Sacramento OKs Local Feed-in Tariff

23 July of 2009 by

There are many different ways to promote the adoption of renewablepower. There are rebates and grants, federal tax credits, state taxcredits, refundable state tax credits, renewable energy certificates(RECs), zero- or low-interest loans, energy-efficient mortgages, powerpurchase agreements, solar lease programs… you get the picture. Amongthe options, one of the most effective — in terms of encouraging themost renewable energy installations — is the feed-in tariff (FIT). Asyou’ll read below, the Sacramento Municipal Utility District (SMUD)recently approved a feed-in tariff for residential customers.

In a nutshell, a feed-in tariff guarantees above-market payments forall the electricity generated by qualifying systems. System owners cansell power at, say, 30 cents/kWh when the going retail rate charged bytheir utility is 12 cents/kWh. Feed-in tariffs generally reduce thenumber of years needed to recoup initial system costs and, accordingly,boost the overall return on investment (ROI).

An often-cited example for showcasing the merits of the feed-intariff is Germany, which, since enacting an FIT ten years ago, haswitnessed an explosion in the number of installed rooftop solar panelsystems. As suggestedby Felicity Barringer at Green Inc., the approach appears to be gainingfavor here in the U.S. In February, the city of Gainesville, Florida adopted a feed-in tariff so popular that, soon after its launch, it became oversubscribed through 2014. Then, last month Vermont passed a statewide feed-in tariff,paying 30 cents/kWh for solar panel installations. Barringer notes,“Washington state also has such a policy, and Hawaii is currentlyconsidering one.”

As for the Sacramento feed-in tariff, here are a couple of highlights for you solarheads out there:

  • Tariff payment terms are available for 10, 15 or 20 years

  • Participants in the FIT are not eligible for solar rebatefunds from California’s Million Solar Roofs initiative. They are,however, still entitled to the 30-percent federal renewable energy taxcredit.

  • The program is not available to homeowners who are participating in net-metering

  • The rate at which homeowners may sell electricity will vary throughout the day, peaking at times of high demand

The SMUD program is set to launch in January. See their website for more details.

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