Friday, November 30, 2012

Feed-in tariffs are fair and help everyone

A feed-in tariff (FiT) is a utility payment that gives solar rooftop owners (i.e. potentially you and I) a fair market price for the energy we generate, as opposed to the meager "net-meter" credit currently available in the US.   In contrast, utility scale solar and wind generators are eligible for long term (10-20 year) Power Purchase Agreements (PPA) with utility companies.  PPA's guarantee a profitable per kWhr return on investment at rates that are usually undisclosed to ratepayers.  Yet proposals to give a fair deal to smaller scale, distributed providers are met with cries of "unfair".  In plain language, Paul Gipe points out the hypocrisy.  Reposted below with permission from the author.
Carlo Voli on the rooftop of the Fabric of Life building, Edmonds, WA (Photos by Bryan Briscoe)

Why FITs are Fairer than Tax-Credits and Net-Metering

November 30, 2012
By Paul Gipe

Critics of feed-in tariffs from the fossil fuel and nuclear industries--and even some ill-informed renewable energy advocates--charge that feed-in tariffs (FITs) are "unfair".
This argument against FITs has been used in the past against all renewable energy policies, including net-metering and tax credits.

The short answer is FITs are Fair. FITs don't hurt the poor. See Do feed-in tariffs hurt the poor?

FITs, in fact, are more egalitarian than other renewable energy policies. They are certainly more egalitarian than the Renewable Portfolio Standards used in North America that restricts renewable energy to multinational corporations.

It is true that net-metering and tax credits are unfair.

Tax credits only benefit those who pay taxes. If the poor don't pay taxes they can't use the tax credits without resorting to complex and costly leasing arrangements that primarily benefit the leasing company.

Net-metering in California has been called solar for the rich. See Solar for Energy Hogs: The California Example by Steven Letendre. Net-metering takes customers out of the distribution systems' rate base, leaving the remaining customers to pay for the distribution system. As more and more up-scale residents install net-metering systems, whether a wind turbine or solar panels, they leave more of the costs on those left behind-those who can't afford solar systems or those who can't install solar themselves. Apartment dwellers and renters can't use net-metering, nor can those whose home is shaded by a leafy canopy of trees.

FITs, when well designed, enable ownership by everyone, even those who don't own their own property. See German Solar PV for Free Says Walter Fischer.

For example, German FITs are more egalitarian than net-metering and tax credits. They are certainly more egalitarian than the mix of piecemeal programs found in North America.

The proof of this is the widespread ownership of renewables in Germany. See "Citizen Power" Conference to be held in Historic Chamber Where World's First Feed-in Law Was Enacted. Nearly two-thirds of solar PV in Germany is owned by farmers and individual citizens. That's just solar. 54% of wind generating capacity in Germany is owned by farmers and citizens. In contrast, less than 2% of wind in the US is directly owned by American citizens. The percentage of local ownership in German is even higher for biogas: 72%.

Advocates of the poor and disadvantaged in California want their communities to benefit from FITs directly. See California Feed-in Tariff for Poor Communities Passes Assembly. They call their proposal "Solar for All" because it specifically enables their participation in the renewable energy revolution.

FITs also enable "greenfield" projects that net-metering does not. FIT projects don't need to be tied to a specific property or utility's "meter". Coops, community groups, and limited partnerships can build projects that they own together when their individual members may not be able to put solar or a wind turbine on their own property. Such projects may use biomass, biogas, wind, or solar. They are not limited to solar only.

Most importantly, the status quo is particularly unfair. Inaction on renewables penalizes the poor the most. The status quo burdens the poor and disadvantaged with the emissions from fossil fuels and the risks from nuclear power as well as dooms them to endure crippling price increases in the future.


Anonymous said...

Yay for FITs

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