BIG SUN GROUP BACKS FEED-INS

Policy Recommendation – Feed-In-Tariffs
August 2009 (The Solar Alliance)

"The Solar Alliance is dedicated to accelerating the deployment of solar energy in the United States…[and] provide balanced and sound technical and policy expertise…Feed-In-Tariffs (FITs) – also known as Renewable Energy Payments (REPs) – are being proposed…FITs are often misunderstood, but can be useful policy tools…

"Feed-in-tariffs require payments to be made by a utility company to a vendor system that sells its power directly to the utility…Payments are typically fixed over some period of time…for both the electricity and… renewable energy certificates (RECs)…"

The FiT concept is gaining momentum worldwide. (click to enlarge)

"The Solar Alliance believes that properly designed FITs are an effective policy instrument to promote the growth of solar energy…[and] particularly useful in supporting specific market segments that are not adequately incentivized via other policies…FITs should be implemented in a manner that does not undermine effective net metering policy or other effective incentive programs.

"I. General Principles…1. FIT programs can be designed to directly or indirectly respond to market maturation…[and] reduce incentive levels…in response to market penetration…2. FIT systems should be able to take advantage of other policy mechanisms and build upon other programs…3. All consumers should have the option of becoming solar generators and using a FIT to supply the grid or using net metering to displace their own internal loads…4. FITs can be configured for meeting on-site load (for an example see the “AB 1969” tariff in California)…[or] can accommodate two systems, one to serve onsite load and the other to feed the grid…5. Setting the initial rate for a FIT is one of the more difficult challenges around implementing FITs. Too high a rate will overpay renewable companies, and too low a rate will stall market development…6. FITs can be funded from… government funds…utility surcharges…or blended into rates. Policy-makers should establish long-term, sufficient funding to ensure a stable and sustainable solar industry."

click to enlarge

"II. Detailed Characteristics…1…FITs should be offered by all utilities…for systems up to 20MWs…2…[U]tilities must offer the FIT to any project, subject to reasonable
application, demonstration and audit rules…3. Rates should be differentiated by technology across renewable energy sources (wind, biomass, solar, etc.) and by project size…4. Rates for new projects under the FIT program should diminish in response to increased volume (MWh)…5. Rates and goals for a FIT should be reviewed when market penetration rates have been met…[or] can be designed to automatically adjust rates…

"…6. FITs should feature 20-year contract lengths to support investment decisions [or]…If choices among terms exist, then the selection should be made by the generator rather than the utility…7. FITs should allow for ownership of projects by both site owners and third parties…[U]tility-owned projects should not be allowed to participate in the FIT…8. In computing the amount of the FIT, RECs should be recognized and valued separately…9. FITs should feature a monetary reservation guarantee that should be proportional to the size of the project and should have pre-determined milestones."