Feed-in tariffs could transform U.S. renewable energy market


Washington, DC, U.S.A. — (METERING.COM) — June 10, 2008 – Feed-in tariffs have not yet been widely adopted in North America, but political momentum for policy appears to be building at both the federal and state levels and if enacted could transform the local renewable energy market

While 26 states have introduced mandatory renewable portfolio standards (RPS) and another six states have established non binding renewable energy goals, over the past two years six states so far have established feed-in tariff bills (California, Illinois, Michigan, Minnesota, Rhode Island, Hawaii). In addition another eight states have considered, or are considering, similar legislation (Florida, Maine, Massachusetts, New Jersey, New York, Vermont, Oregon, Wisconsin).

At the federal level there is also a significant effort to move feed-in tariff legislation forward, with the recent introduction by Congressman Jay Inslee of a national feed-in tariff bill (referred to as a renewable energy payment, REP).

These are among the findings of a new review “Feed-in tariffs and renewable energy in the USA – a policy update” published by the Heinrich Böll Foundation in conjunction with the North Carolina Solar Center and the World Future Council.

While there has been remarkable progress in the development of renewable energy in the U.S., RPS policies are expected to account for only 15 percent of the projected electricity demand growth by 2025. In order to meet increasingly aggressive environmental and economic development goals, new ways to accelerate renewable energy market growth are being investigated. Among these are feed-in tariffs, which have driven rapid renewable energy growth for electricity in Europe.

In looking ahead to future feed-in tariff policy development, several trends stand out, the report says. First, feed-in tariff policies and U.S. RPS policies are potentially complementary, and most of the states that are proposing feed-in tariffs already have renewable portfolio targets in place (except Michigan). Second, current feed-in tariff proposals are generally limited in their scope and target specific technologies (e.g. PV), small renewable generators (e.g. under 20 MW), or ownership structures (e.g. community-owned) that might not otherwise successfully compete in RPS markets. These limitations also serve to address concerns over policy costs, and directly promote policy goals such as rural and economic development.

If additional U.S. feed-in tariff legislation is proposed, it will be unsurprising if it will be limited to certain subsets of generators, rather than creating broad and open-ended incentives for renewables as in Germany. Just as many RPS policies have been iteratively revised to be more aggressive, however, feed-in tariffs could likewise evolve to become broader over time if the initial efforts prove successful.