WASHINGTON—When you’re peddling an esoteric idea with a cumbersome name on Capitol Hill, you expect to draw a fair share of glazed-over looks from senators and representatives.
Renewable energy advocate Craig Lewis is all too familiar with that particular gaze.
“Two years ago, and even today, most legislators give you a blank stare when you mention feed-in tariffs,” Lewis, executive director of the FIT (Feed-in Tariff) Coalition told SolveClimate News in a Wednesday interview. “I figure we’re at 25 percent penetration right now. But we need to be at 80 percent before we can push this bill up the Hill and roll it down the other side.”
The 18-month-old Palo Alto, Calif.-based nonprofit is behind Rep. Jay Inslee’s revamped legislative effort to encourage a mammoth boost in solar and wind power by offering financial incentives to consumers and businesses nationwide who generate electricity via renewable sources.
Inslee’s legislation, introduced late Tuesday night, is called the Renewable Energy Jobs and Security Act. It’s a tweaked version of a bill that went nowhere after the Washington Democrat first introduced it in 2008.
In a nutshell, Inslee’s bill is based on Germany’s feed-in tariff, an enormously successful program that many consider the gold standard worldwide. Producers of clean energy a connection to the nation’s electric grid and predetermined rates from utilities for the power they generate.
The extra cost of the clean power shows up on every citizen’s electric bill as a small increment. Everyone pays in common to support the transition to clean energy.
“Germany is a model for the United States,” Randy Hayes, U.S. director of the nonprofit World Future Council, explained during a Wednesday briefing organized by the FIT Coalition. “It’s a race to catch up. We need to shift from being a nation of energy consumers to a nation of energy producers.”
Fiscal hawks need to be aware that feed-in tariffs are not another bloated government program intended to bankrupt ratepayers, supporters say. Instead, under Inslee’s plan a government entity offers a premium price to clean energy generators such as homeowners, schools and industries as an incentive to outcompete dirtier and cheaper coal, oil and natural gas.
The extra cost of clean power is reflected as a line item in each ratepayer’s electric bill—referred to as a shared fee for the common good. Theoretically, the price for clean energy will fall as it displaces fossil fuel.
Timing on the bill is less than perfect because Inslee launched it the day before Senate Majority Leader Harry Reid, D-Nev., opted to leave a national renewable energy standard out of an extremely pared down energy/climate bill that senators plan to tackle before exiting Washington for their August recess at the end of next week. A feed-in tariff is a pricing mechanism designed to work in tandem with—not replace—a renewable energy standard at the national level or a renewable portfolio standard at the state level.
Feed-in Tariffs Blooming Worldwide
Price guarantees for feeding renewable power into the grid are catching on in dozens of countries worldwide where at least five different types of models seem to be thriving. For example, Vermont and California are among handfuls of states taking a close look at feed-in tariffs, and cities with municipally owned electric utilities such as Indianapolis, Sacramento, San Antonio, Texas, and Gainesville, Fla., are also putting them into place.
Germany initiated its feed-in tariffs back in the early 1990s, using U.S. laws as a model for fashioning its nascent legislation. After reinventing its model in 2000, it has parlayed the price guarantees into an economy where more than 14 percent of Germany’s electricity comes from green sources. The plan calls for bumping that number up to 33 percent by 2020.
Payments made to generators of clean energy in Germany have fallen considerably, according to news reports. For instance, The overwhelming success with solar prompted Chancellor Angela Merkel to slice the price paid for power from roof-mounted solar panels by 16 percent in early June.
The feed-in tariff is a huge boon to Germany’s solar industry, Lewis pointed out. Even though California receives 70 percent more sunlight than Germany, Germany installs 15 times more solar electric capacity every year. The European country installed 3,000 megawatts of solar energy in 2009, which was four times more than analysts predicted.
Utility Companies Threatened
Understandably, many utility companies are less than enamored with feed-in tariffs because they are used to being in charge of how and when power is distributed. They are accustomed to paternalistic relationships with residential, commercial and industrial customers to whom they deliver power to via their distribution lines.
Working with those customers to iron out details on interconnection-guaranteed, power purchase agreements is new territory for utilities.
“Utilities resist transparency about their distribution grids,” Lewis said. “They are nervous. Distribution grids are a black box and that black box is a cash cow. They don’t like to be told what to do or to change.”
That traditional resistance to feed-in tariffs, however, is showing signs of thawing. Michael Eckhart, president of the nonprofit American Council on Renewable Energy, noted that members of the National Association of Regulatory Utility Commissioners passed a resolution in July supporting efforts among states to implement feed-in tariffs.
What Inslee’s Bill Looks Like
In addition to photovoltaic solar, thermal solar and wind, Inslee’s bill lists geothermal, marine and hydrokinetic, biomass, landfill gas, biogas from farm waste and some hydropower as renewable energy sources eligible for a feed-in tariff.
His bill covers distributed generation systems up to 20 megawatts in size, so it includes small retail and larger wholesale projects. It also establishes a National Renewable Energy Corp.
RenewCorps, Lewis said, is the bookkeeping portion of the bill because it creates a cost-sharing mechanism that equally distributes costs of compliance to electrical energy customers on a regional basis. It provides a full reimbursement to utilities for costs associated with network upgrades and interconnection.
National rates on guaranteed power purchase agreements between the energy generators and the utilities would be fixed for 20 years. As is the case in Germany, rates would differ depending on technology type, size and site. They are designed to decline over time.
Varying kilowatt-hour pricing paid by utilities would be based on a scale that is established by determining where each particular renewable is most abundant. For instance, California’s Mojave Desert is measured as the No. 1 spot for solar energy, Lewis said.
Re-Election Prospects Not Affected
Inslee, who will face off against a yet-to-be-determined Republican opponent in the Nov. 2 election, is certainly not putting his House seat in jeopardy by proposing such progressive legislation at this political juncture.
In 2008, he received almost 70 percent of the vote from a district that encompasses part of northwest Seattle and largely suburban areas north and east of Seattle. This fall he is running for his seventh term in the 1st Congressional District but his eighth overall. Between 1993 and 1995, he represented a different district in central Washington.
In the House, Inslee serves on the Energy and Commerce Committee, the Natural Resources Committee and the Select Committee on Energy Independence and Global Warming.
Republican political newcomers Matthew Burke, a certified financial planner, and James Watkins, a former Microsoft manager with an advanced degree in business administration, will be competing in an Aug. 17 primary to determine who will be up against Inslee on the mid-term ballot.
Berkeley Professors Back Feed-in Tariff for California
University of California, Berkeley, professors Dan Kammen and Max Wei released a report earlier this month recommending that the Golden State adopt a feed-in tariff similar to Germany’s model. Kammen, who teaches energy, policy and nuclear engineering, advised President Obama on energy policy during the 2008 campaign.
Legislation currently lodged in the Senate is geared for wholesale, mid-size distributed generation systems that generate up to 20 megawatts of power. Already, two separate pieces of state legislation already allow for feed-in tariffs on much smaller projects. The California Solar Initiative and the Small Generator Incentive Program allow incentives for projects under 1 megawatt, while a law passed in 2006 covers projects between 1 an 1.5 megawatts.
Using the pending bill as a model, Kammen and Wei put forth a scenario that sets a rate for power from distributed energy at 16 cents per kilowatt hour beginning in 2011. That rate would be sliced to 10 cents per kilowatt hour within five years.
They predict the legislation could add close to 30,000 jobs per year between 2011 and 2020, and stimulate a total of $50 billion in new investments in the state’s economy.
Lewis pointed out that California’s three investor-owned utilities fell woefully short of meeting its existing renewable portfolio standard of 20 percent by 2010. He doubted they could meet the more ambitious goal of 33 percent renewables by 2020 without a focus on wholesale distributed generation.
Plugging Away on Inslee’s Bill
Feed-in tariffs will become part of the U.S. landscape, Lewis predicted, when enough decision makers fully grasp why the country has to wean itself of fossil fuels. Odds-on, that won’t happen before the mid-term election, but he never expected Inslee’s bill to be an overnight success.
“The time is well overdue for this country to look at feed-in tariffs and go to the next step,” he said, adding that the price guarantees were the driving force behind 90 percent of all global solar development in 2009.
Economic sensibility, environmental sustainability and national security make the switch to renewables a no-brainer, Lewis said. And a price guarantee provides the clearest path toward that transition.
That, he explained, is what motivates him to continue educating legislators about less-than-gracefully-named feed-in tariffs.
“The only question,” he concluded, “is how fast that can happen and how painful that transition is going to be.”