Feed-in tariffs, also known as renewable energy payments, are known as a type of policy mechanism that is designed to promote the inclusion of sources of renewable energy to assist in the acceleration toward grid parity. Most feed-in tariffs have three main provisions – guaranteed access to the grid, long term electricity contracts, and perchance prices based on renewable energy generation cost.
1) Germany. A number of feed-in tariffs were introduced in Germany to promote the utilization of renewable energy technologies, including wind, solar, biomass, geothermal, and hydro powers. Each technology is assigned its own feed-in tariff rate. For example, in 2010, feed-in tariffs were found between 2.47ct/kWh for various hydropower facilities over 50 megawatts to 34.05 ct/kWh for solar installations for commercial buildings a maximum of 30 kilowatts. Germany’s goals with the feed-in tariffs are to increase renewable energy consumption to 20 percent by 2020 and encourage renewable technologies development, decrease external costs, and boost energy supply security for the future.
2) Australia. A number of state governments within Australia have enacted feed-in tariffs for electricity created through solar photovoltaic systems. Australian Capital Territory and New South Whales provide gross feed-in tariffs. For example, Australian Capital Territory has the Electricity Feed-in Act of 2008 which allows individuals to install photovoltaic or other renewable energy sources in an effort to create their own energy and then sell it back to the local power grid. Other governments, however, have net feed-in tariff programs, though these have been under criticism for not offering ample incentives for residential households to install solar panels. A uniform feed-in tariff for all states has been put on the table but not yet enacted; however, they do work, as showcased by Canada and a number of European countries.
3) Ontario, Canada. Ontario’s feed-in tariff program is the first comprehensive guaranteed pricing structure in North America for the production of renewable energy. The program allots for stable prices under a number of long-term contracts for energy that is generated via renewable energy sources, including water power, solar photovoltaic, biomass, biogas, on-shore wind, and landfill gas. The program was designed through the Green Energy and Green Economy Act of 2009. The program aids to “Help Ontario phase out coal-fired electricity generation by 2014 – the largest climate change initiative in Canada; boost economic activity and the development of renewable energy technologies; [and]create new green industries and jobs.”
4) China. China has created a fixed feed-in tariff scheme for a variety of new onshore wind producing power plants to assist in helping receive profits. The economic planning agency, The National Development and Reform Commission, made the announcement that a number of onshore wind projects will have the ability to receive tariffs. Locations that have an increase in wind resources will be the recipient of decreased feed-in tariffs, while areas with lower outputs will have increased access to generous tariffs. According to an article, “The feed-in tariff will replace the existing public bidding process for wind projects, in which a low-power tariff has been the primary criterion for securing planning approval and energy supply contracts.”
5) India. India has one of the most motivated solar power programs, especially with the new Jawaharlal Nehru National Solar Mission designated by the Prime Minister in 2010. The program’s objective is for the installation of 20,000 megawatts of solar powered energy by the year 2022. The first phase is the installation of 1000 megawatts through paying a tariff that has been fixed by India’s Central Electricity Regulatory Commission. Though this may seem like a feed-in tariff, however, there are conditions based on project size, for example, tariff for solar photovoltaic projects has a fixed price of 0.397 USD per kilowatt hour.
6) Ireland. In 2006, the Minister for Communications Marine and Natural Resources Noel Dempsey made the announcement of the next wave of support for renewable energy sources in Ireland. The Renewable Energy Feed In Tariff is to assist the government in increasing the use of renewable energy by 40 percent by the year 202. And to support “the construction of renewable energy powered electricity in the categories of Anaerobic Digestion, high efficiency CHP, Ocean Energy (wave and tidal), and Offshore Wind.”
7) Spain. Spain has been known for its favorable feed in tariffs under Royal Decrees 43/2004 and 661/2007, for renewable sources of energy. These tariffs are to ensure that the country is able to provide a positive environment for the creation of new projects and initiatives aimed at increasing the utilization of renewable energy sources, including wind and solar. It allows producers of renewable energy to sell produced energy to the system directly via distributors. Producers are able to opt for either selling the electricity at market price with a fixed premium or at an attractive regulated tariff cost.
8 ) United Kingdom. In 2020, Ed Milibrand, Britain’s Secretary of State for Energy and Climate Change spoke about the new feed-in tariff policy created by the Labor Government. Also known as the “Clean Energy Cash Back Scheme,” the tariffs rewards households switching to renewable energy sources by providing them with regular guaranteed payments. For example, with solar panels, there three financial savings – a “Generation Tariff – A set rate monthly payment for each kWh of generated electricity. This rate is guaranteed for 25 years with electricity generated by solar panels. [An] export tariff – an additional payment from your energy supplier for any electricity not used in the home that is exported to the grid. This is paid at a rate of 3p per kWh. [And then there is] Energy bill savings – as well as these cash incentives given at the end of each month, you will also benefit from savings to your usual electricity bills as you will be using electricity generated by your home, not paying for it.”
9) Israel. In 2010, Israel created new residential solar feed-in tariffs. The Israeli Minister of national Infrastructure authorized the new policy for those residences and small industrial businesses that install a maximum of 50 kilowatts of solar energy. The tariff is set by the Israeli Public Utilities Authority. The tariffs for residential areas up to 4 kilowatts will be uncapped until the end of 2014. As well, industrial installations between 15 and 50 kilowatt hours in non-urban locations will also be uncapped. Dr. Uzi Landau, the minister said, “The new policy removes almost all the restrictions from installing domestic facilities of up to 4KW and this promotes the green rooftops vision.”
10) United States. In 2008, a new feed-in tariff legislation was introduced in the United States. The legislation would provide a number of incentives to businesses and consumers generating electricity via renewable sources of energy. Called the Clean Energy Buy-Back Act, it would ensure that produces of clean energy in the United States receive connection to the grid as well as predetermined rates for their power from the utility companies. This was the first time a feed-in tariff was proposed to Congress and is shaped much in the way of those in Germany – “As the former Chairman of the Congressional Study Group on Germany, it is clear to me that the single most important step we can take in order to promote a rapid growth of renewable energy in the United States is to adopt our own version of the German feed-in-tariff,” said U.S. Rep. Bill Delahunt (D-Mass), the prime co-sponsor of the bill. “In my travels to Germany I have been amazed at how this very simple policy has created an explosion of grassroots interest in the use of solar and wind energy. It is time to bring this renewable energy revolution to the United States.”
Article by Shawn Lesser & Ben Taube
Shawn Lesser is Co-founder & Managing Partner of Atlanta-based Watershed Capital Group – an investment bank assisting sustainable fund and companies raise capital, perform acquisitions, and in other strategic financial decisions. . He is also a Co-founder of the GCCA Global Cleantech Cluster Association ”The Global Voice of Cleantech”. He writes for various cleantech publications and is known as the David Letterman of Cleantech for his “Top 10″ series. He can be reached at email@example.com
Ben Taube currently serves as the Executive Director of the Southeast Energy Efficiency Alliance (SEEA) which is a nonprofit headquartered in Atlanta, GA with a mission to deploy energy efficiency across 11 southeast States. The organization is comprised of public and private interests. Ben also serves as the Chair of the Global Cleantech Cluster Association. Mr. Taube has a Bachelors Degree from the University of Memphis and a Masters in Environmental Policy and Management from the University of Denver.