Solar Feed-in Tariffs Catching On in LA, Across the U.S.

Solar Feed-in Tariffs are catching on throughout the United States and CanadaRooftop solar power appears poised to move into the mainstream of US energy infrastructure as creative financing options, such as solar leasing, community solar and feed-in tariffs are gaining traction and building upon huge increases in solar photovoltaic (PV) production capacity and ongoing technological advances.

The multiple, cross-cutting benefits of spurring on local solar, wind and other renewable energy system installations aren’t lost on most Americans, or on some politicians. Los Angeles is due to hold its mayoral primary March 5. Significantly scaling up LA’s pioneering (at least in the US) solar energy feed-in tariff (FiT) is the centerpiece of mayoral hopeful Eric Garcetti’s campaign.

A city councilman representing LA’s 13th District, Garcetti says that he’ll scale up the Department of Water & Power’s (DWP) 100 megawatt (MW) FiT by a factor of 12 and bring 1.2 gigawatts (GW) of clean, renewable, locally produced rooftop solar energy to the City of Angels, according to a report from KCET’s Rewire.

Rooftop solar: It makes environmental and economic sense

“It makes environmental and economic sense for the DWP to power the city with clean energy generated right here in L.A. instead of importing fossil fuel electricity from out of state,” Garcetti was quoted from a press release issued by his office.

“If they can do 1,200 megawatts in Ontario, Canada, we can do it here in L.A. This will create thousands of jobs and help reach my goal of making DWP coal and nuclear free.”

Garcetti is facing some stiff competition, and a big field of contenders in the mayoral race. Fourteen contenders are vying for the Democratic Party’s nomination in the March 5 primary, including City Controller Wendy Greuel, who has raised $3 million in campaign funds compared to Garcetti’s $3.5 million, according to Rewire’s report. Greuel’s also gained endorsements from environmental activists, “including Evan Gillespie – one of the Sierra Club activists who helped push DWP to launch its 100-megawatt feed-in tariff program,” Rewire’s Chris Clarke writes.

FiTs have been the cornerstone of government policy to boost solar and renewable energy installations in Europe. Credited with spurring huge increases in solar and renewable energy capacity, they’ve been implemented in different forms in Denmark, Germany and Spain, among other countries, helping drive each to the top of worldwide rankings for installed solar and wind power capacity.

As Worldwatch Institute explains in a post on its Vital Signs Online, FiTs, distilled down to their essential common element, “guarantee that anyone who produces electricity from a renewable energy source – whether they are a homeowner, small business, or large electric utility – is able to sell that electricity into the grid and receive long-term payments for each kilowatt-hour (kWh) produced. Payments are set at pre-established rates, often higher than what the market would ordinarily pay to ensure that developers earn profitable returns.”

Though US federal renewable energy incentives in the main remain limited to investment and production tax credits, FiTs are catching on among state governments, often as a complement to Renewable Portfolio Standards (RPS) that require electricity providers to source a given percentage of electrical energy from renewable sources. “More than a dozen states, one [Canadian] province [Ontario] and numerous municipalities have since implemented some form of FiT,” according to Worldwatch’s report.

In contrast to tax credits and tax equity financing, FiTs spur a lot more in the way of small-scale residential and commercial solar energy installations as opposed to much larger utility-scale projects.

“A lot of the charm of the feed-in tariff is solid, take-it-to-the-bank security and confidence for the investing community. You get access to what is very difficult to get right now: financing,” Worldwatch quoted US Representative Jay Inslee, who is sponsoring legislation to establish a nationwide FiT.

Impressed with the results and success of Germany’s national FiT, Gainesville Regional Utilities’ (GRU) assistant general manager Ed Regan in 2009 convinced the Gainesville City Commission to approve the first solar PV FiT in the US.

GRU assured solar PV providers who signed up for the solar FiT before 2011 a rate of $0.32 per kWh for 20 years, “an estimated 4-6 percent return on investment,” according to Worldwatch’s Vital Signs.

Aiming to ensure that electricity costs wouldn’t increase more than 1 percent as a result of enacting the FiT, the municipal utility limited the program to 4 MW of solar PV per year. It’s already fully subscribed out to 2015, a total of 24 MW. A lot sunnier than Germany, the world leader in installed solar PV capacity, Florida had installed just 2.5 MW of solar electric capacity.

Giving the local economy a “green,” clean energy boost was the point that really sold the City Commission. “Our primary motive is not to get the cheapest energy and keep profits high for investors, because we don’t have investors,” Worldwatch quoted GRU engineer John Crider. “For the municipality, we have a larger vision….[to] create a local, thriving marketplace for local solar providers.”

Image credit: Massachusetts Clean Energy Center, courtesy flickr

Andrew Burger
Andrew Burger
A product of the New York City public school system, Andrew Burger went on to study geology at the University of Colorado, Boulder, work in the wholesale money and capital markets for a major Japanese bank and earn an MBA in finance.

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