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California Commission Recommends Feed-in Tariffs & Other FIT News

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  • Paul Gipe
    CEC Recommends Cost-Based Feed-in Tariff Tariffs for Projects up to 20 MW
    Message 1 of 1 , Jan 6, 2009
      CEC Recommends Cost-Based Feed-in Tariff

      Tariffs for Projects up to 20 MW
      Tariffs Differentiated by Technology and Project Size

      At the California Energy Commission's final workshop on feed-in tariffs December 1, 2008, the presiding commissioners accepted the staff's recommendation that California implement a system of feed-in tariffs.

      The staff will complete a final report in early 2009 and will submit it for approval by the full commission. The report will then be incorporated into the 2009 Integrated Energy Policy Report, the IEPR.

      The recommendation calls on the Public Utility Commission (PUC) to immediately implement a system of feed-in tariffs for projects up to 20 MW in size. The program should require a "must take" provision and tariffs should be based on the cost of generation and not to the Market Price Referant, the PUC's term of art for wholesale avoided cost.

      The CEC also recommended that the CEC and the PUC "continue" to evaluate feed-in tariffs for projects greater than 20 MW.

      The PUC is not bound to follow CEC recommendations and both institutions jealously guard their respective jurisdictions.

      The CEC's 2008 Integrated Energy Policy Report Update was approved on November 20, 2008. The update is an interim report between the full IEPR that is issued every two years.

      The 2008 Update discusses the CEC's feed-in tariff workshops and makes the same recommendations (page 29) that were contained in the December 1, 2008 workshop.

      California's institutional wheels are grinding on and it's likely that some kind of feed-in tariff system differentiated by technology and project size will move through the policy machinery in 2009.

      Hawaii Moves Toward Feed-in Tariffs by Mid-Summer 2009

      On October 20, 2008 the Governor of Hawaii, Linda Lingle, the Department of Business Economic Development and Tourism, the Division of Consumer Advocacy of the Department of Consumer Affairs, and the Hawaiian Electric Company (HECO) signed an agreement to implement a feed-in tariff policy in 2009.

      The agreement, say the signatories, is to move the island state away from dependence on imported oil, and toward indigenous renewable resources of which the islands have abundance.

      The state and HECO agreed to accelerate the development of renewable resources on all the islands in the Hawaiian chain.

      The agreement specifically binds HECO to implement a series of feed-in tariffs to "dramatically accelerate the addition of renewable energy from new sources". The parties further agreed that the feed-in tariff "should be designed to cover the renewable energy producer's costs of energy production plus some reasonable profit."

      The agreement commits Hawaii to complete regulatory review by March, 2009 and to implement the resulting feed-in tariffs by July.

      If implemented as conceived, Hawaii will have moved further and faster on feed-in tariffs than any other state.

      Power Magazine: Feed-in tariff coming to America? 
      December 1, 2008

      Frank N. Laird, PhD

      Europe has seen tremendous activity in the development of renewable energy as a response to climate change. As a result, some of the most important renewable energy firms operating in the U.S. are based in Denmark, Germany, and Spain. Stable, high-level policy is one reason Europe dominates this sector. . .

      Gainesville Moves Rapidly To True Solar Tariff

      While others talk, Gainesville, Florida is moving steadily toward implementing a true tariff for solar photovoltaics.

      On December 18, the City Commission approved a higher tariff of $0.32/kWh under Gainesville Regional Utilities' (GRU) proposed feed-in tariff program. GRU had earlier proposed a tariff of $0.26/kWh with a 20-year contract.

      Solar installers had urged GRU and the City Commission to reconsider the tariff arguing that even with the federal Investment Tax Credit, the tariff was too low to make a sufficient profit during the 20-year contract period.

      The City Commission agreed and has set January 15, 2009 for the first formal reading of GRU's proposal. They expect the policy to be formally approved March 1, 2009.

      There are several utilities in the upper Midwest offering solar PV tariffs of $0.25/kWh. The programs in Wisconsin and in Michigan's Upper Peninsula severely restrict the amount of solar PV capacity that can be installed. For example, Wisconsin Public Service's recently approved solar PV tariff is limited to only 300 kW.

      There is 300 kW of solar PV already operating in GRU's service area. GRU has also proposed grandfathering all net-metering customers into the program once it's underway.


      Feed-In Frenzy: A simple green tariff has transformed Germany. Why isn't Canada following suit? by Chris Turner

      CanWEA's WindVison 2025 Says FITs Best

      CanWEA criticizes RFPs and calls for procurement mechanisms that reflect best practices worlwide: feed-in tariffs. The comments are made in CanWEA's WindVision 2025, a report that lays out CanWEA's vision of where and how wind energy can be developed in Canada.

      CanWEA says . . .

      " In most of Canada, provincial governments have directed Crown utilities to procure increasing amounts of wind energy and other renewables through competitive tendering. At face value, it makes good sense to contract for renewable energy supplies at the lowest possible cost. On closer inspection, however, current procurement practices can have unintended consequences which make it harder to capitalize on wind power's full potential.

      With competitive tendering, utilities bring new wind capacity on stream in large chunks rather than in steady increments. While this may satisfy the utility's needs for more power, it means that equipment manufacturers face a 'boom and bust' scenario and an uncertain business climate that offers little incentive to set up facilities in Canada. This cycle of ups and downs also makes it difficult for wind energy developers to make long-term investment plans for Canada. Good wind projects which have passed the initial planning stage must sit on the shelf until new tenders are issued, by which time developers may well have placed their capital and people elsewhere. A procurement system which provided a more stable outlook and a steady flow of opportunities would encourage turbine and component makers to locate and produce in Canada and ensure that good wind energy projects move forward.

      Another downside feature of competitive tendering is that it is technically challenging and very expensive for bidders to participate. Responding to a Request For Proposal (RFP) for a major wind project will entail thousands of hours of expert time and costs running into millions of dollars. Not only does this take time and resources away from project development and stakeholder engagement, it gives a distinct advantage to large firms that have the financial capacity to carry these costs and may deter community groups, municipalities, co-operatives and Aboriginal communities from even taking part. One of the strengths of wind energy is that it can be deployed at varying scales by a great variety of potential project developers. Utilities and power authorities must adjust their procurement processes to ensure that it is not only the big players that can compete.

      Competitive tendering can also lead to higher costs for wind power projects. When Canadian utilities issue RFPs for new wind energy capacity, they commonly receive proposals equivalent to three to four times the amount of power they are actually seeking. So, competing is a risky business and bidders factor this risk into their price proposals. An effective procurement process should also look beyond price and factor in other variables like community support and local economic benefits.

      When it comes to procurement practices, experience in Europe may offer useful guidance to Canada. Wind energy projects in many European countries have an automatic right to connect to the grid and receive a fixed price (feed-in tariff) for their electricity production. If developers are willing to build wind farms at that price, they are free to do so and can start selling electricity as soon as projects are completed. The feed-in tariff system provides much greater certainty and lower risk as developers can easily project whether a project makes good business sense. So it's no surprise that countries which offer feed-in tariffs are attracting huge wind power investments. This underscores the need for Canada to rethink its procurement processes to improve our ability to compete for global wind energy investment.

      CanWEA calls on provincial governments to examine best practices in the world's leading wind energy countries and adjust their procurement practices to provide a stable and steady stream of opportunities and accommodate a wide range of potential wind energy project developers. New procurement processes should reward disciplined, long-term development proposals and consider factors such as project quality, economic and environmental benefits in addition to price."

      South African Feed-in Tariff Proposal as Bad as Feared

      South Africa's National Energy Regulator (NERSA) released its proposed feed-in tariff policy in early December, 2008. It is as bad as feared by renewable energy advocates. See

      While NERSA puts a bold face on its proposal and uses the language found in successful policies elsewhere, substance is lacking.

      The principal flaws are short contract terms, 15 years versus 20-year contracts in Germany and 25-year contracts in Spain, and low tariffs for wind, landfill gas, and concentrating solar.

      NERSA's proposal leaves out solar photovoltaics entirely.

      The tariffs proposed for wind energy and concentrating solar are significantly less than those in Europe.

      Wisconsin PSC approves FIT for PV

      Wisconsin's Public Service Commission approved new feed-in tariffs for Wisconsin Public Service and Wisconsin Power & Light on December 18, 2008.

      The new tariffs pay $0.25/kWh for solar electric generation. Unfortunately, the programs are severely limited to 300 kW in WPS case, and 683 kW in WP&L's case.

      Santa Monica To Study Feed Law

      Santa Monica's city council ordered staff to study the steps necessary to implement a feed-in tariff on December 2, 2008.

      The city, a part of the Los Angeles conurbation, joins a rapidly growing list of cities in California discussing renewable energy feed-in tariffs, including Palm Desert and Santa Monica's neighbor, the City of Los Angeles.

      Solar Santa Monica's advisory board includes Terry Tamminen, formerly a senior member of Governor Arnold Schwarzenegger's administration and an advisor to Florida Governor Charles Crist.

      The resolution emphasizes that the feed-in tariff could be part of the city's Solar Santa Monica program.

      "Request of Mayor Pro Tem Bloom and Councilmember O'Connor that the City Council direct staff to investigate and report back regarding appropriate steps to develop implementation strategies for a "feed-in tariff" for solar energy incentives.

      A feed-in tariff will allow any property owner and third party investor to earn a reasonable return for solar electric investments in settings that have, thus far, lagged behind in the Solar Santa Monica program and throughout the State of California. It will promote reaching the energy and climate protection goals of the California Solar Cities program, support California utilities in achieving renewable energy mandates and will catalyze the solar industry, creating sustainable green collar jobs that foster climate protection goals. Finally, a feed-in tariff will assist local governments in extending the benefits of low-cost solar renewable energy to moderate and low income individuals and families."


      National Audubon and Environmental Entrepreneurs Support Feed-in Tariffs

      Positive mention of feed-in tariffs as a valuable policy tool for developing renewable energy by E2 and the National Audubon Society indicates that the idea, once marginalized, has now become main stream.


      In setting out its priorities for 2009, Environmental Entrepreneurs (E2) is calling for an increase in distributed generation in California through a feed-in tariff.

      Calling itself the "independent business voice for the environment", E2 is an influential spinoff from the Natural Resources Defense Council (NRDC).

      The brief mention on E2's web site is the first time that an affiliate of NRDC has publicly called for a feed-in tariff.


      In a year end op-ed, the president of the National Audubon Society, John Flicker, outlined the environmental and energy issues confronting the nation and what should be done about them. Flicker, a former Florida state director of the Nature Conservancy, called for policies to increase clean source of electricity, including feed-in tariffs.

      "To increase the supply of clean electricity, we need to pay private entrepreneurs a fair price to produce it. This can be achieved through subsidies such as the Production Tax Credit, or by requiring utilities to buy clean electricity at a price that guarantees a return on investment. Congress will likely consider extending the Production Tax Credit when it convenes, and several states are now looking at "feed-in tariff" laws, which would require local utilities to pay a fair price for clean electricity. They would then pass the cost on to consumers."

      The National Audubon Society is the US' premier bird protection organization.


      This news update is partially supported by the Jan & David Blittersdorf Foundation in cooperation with the Institute for Local Self Reliance, and the Sierra Club's Smart Energy Solutions Fund. The views expressed are those of Paul Gipe and are not necessarily those of the sponsors.
      Paul Gipe
      Tehachapi CA 93561-1741 USA
      661 325 9590, 661 472 1657 mobile
      pgipe@..., www.wind-works.org
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