ordinarily pay, to ensure that developers earn profitable returns.

The FIT is credited for the rapid deployment of wind and solar power among world renewable energy leaders Denmark, Germany, and Spain this past decade. Similar policies have since been adopted by many other countries, leading the FIT to become the most prevalent tool for promoting renewables.

In North America, its adoption has been relatively slow. As public support for renewable energy increases, however, more governments are adopting FIT policies—often as a complement to the widely used Renewable Portfolio Standards (RPS) that require utilities to purchase minimum amounts of renewable electricity.

Several U.S. states and Canadian provinces began serious consideration of the FIT last year. More than a dozen states, one province, and numerous municipalities have since implemented some form of FIT.

“We’ve reached a tipping point where a feed-in tariff is no longer such an odd idea for America,” said Paul Gipe, the author of several books on wind energy and a FIT advocate. “In fact, it’s the best idea for rapid development of the massive amount of renewable energy that’s needed now.”

Renewable energy projects have often struggled to gain the confidence of investors, a problem the FIT policy addresses by ensuring that anyone with a sun-drenched roof or windy backyard may receive funding for a set period of time, normally 15-20 years.

“A lot of the charm of the feed-in tariff is solid, take-it-to-the-bank security and confidence for the investing community,” said U.S. Representative Jay Inslee, a sponsor of legislation that would establish a nationwide FIT, at a Washington, D.C. briefing earlier this month. “You get access to what is very difficult to get right now: financing.”

Not all FIT policies are created equal. The North American programs enacted to date often limit the level of economic incentive, the project size, and the renewable energy source, compared to large-scale programs enacted in Europe. Small-scale renewable energy advocates are praising FIT programs approved this year in Gainesville, Florida; Vermont; and Ontario as examples that North America should follow.

Gainesville, Florida

Florida, the Sunshine State, is blessed with bountiful solar resources to support renewable electricity. In the northern city of Gainesville, the municipal utility has helped ratepayers purchase their own solar panels since 1997. The program has partially financed some 40,000 watts of solar photovoltaic (PV) panels, but until recently there was no incentive for homeowners to install the panels properly.

“We weren’t getting energy bang for the buck,” said John Crider, an engineer with Gainesville Regional Utilities’ strategic planning department. “People could get the rebate check and put their solar panel in the shade.”

Last year, Assistant General Manager Ed Regan visited Germany, the world’s leader in grid-connected solar PV, on a trip coordinated with the Solar Electric Power Association. Impressed by Germany’s FIT policy, Regan convinced the Gainesville City Commission to approve the first FIT for solar PV in the United States. The utility promised that solar providers who signed up for the program before 2011 would earn $0.32 per kilowatt hour for 20 years, an estimated 4-6 percent return on investment.

“We assume, as time goes on, it will be cheaper to buy and install solar equipment,” Crider said. “The rate we pay goes down as well, to keep the return ideally constant.”

The utility, which is otherwise reliant on coal and natural gas for its power generation, wanted to be sure that electricity costs would not increase more than 1 percent due to the FIT, Crider said. The decision led the utility to limit the program to 4 megawatts total of solar PV each year. The program is already fully subscribed through 2015—a 24-megawatt commitment. Before the Gainesville program, the entire state of Florida had installed 2.5 megawatts of solar electricity capacity.

The FIT gained the city’s support mostly to boost the local economy. More than 220 companies in Florida produce, sell, or install solar PV products, according to the Apollo Alliance, a San Francisco-based organization that champions “green jobs” nationwide.

“Our primary motive is not to get the cheapest energy and keep profits high for investors, because we don’t have investors,” Crider said. “For the municipality, we have a larger vision…. Create a local, thriving marketplace for local solar providers.”

Vermont

With two-thirds of Vermont’s electricity contracts set to expire in 2012, the state was in a position this year to change its energy portfolio. Meanwhile, Vermont was far from its 2025 goal of 25-percent renewable energy—renewables were supplying less than 10 percent.

The state offered a “net-metering” program that allowed residents to feed renewably generated electricity into the grid, offsetting some or all of their electric bills. Hundreds of small-scale systems resulted, but these combined to meet a mere 0.02 percent of the state’s electricity load.

“We were trying to alter the entire energy paradigm, but we were on a very slow trajectory,” said Andrew Perchlik, executive director of Renewable Energy Vermont.

The net-metering program did not allow participants to turn a profit, a problem given that small-scale power generation projects required the same costly permits as commercial power plants. Too few Vermonters had reason to participate.

Legislators had considered adopting a FIT, but the policy lacked grassroots support until a new coalition of business leaders, environmentalists, and utility executives formed a renewable energy consensus. The group met before the state’s politicians convened in January and settled on the framework of what would become Vermont’s first FIT, which they call a “standard offer.”

“Increasingly, utilities are realizing that customers are asking for renewable energy. In the long run, it will be less expensive than the alternative,” said Robert Dostis, a former state House of Representatives energy chairman who now directs external affairs for Green Mountain Power. “By being at the table, we were able to contain the enthusiasm of some of the renewable energy advocates and have them understand the rate impact of some of their ideas.”

The legislature settled on a 50-megawatt program that limited individual projects to 2.2 megawatts each. Starting in January 2010, 20-year contracts will be available for developers of large- and small-scale wind, solar, and biogas power projects.
Opponents said the public would reject the idea of paying more for renewable energy projects—the highest rate, $0.30 per kilowatt-hour of solar energy, far exceeded the $0.04 many ratepayers were being charged at the time. “That was not the case at all,” Perchlik said. “Some 80 percent wanted renewable energy, and they were willing to pay 5 percent more.”

The energy bill cleared the Democrat-controlled legislature easily. In May, Republican governor Jim Douglas allowed the bill to become law despite his concerns about it. He said the FIT “fails to recognize the current viability of renewable energy in a competitive setting and will needlessly increase costs to Vermont consumers so as to subsidize this one favored business sector.”

Although program specifics have yet to be finalized, Vermonters are expressing growing interest. Dostis predicts that the program will fulfill its 50-megawatt limit by 2012. “I think this is really going to propel development,” he said.

Ontario

During the 2007 provincial campaign, Ontario’s Liberal party promised it would close every coal-fired power plant across the province by 2014. Premier Dalton McGuinty said the plant closures would benefit human health and meet half of the party’s commitment to reduce greenhouse gases 15 percent below 1990 levels by 2020.

Following the election, the Liberal party secured 71 of the Legislative Assembly’s 107 seats. Despite clear political support, shuttering 18 percent of the province’s power source is no easy feat. The Liberals had already pledged to close the coal plants during their previous term, only to push back their own deadline.

Since 2006, the Ontario Power Authority (OPA) began offering a FIT system that provided 20-year payments of 11 Canadian cents (US$0.09) per kilowatt-hour for small-scale hydro, wind, and biomass power projects, and 42 Canadian cents (US$0.34) for solar projects. More than 1,000 megawatts of projects were installed during the first year, but renewable energy advocates criticized the payments, particularly for solar energy, as too small.

In March, the province announced that its proposed Green Energy and Green Economy Act would establish a revised FIT modeled after Germany’s. The bill set payments for on-shore, off-shore, and community-based wind power; rooftop PV and ground-mounted PV power; small hydropower; and various biomass power options. Payments would depend on the project size for each technology.

The proposal was instantly applauded by renewable energy supporters. “The Green Energy Act is the most progressive renewable energy policy in North America in three decades,” said Gipe, who advised the Ontario Sustainable Energy Association. “There was a decision to pay what it costs to develop renewable energy. It’s clear to the public, transparent to everyone.”

An OPA-conducted survey found 150 developers who were interested in the new FIT and were willing to construct 15,000 megawatts of electric capacity—enough to produce the equivalent of 20 percent of Ontario’s electricity consumption.

Gipe also solicited support from Ontario’s farmers, whom he advised would be eligible to receive payments for wind turbines on their property.

“I went to every farm group I could,” Gipe said. “This is an opportunity to revitalize the Ontario economy … not just to revitalize the rural economy, but the entire industrial economy of Ontario.”

The proposal was approved in May. It now stands as the most generous FIT policy in North America.

The very last sentence of this article notes that the “Oregon legislature is currently considering a five-year pilot program to try out the [feed-in tariff] model.”  This is potentially good news but until Oregon and all other states adopt a system where energy can be sold to utility companies at a rate that is high enough to make all sizes of solar installations “profitable”,  like Germany for example, solar will continue to lag behind wind and other renewable energy sources.

# # #

Is Solar Power Only A Rich Man’s Renewable Source?
By Rob Manning – OPB News – June 8, 2009

Turning energy from the sun into electricity is one of the keys to saving the earth, according to renewable power advocates, and if solar is going to take off in the Northwest, it will mean re-shaping our relationship with energy.

Solar energy is considered an intermittent resource, although one of the more predictable ones, since you know it produces electricity only when the sun is up.

And solar is about as renewable as it gets – when the sun comes up, the rays get captured in panels and converted into energy.

Even factoring in the cost of producing the panels, solar energy is several times more efficient than fossil fuels. And unlike wind — which can kill birds — or hydro — which can kill fish — there’s no known collateral damage from solar installations.

But right now, solar doesn’t even register as one of the seven biggest sources of electricity in Oregon.

Portland General Electric’s Mark Osborne.

Mark Osborne: “We’re continually looking in areas – some of the potentials might be near our Boardman power plant, because there’s transmission available. The solar resource is a little better over there than it is on the west side of the Cascades.”

The closest thing to a solar power “plant” right now is PGE’s warehouse rooftop in Northeast Portland. It’s accessible only by a ladder.

Rob: “Nice view from up here.”

Mark Osborne:  “Oh yeah, a view of Mount Hood. Beautiful view of the Columbia River, on a beautiful sunny day like this, it’s a great place to hang out. A little warm, but nice….”

PGE leases this roof from the multi-national corporation, Pro Logis. The technology is a little different, too. Rather than solar panels, the roof is carpeted with thin-film solar absorbers.

Mark Osborne: “You can walk on it, that makes it very flexible, for doing work on a roof, you don’t have to remove it to do work on a roof.”

Osborne says upfront installation costs can make projects like the Pro Logis lease too expensive. He says PGE’s focus for now is to allow customers to get discounts on their power bills for solar they generate themselves.

Pat Schellerup and Heath Kearns are with “Mr. Sun Solar.” They’re looking over solar panels their company put on another roof in Northeast Portland.

Heath Kearns says these conventional photovoltaic solar panels will reduce the electricity bills of future tenants of this building.

Heath Kearns: “Along with the fact that it’s a very efficient building the way they’ve constructed it, it should cover about half the energy needs of the dwellings.”

Mr. Sun also installs another kind of solar — called “solar thermal.”

Pat Schellerup: “We wish that people would recognize solar thermal more.”

Mr. Sun general manager, Pat Schellerup says solar thermal focuses the sun’s rays to heat up water, for showers, or your dishwasher.

Pat Schellerup: “When people hear the word ‘solar,’ they think of the nice shiny electric panels, and it’s just kind of what everybody knows.”

But sales manager Heath Kerns says older solar thermal technology does a much better job of cutting hot water costs than newer photovoltaic solar panels.

The cost per kilowatt hour for solar in the Northwest ranges from a high of 21 cents for PV all the way down to 2 cents for the cheapest solar thermal.

Heath Kearns: “You know, this system, this single collector, with a 120 gallon tank down there, is going to produce 1900 kilowatt-hours a year. You know, that’s almost the same amount of energy as all nine of these panels are going to produce in a year.”

But Kearns says it’s gotten harder to sell people on solar thermal, because federal tax breaks have equalized the cost of the two technologies.

But for a lot of people, all solar is still too expensive.

Mark Pengilly: “The roof surfaces that are most suitable are this one here, and then here on the south-facing covered porch. And together, I could get about four kilowatts, on those two surfaces.”

Mark Pengilly’s home is in the hills northwest of Portland, where he lives with his wife, and his Rottweiler.

Pengilly says he and a like-minded neighbor went to solar workshops with the intention of putting panels on both their roofs.

Mark Pengilly: “We invited three solar installers to come out and do bids, and when we looked at the bids, that even though we’d really like to do this, it didn’t make financial sense, it didn’t pencil out, because it would be nearly 30 years for us to get our money.”

Pengilly says his system would have cost him $14,000 up front, and later, he’d get up to $10,000 of that back – over a few years – through tax incentives.

The last four grand he’d recover – very slowly – by cutting his electric bill by about $25 a month.

Mark Pengilly: “In fact, one of the installers said to me ‘this is, essentially, a rich man’s game.’ If it’s only a rich man’s game, we aren’t going to be able to solve the global warming crisis. We need to have a solution that enables everybody to contribute to the solution.”

There’s a variety of ideas for changing the system — like expanding leasing by utilities or third party companies. They’d make money by funding the upfront costs but reaping the long-term payback from solar. 

Pengilly likes the German model. In Germany, where solar power is expanding fastest, homeowners are guaranteed payment by the kilowatt for all the solar energy they produce.

Big industry players, like Boris Klebensberger, with the German panel maker, Solar World – like that model, too. At last year’s “ribbon cutting” for Solar World’s big new plant in Hillsboro, Governor Ted Kulongoski and Senator Ron Wyden listened as Klebensberger emphasized that U.S. citizens should have a right to sell solar electricity. 

Boris Klebensberger: “It’s a civil right. You can carry weapons – fine. Not that I’m not worried, huh? But I would also far more appreciate if there was also the right for every American citizen to also plug their PV system into the system. And therefore help us and you, all of us together, to make the change.”

Utilities have raised questions about the concept known as feed-in tariffs.

The utilities wonder how they’d work, both financially, and from an operational standpoint.

Solar savvy homeowners like Mark Pengilly say the utilities are just reluctant to give up their monopoly on power production.

Vermont and the city of Gainesville, Florida, recently approved feed-in tariff policies.

The Oregon legislature is currently considering a five-year pilot program to try out the model.

EWEB a pioneer in renewable energy payment plans
By Bill Welch – Guest Viewpoint – Register-Guard – November 25, 2008

Gov. Ted Kulongoski recently unveiled his climate change goals for the 2009 Oregon Legislature. One of the goals — developing a pilot program to allow Oregonians to sell renewable power directly to their local utility — prompted a guest viewpoint by Jennifer Gleason of the Environmental Law Alliance Worldwide (Register-Guard, Nov. 18).

Gleason’s central point was that the success of a pilot program hinges on the need for a renewable energy payments policy, also known as REP. In such a policy, utilities purchase all of the output from customers’ generation systems “at a fair price for an extended period.” She correctly identified several elements to make sure a policy works.

One need not look far to find an example of a successful pilot program. That’s because the Eugene Water & Electric Board already completed a pilot program almost identical to what the governor and Gleason are suggesting. The utility also has an REP in place for customers who wish to install solar or other renewable generation systems.

The utility initiated its pilot program, the EWEB Photovoltaic Generation Program, in 2001. EWEB provided access to its electric distribution system, provided 10-year contracts to purchase all the output of photovoltaic generation systems at almost twice the average retail rate, and worked with local contractors to implement the program — all of the key elements Gleason identified.

In 2007, EWEB created a full program modeled after the pilot program. EWEB’s Photovoltaic Generation Program currently is the only one of its kind in Oregon.

Since 2001, EWEB’s customers have installed 24 photovoltaic generation systems using this innovative program. Four additional generation projects are under construction.

Together, the projects will generate approximately 1.8 million kilowatt-­hours of electricity per year. All those kilowatt-hours flow directly into EWEB’s system and are purchased at rates that are set in 10-year power purchase contracts. In 2008, the generation purchase rate is almost twice EWEB’s average retail rate.

An additional 63 smaller renewable generation systems, producing more than 300,000 kilowatt-hours per year, are installed in a net-metered configuration, in which EWEB purchases power that is not used first by the homeowner or business.

EWEB has a board-approved customer generation policy that includes an REP as well as other options to allow customers to generate power. The policy is available on EWEB’s Web site, www.eweb.org, along with examples of power purchase contracts, program information and requirements, and links to tax credit sites.

EWEB is committed to developing renewable resources and energy efficiency to meet the power needs of its customers. For the majority of home­owners and businesses who want to take personal action, the most viable options continue to be efficiency improvements and solar.

EWEB’s existing solar generation program can serve as a model for state, local and utility efforts to create workable incentives for achieving local, renewable energy development.
Bill Welch is the energy management services engineering supervisor for the Eugene Water & Electric Board.

Let all join in renewable revolution
By Jennifer Gleason – Guest Viewpoint – Register-Guard – November 18, 2008

Every Oregonian should be able soon to generate renewable energy from the sun and sell it to their local utility at a fair price.

Gov. Ted Kulongoski’s recently announced plan to protect the climate includes a pilot project that could make it possible for everyone in Oregon — including families, school districts, farms, vineyards, businesses and nonprofit organizations — to help generate energy from the sun.

If done well, this pilot project will be modeled on policies adopted in Europe that have made Germany the world leader in solar energy production. A well-crafted production incentive policy (known as a renewable energy payment, or REP, policy) guarantees that utilities will buy renewable energy — in this case, solar — at a fair price for an extended period.

The price is set to ensure that people generating the electricity will make a profit, but not a windfall profit.

With this guarantee, people are willing to invest in the equipment needed to produce renewable energy. Experience in Germany has shown that REP policies are the most effective and efficient way to promote the generation of electricity from renewable sources.

The Environmental Law Alliance Worldwide has been studying REP policies around the world to determine what makes such a program successful. We have been helping environmental advocates around the world promote renewable energy payment policies, and we are excited to bring these lessons home to Oregon.

A well-designed REP policy would help put Oregonians to work building, installing and servicing the equipment that makes generating and selling renewable energy possible. Other states — including Michigan, Minnesota, Florida and Hawaii — are considering adopting similar programs. Oregon should move quickly and be a leader so that its businesses can get a head start in producing the equipment needed to generate renewable energy.

Oregon’s policy should give all Oregonians the opportunity to participate in this program. The Legislature may be tempted to limit the policy to investor-­owned utilities (PacificCorp and PGE) that distribute electricity to the Portland area and a few other parts of the state, but we should demand that all Oregonians can help meet our energy needs.

Those of us living in Eugene want to be able to afford to put solar panels on our rooftops, and farms and vineyards across the state should be able to sell electricity to their local utilities, too. The program should make it simple for anyone to participate. Ideally, it should go beyond solar and include other renewables as well.

REP policies differ from “net metering,” which already is available from Oregon utilities, in several important ways. Most importantly, Oregon utilities are not required to pay for excess electricity generated by the customers under net metering, and net metering is only for electricity that is primarily generated to offset part or all of the customer’s electricity use.

Under an REP policy, Oregonians would sell all of the electricity they generate to the utility at a price that would make it profitable to generate renewable electricity, and then they would buy back from the utility the electricity they need at the regular retail price.

There are several other important benefits to REP policies not included in net metering that make the governor’s plan a great step forward. Working with partners in Europe, the Environmental Law Alliance has identified three key elements that are required to make a renewable energy payment program succeed.

The policy must ensure that people who generate solar power are able to connect to the electric grid to deliver this power back to utilities. We must ensure that the grid is maintained and that access is transparent and fair.

The policy must set a fair price for purchasing electricity and guarantee that price for an extended period, so people are willing to invest in generating solar power. The price must include built-in adjustments over time and priority purchase for renewables.

The policy must work well with the state’s renewable energy goals and programs, and it must support local industry.

More can be learned about designing a strong REP policy at onlinepact .org. ELAW is partnering with the Alliance for Renewable Energy to promote strong REP policies in North America. Learn more about REPs at www .allianceforrenewableenergy.org.

Oregon has a great opportunity to lead the way in meeting climate challenges. A strong renewable energy payment policy will give all Oregonians the opportunity to generate renewable energy to meet our energy needs.

It will put Oregonians to work and help Oregon become a leader in building a green, sustainable economy.
Jennifer Gleason of Eugene is a staff attorney at the Environmental Law Alliance Worldwide (www.elaw.org).

Let all join in renewable revolution
By Jennifer Gleason – Guest Viewpoint – Register-Guard – November 18, 2008

Every Oregonian should be able soon to generate renewable energy from the sun and sell it to their local utility at a fair price.

Gov. Ted Kulongoski’s recently announced plan to protect the climate includes a pilot project that could make it possible for everyone in Oregon — including families, school districts, farms, vineyards, businesses and nonprofit organizations — to help generate energy from the sun.

If done well, this pilot project will be modeled on policies adopted in Europe that have made Germany the world leader in solar energy production. A well-crafted production incentive policy (known as a renewable energy payment, or REP, policy [also known as a feed-in tariff, or FIT]) guarantees that utilities will buy renewable energy — in this case, solar — at a fair price for an extended period.

The price is set to ensure that people generating the electricity will make a profit, but not a windfall profit.

With this guarantee, people are willing to invest in the equipment needed to produce renewable energy. Experience in Germany has shown that REP policies are the most effective and efficient way to promote the generation of electricity from renewable sources.

The Environmental Law Alliance Worldwide (ELAW) has been studying REP policies around the world to determine what makes such a program successful. We have been helping environmental advocates around the world promote renewable energy payment policies, and we are excited to bring these lessons home to Oregon.

A well-designed REP policy would help put Oregonians to work building, installing and servicing the equipment that makes generating and selling renewable energy possible. Other states — including Michigan, Minnesota, Florida and Hawaii — are considering adopting similar programs. Oregon should move quickly and be a leader so that its businesses can get a head start in producing the equipment needed to generate renewable energy.

Oregon’s policy should give all Oregonians the opportunity to participate in this program. The Legislature may be tempted to limit the policy to investor-­owned utilities (PacificCorp and PGE) that distribute electricity to the Portland area and a few other parts of the state, but we should demand that all Oregonians can help meet our energy needs.

Those of us living in Eugene want to be able to afford to put solar panels on our rooftops, and farms and vineyards across the state should be able to sell electricity to their local utilities, too. The program should make it simple for anyone to participate. Ideally, it should go beyond solar and include other renewables as well.

[REP / FIT is different from Net Metering]

REP policies differ from “net metering,” which already is available from Oregon utilities, in several important ways. Most importantly, Oregon utilities are not required to pay for excess electricity generated by the customers under net metering, and net metering is only for electricity that is primarily generated to offset part or all of the customer’s electricity use.

Under an REP policy, Oregonians would sell all of the electricity they generate to the utility at a price that would make it profitable to generate renewable electricity, and then they would buy back from the utility the electricity they need at the regular retail price.

There are several other important benefits to REP policies not included in net metering that make the governor’s plan a great step forward. Working with partners in Europe, the Environmental Law Alliance has identified three key elements that are required to make a renewable energy payment program succeed.

The policy must ensure that people who generate solar power are able to connect to the electric grid to deliver this power back to utilities. We must ensure that the grid is maintained and that access is transparent and fair.

The policy must set a fair price for purchasing electricity and guarantee that price for an extended period, so people are willing to invest in generating solar power. The price must include built-in adjustments over time and priority purchase for renewables.

The policy must work well with the state’s renewable energy goals and programs, and it must support local industry.

More can be learned about designing a strong REP policy at Policy Action on Climate Toolkit.  ELAW is partnering with the Alliance for Renewable Energy to promote strong REP policies in North America. Visit Alliance for Renewable Energy to learn more about REPs.

Oregon has a great opportunity to lead the way in meeting climate challenges. A strong renewable energy payment policy will give all Oregonians the opportunity to generate renewable energy to meet our energy needs.

It will put Oregonians to work and help Oregon become a leader in building a green, sustainable economy.

Jennifer Gleason of Eugene is a staff attorney at the Environmental Law Alliance Worldwide (www.elaw.org).