Feed-In Tariff Discussion Continues, In California and At SPI
Solar energy advocates at Solar Power International (SPI) this week are likely to promote the creation of a feed-in tariff program as an effective way for California — and other states — to generate more solar energy.
In a feed-in tariff model, homeowners and business owners with solarenergy systems are able to sell their clean energy back to local utility companies at a long-term, premium rate. That, say advocates of theCalifornia plan — like Mayor Pro Tem Jim Ferguson of Palm Desert — would create a clear incentive for more individuals in California to installsolar panels. The main draw? Steady income from feed-in tariff paymentsshortens payback periods and the boost return on investment on a givensolar energy system. Armed with stronger financial projections,homeowners and developers alike are better able to finance — andcomplete — their solar power projects.
Feed-in tariffs have successfully boosted demand for solar power in a number of places — some that are down right dark and cloudy compared to California. Ferguson’s Palm Desert community, for instance, gets twice as much annual sunlight as Germany, a solar energy powerhouse that, as noted by the L.A. Times, pumps out four times as much solar power as the entireUnited States. This surge in solar energy generation is widelyattributed to Germany’s national feed-in tariff program.
Feed-in tariffs do not come without their challenges, however.Utility companies invariably note that, if forced forced to pay out anabove-retail rate for solar energy generation, they’d likely have toraise rates — an unpopular move, even if we’re talking fractions of apenny per kilowatt hour. Then there are other issues, like how to fairly determine the feed-in tariff rate and delegate oversight of theprogram.
In California — and at SPI — much of the debate is centering onsomething called a reverse auction mechanism. Slightly different from aclassic feed-in-tariff program, an auction-based approach does notmandate a price that utility companies must pay. Instead, there is bea bidding process in which utilities contract to buy energy from thosewho offer the best rates. The program would apply only to mid-sizesystems on warehouse roofs and closed landfills.
We’ll keep you updated as the discussion progresses. The bottom lineis that a feed-in tariff program in California would provide a clearboost to solar energy projects across the state.
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