FiTs and Starts: Are Feed-in Tariffs Fit to Be Tried?

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NREL, Golden, CO

With the death of Cap-and-Trade legislation in the Senate, Feed-in Tariffs (FiTs) are starting to become more and more attractive to renewable energy boosters.

But are FiTs all they are cracked up to be?

NREL, the National Renewable Energy Laboratory, recently released a A Policymaker's Guide to Feed-in Tariff Policy Design that largely sings the praises of various FiT schemes.

According to a Deutsche Bank study quoted in the NREL guide, 75 percent of global solar PV and 45 percent of wind development are directly related to FiT schemes. In the European Union alone, over the past ten years, FiTs have led to the deployment of 15,000 MW of solar PV and 55,000 MW of wind power.

The benefits of FiTs are obvious to the renewable energy (RE) industry, as NREL states, FiTs drive "market growth by providing developers long-term purchase agreements for the sale of electricity generated from RE sources. These purchase agreements, which aim to be both effective and cost-efficient, typically offer aspecified price for every kilowatt-hour (kWh) of electricity produced and are structured with contracts ranging from 10-25 years."

Furthermore, "payment level can be differentiated by technology type, project size, resource quality, and project location."

And therein lies the rub. FiTs do not a free market make: 1.) Fixing the price doesn't mean the best price for consumers or taxpayers and 2.) the government picks the technology, site or size of the project.

While you can't argue with success, we are already seeing that such success can lead to excess.

According to a renewable energy player familiar with a variety of country-based FiT policies, such schemes have led to an excess of solar development (viz. the German example) or prices that don't take into account future efficiencies and cost-savings, which can result in windfall profits for developers and manufacturers.

More of our focus needs to be on making renewables more efficient and cost-effective so they don't have to rely on government props and subsidies. The example of Spain should be a warning, where retroactive cuts to their FiT scheme due to the bad economy may endanger that country's solar industry and renewable production altogether.

Fixing prices and picking technologies shouldn't be the job of governments. I'm not saying that FiT schemes can't be properly designed to allow as free a market as possible, I just don't want to see us all go to Abilene yet again chasing the latest "Get FiT" fad.

 

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Clean Tech: Clean Edge/Co-op America Report on Utility Solar in US

A new study by Clean Edge and Co-op America shows that the US could achieve 10 percent solar by 2025:

While the U.S. currently gets less than one tenth of one percent of its electricity from solar power, our research shows that solar offers the opportunity to provide a significant portion of the nation’s electricity supply for both distributed and centralized generation by 2025—up to ten percent from a combination of solar PV and CSP. As storage and smart grid technologies evolve, we see the potential for solar to provide an even larger percentage of U.S electricity needs.

Their analysis -- based upon proprietary Clean Edge data, company research, and expert interviews -- provides the following key findings:

1. Solar resources are ubiquitous.
2. Solar can provide utilities with a peak-power hedge.
3. Environment and carbon are becoming central drivers.
4. Solar power will soon reach price parity with conventional sources.
5. Utility participation is critical to solar success.
6. Smart grid deployment is imperative.
7. Distributed solar PV offers utilities unique advantages.
8. The solar industry needs to cooperate with utilities.
9. Standards must be implemented.
10. It’s not just PV, but also CSP (Concentrated Solar Power).
11. Utilities need to be able to integrate solar expenditures into their
rate base—and to be able to take a full life-cycle cost approach.
12. Utilities have a unique relationship with customers.

Download the report here: Clean Edge

Book Review: Power of the People: America's New Electricity Choices by Carol Sue Tombari

Imported oil, dirty coal, energy inefficiencies and waste, and truncated investment in alternative energy development have landed us in a quandary. Where do we turn for the power we need to run our wired and wireless economy and our increasingly mobile culture?

Carol Sue Tombari, former director of the State of Texas's energy efficiency and renewable energy programs and currently on staff at the US Department of Energy's National Renewable Energy Laboratory, describes some answers in her new book, Power of the People: America's New Electricity Choices.

Tombari provides a concise and cogent overview of how we got in this mess and a primer for how we can get out of it. Essentially, Tombari argues that we need a combination of vigorous policy agendas and massive investments in what we've called on this blog "The New Green Economy."

We are "sleepwalking toward disaster," argues the author, but she tempers her cynicism with equal doses of optimism and faith -- faith that we have the know-how and ingenuity to get us out of this mess.

If only we would wake up and change where we're going and what we're doing.

"I'm not talking about an overnight energy revolution, Tombari concludes. "Really, it's more like an evolution, incorporating both twentieth- and twenty-first-century technologies as we transition to the completely different, carbon-constrained reality in the coming years."

For anyone who wants a quick study of the path we've been on, as well as the good, the bad, and the balance of those choices, and the potential for alternatives, Power of the People is required reading.

"Renewable energy and energy efficiency can be expected to develop a larger presence in the marketplace," writes Tombari, "especially as the cost of twentieth-century fuels continues to go up and the capital costs of renewables continue to go down."

But our energy "needs remain humongous and continue to grow," Tombari argues. "Energy efficiency in particular will gain significantly greater market share because of its no-regrets nature and the fact that it doesn't require the investment of materials needed by utility-scale technologies."

While "we will continue to rely heavily on central station power plants, especially in the near- and mid-term," according to Tombari, "we as individuals, as neighbors, as citizens of our towns and states, can lead our government...Our roots as a nation are in the grass. We know how to do this."

Her optimism is infectious. Power of the People is a must-read for anyone concerned about the future of our nation and our planet.

Clean Tech: Solar Thermal Gets Boost From US$105M Investment in Solel

Venture Beat reports this morning about a solar thermal company gaining "significant traction: Solel, a manufacturer and installer of solar thermal energy generators, has taken in US$105 million from London-based investment firm Ecofin.

"In the space of the past couple years, the 20 year old Israeli company has taken flight, accumulating contracts and equipment orders and signing agreements to build major generation projects in California and Spain.

"In California and Nevada, Ausra and Brightsource are also competing for attention, scaling up operations as rapidly as possible. At least for the moment, solar thermal looks like a safer bet than photovoltaics, based on the economics.

"However, that story may be changing, as solar PV manufacturers bring down costs over the next few years."