Alliance for Renewable Energy

CIVIL SOCIETY INSTITUTE STUDY: U.S. COULD ACHIEVE OVER $80 BILLION IN LOWER ENERGY COSTS BY FOCUSING ON SAFER, RENEWABLE ENERGY

2011-12-02T12:12:35-05:00

WASHINGTON, D.C. – November 16, 2011 – It is a myth that switching to safe, renewable energy would mean an unreliable U.S. power supply that also is too expensive to afford. That is the major conclusion of a new Synapse Energy Economics report prepared for the nonprofit Civil Society Institute (CSI) that details a future with more energy efficiency and renewable energy and less reliance on coal and nuclear power. Titled "Toward a Sustainable Future for the U.S. Power Sector: Beyond Business as Usual 2011," new Synapse/CSI report outlines a realistic transition to a cleaner energy future that would result in a net savings of $83 billion over the next 40 years. The Synapse report also details other major benefits, including: the avoidance of tens of thousands of premature deaths due to pollution; the creation of hundreds of thousands of new jobs; sharp cuts in carbon pollution; and significant cuts in water consumption for power production.

Read the 11.16.11 Civil Society Institute news release here.
Read the 11.16.11 Synapse Energy Economics report here.
After 5 p.m. EST on 11.16.11, listen to the streaming audio of the CSI news event.
Read about the related 11.3.11 CSI national opinion survey here.

How Germany Became Europe’s Green Leader

2011-11-11T13:37:40-05:00

Cyclists on Freiburg's car-free Wiwili bridge. The bridge was closed

to cars in the early 2000s and is now open only to cyclists and

pedestrians. Photo by Ralph Buehler.

October 24, 2011

Ralph Buehler, Arne Jungjohann,

Melissa Keeley, Michael Mehling

This article examines how German environmental policymaking over the last 40 years transformed Europe’s economic engine into the international driver of green growth. By examining Germany’s environmental policy development in the energy, infrastructure and transportation sectors, transferable lessons are gleaned that may help the US pave its own green policy agenda.

How Germany Became Europe’s Green Leader creates a bridge between Germany’s successful green policy outcomes and relevant solutions to the obstacles currently hindering the United States. Political polarization, the need for long-term strategic planning as well as policy fragmentation are all issues that once characterized Germany’s environmental policy landscape, yet now mirror the impasse the US must overcome in order to go forward.

Germany’s solutions may have their own legal and political idiosyncrasies, but the extent of their success necessitate deeper exploration for those who want similar success to occur across the Atlantic. First, successful policies began as small-scale projects that expanded when proved successful. The German Renewable Energy Resources Act, (EEG) initially provided subsidies to basic renewable energy sources for grid access. As EEG became more established, it eventually covered a broader array of innovations and technologies. Long-term planning and coordination that cuts across boundaries (levels of government or public/private sectors) have greater policy effectiveness than “silver bullet” approaches that strive for limited, short-term solutions. In addition, new solutions that benefit both sides of a policy divide have greater staying power than solutions that don’t enjoy such broad-based appeal.

Green economic transformation is not just possible, but as Germany demonstrates, it can incorporate the key sectors that are vital for both economic and ecological sustainability. If policies are carried out on a step-by-step basis, with coordination, consent and enlargement geared towards a long-term vision, the United States can become both an economic and a green energy leader.

Click here to access How Germany Became Europe’s Green Leader: A Look at Four Decades of Sustainable Policymaking

Feed-in Tariffs Best to Deal with Climate Change Says IPCC Working Group III Renewables

2011-11-08T17:33:27-05:00

FITs Least Costly--Most Competitive Mechanism Says Climate Researchers

November 8, 2011

By Paul Gipe

The 135-page report by the Intergovernmental Panel on Climate Change , especially Chapter 11 on Policy, Financing and Implementation, makes it clear that the overwhelming weight of academic studies conclude that feed-in tariffs--or fixed-price mechanisms--perform better at delivering renewable energy quickly and equitably than quota systems, such as Renewable Portfolio Standards in the US or the Renewable Obligation in Britain. This is not the unsurprising conclusion from a surprising source: the IPCC's Working Group III on Renewables.

Below are selected excerpts illustrating the theme that runs through the report.

Page 5

Several studies have concluded that some feed-in tariffs have been effective and efficient at promoting RE electricity,

mainly due to the combination of long-term fixed price or premium payments, network connections, and guaranteed purchase of all RE electricity generated. Quota policies can be effective and efficient if designed to reduce risk; for example, with long-term contracts.

Page 53

Although they have not succeeded in every country that has enacted them, price-driven policies have resulted in rapid renewable electric capacity growth and strong domestic industries in several countries--most notably Germany (See Box 11.6) and Spain (See Box 11.8) but more recently in China and other countries as well--and have spread rapidly across Europe and around the world (REN21, 2006, 2009b; Mendonça, 2007; Rickerson et al., 2007; Girardet and Mendonca, 2009). (See Boxes 11.7, 11.11 and 11.12.)

The success of FIT policies depends on the details. The most effective and efficient policies have included most or all of the following elements (Sawin, 2004; Mendonça, 2007; Klein et al., 2008a; Couture, 2009):

Utility purchase obligation;
Priority access and dispatch;
Tariffs based on cost of generation and differentiated by technology type and project size, with carefully calculated starting values;
Regular long-term design evaluations and short-term payment level adjustments, with incremental adjustments built into law in order to reflect changes in technologies and the marketplace, to encourage innovation and technological change, and to control costs;
Tariffs for all potential generators, including utilities;
Tariffs guaranteed for a long enough time period to ensure adequate rate of return;
Integration of costs into the rate base and shared equally across country or region;
Clear connection standards and procedures to allocate costs for transmission and distribution;
Streamlined administrative and application processes; and
Attention to preferred exempted groups, for example, major users on competitiveness grounds or low-income and other vulnerable customers.

Page 55

The IEA argues that the key for countries like Germany, Spain and Denmark has been high investment security coupled with low administrative and regulatory barriers (IEA, 2008c). The IPCC's Fourth Assessment Report, in comparing quantity-based mechanisms and FITs, noted that: "In theory, this difference should not exist as bidding prices that are set at the same level as feed-in tariffs should logically give rise to comparable capacities being installed. The discrepancy can be explained by the higher certainty of current feed-in tariff schemes and the stronger incentive effect of guaranteed prices." (Sims et al., 2007). Likewise, Stern (2007) concluded that "feed-in mechanisms achieve larger [RE] deployment at lower cost. Central to this is the assurance of longterm price guarantees [that come with FITs]…. Uncertainty discourages investment and increases the cost of capital as the risks associated with the uncertain rewards require greater rewards.". Bürer and Wüstenhagen (2009) found that, because FITs effectively reduce risk, venture capital and private equity investors perceive FITs to be the most effective policy to stimulate investment in RE technologies (Bürer and Wüstenhagen, 2009).

Page 55 . . .

FITs have encouraged both technological (Huber et al., 2004) and geographic diversity (Sawin, 2004), and have been found to be more suitable for promoting projects of varying sizes (Mitchell and Connor, 2004; van Alphen et al., 2008). . . . A number of studies have concluded that FITs have consistently delivered new supply, from a variety of technologies, more effectively and at lower cost than alternative mechanisms, including quotas, although they have not succeeded in every country that has enacted them (Ragwitz et al., 2005; Stern, 2007; de Jager and Rathmann, 2008).

Page 56

Recent studies (Resch et al., 2009; de Jager et al., 2010) of quota systems in Europe found that Italy, the UK, Poland and Belgium had experienced high producer profits resulting from high investment risks and low growth rates. Other studies have reached similar conclusions (D. Fouquet et al., 2005; New Energy Finance Limited, 2007; Jacobsson et al., 2009; Verbruggen and Lauber, 2009). Such profits primarily benefit incumbent actors and relatively mature, low-cost technologies, and can be costly for consumers (Jacobsson et al., 2009). The exception among European countries using a quota obligation is Sweden, which has experienced a high rate of RE growth coupled with relatively low producer profits. This was because quota systems tend to favour least-cost RE and Sweden has an abundance of biomass.

Page 58

With respect to competitiveness, another element of efficiency, a 2008 analysis found that market competition (number of players) was stronger among wind turbine producers and constructors under the German FIT than under the quota scheme used in the UK (Butler and Neuhoff, 2008). Except in the case of Spain, where the premium option attracts mostly incumbent power generators, FITs have been more successful at bringing new players into the market (Verbruggen and Lauber, 2009). FITs encourage competition among manufacturers rather than investors (Held et al., 2007). FITs have been found to encourage development of domestic manufacturing industries, which leads to a large number of companies and thereby creates competition (Sawin, 2004). FITs shift competition from electricity price to equipment price, which some analysts have argued is more appropriate competition for capital-intensive RE technologies (Wagner, 1999; Hvelplund, 2001).

Verbruggen and Lauber (2009) demonstrate that well-designed FITs provide dynamic incentives to reduce long-run marginal costs of a variety of RE technologies because investment money is assigned to investors accordingly; more efficient producers obtain greater rents by lowering costs, and the FIT payment rates are regularly adjusted to avoid excessive rents.

. . . At the same time, detailed analysis of which companies gain from quota systems suggest that it is primarily incumbent actors that continue to benefit from the new market (Girardet and Mendonca, 2009; Jacobsson et al., 2009; Verbruggen and Lauber, 2009). The transaction and administrative costs of a TGC system are higher than with FIT, making participation of small-scale new entrants cumbersome, and therefore limited (C. Mitchell et al., 2006). In contrast, FITs tend to favour ease of entry, local ownership and control of RE systems (Sawin, 2004; Lipp, 2007; Farrell, 2009), and thus can result in wider public support for RE (Damborg and Krohn, 1998; Sawin, 2001, 2004; Hvelplund, 2006; Mendonça et al., 2009). Such ease of entry has also proved a powerful means for unleashing capital towards the deployment of RE projects (Couture et al., 2010).

Page 59

FITs generally have lower administrative costs than quota policies (Haas et al., 2011) and are considered easier to implement (van der Linden et al., 2005), though tariff setting can be challenging, particularly if there are very dynamic cost developments (as with PV in recent years).

Quotas, particularly those operating with tradable certificates, appear to be more complex because of the need to set both penalty prices and quantities. Transaction costs are also generally higher for such quota systems. Complexities also arise from the need for trading platforms under quotas with tradable certificates, and tendering schemes require administrative capacity to deal with the bidding process (Sawin, 2004; de Jager et al., 2010).

. . . In summary, a number of historical studies, including those carried out for the European Commission, have concluded that well-designed and well-implemented FITs are the most efficient (defined as comparison of total support received and generation cost) and effective (ability to deliver increase in the share of RE electricity consumed) support policies for promoting RE electricity (Ragwitz et al, 2005; de Jager et al, 2010; Sawin, 2004; European Commission, 2005; Stern, 2007; Mendonça, 2007; Ernst & Young, 2008; Klein et al., 2008b; Couture and Gagnon, 2009; Held et al, 2010; Ragwitz et al, 2011).

Snapshot of Feed-in Tariffs around the World in 2011

2011-10-07T10:48:31-04:00

Updated Tables of Feed-in Tariffs Worldwide

Summary of Prices for Wind, Solar, Geothermal, & Other Technologies

October 5, 2011

By Paul Gipe

Feed-in tariffs are the world's most popular renewable energy policy mechanism. Despite the economic recession, more and more jurisdictions are turning to feed-in tariffs to spur not only renewable energy development but also industrial development and the attendant jobs that it creates.

The following article is a snapshot of places where feed-in tariffs are being used, and the prices that are being paid. While extensive, this article is not comprehensive. It does not include every tariff for every technology in every jurisdiction, but it does give a flavor for the widespread use of this policy mechanism with the odd name.

More than 80 jurisdictions around the world now use or have used feed-in tariffs to pay for new renewable generation, according to a recent report by REN 21. These vary from former Eastern Bloc countries, such as Slovenia and Bulgaria, to developing countries, such as Uganda and Mongolia, to the more well known examples of Germany and France.

According to the Renewables 2011 Global Status Report, feed-in tariffs now dominate policy for renewable energy worldwide. There are 60% more jurisdictions (states, provinces, and entire countries) using feed-in tariffs than are now using quota systems (Renewable Portfolio Standards, Renewable Energy Standards, and so on).

Momentum for quota programs began leveling off in 2008 as the global recession first began to take hold. Even during the early years of the recession, however, momentum continued to build for feed-in tariff policies.

Updated Tables of FITs Worldwide

I try to maintain a multi-tab table (spreadsheet) of feed-in tariffs worldwide on my web site at www.wind-works.org. See Tables of Feed-In Tariffs Worldwide. I've recently updated the tables and now include current prices for Armenia, Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Northern Indiana Public Service Company (NIPSCO), Nova Scotia, Spain, and Sri Lanka, as well as tariffs for numerous other countries.

The full table is never complete or fully current, as the data changes frequently. For solar photovoltaics (solar PV), it changes even more frequently, as jurisdictions adjust their tariffs for new contracts to reflect falling panel prices. But the table remains one of the few such sources in the public domain.

Most countries in the European Union (EU) now use feed-in tariffs as the policy of choice to develop their renewable resources. Earlier this year consultants to the EU released a major report on the status of member states' policies to meet their binding renewable energy targets. The 343-page report, Renewable Energy Country Policy Profiles 2011, includes extensive updates on feed-in tariffs in the member states. Much of the data in the report has been incorporated into my Tables of Feed-In Tariffs Worldwide.

Price Alone is Insufficient

For most, feed-in tariffs are solely about the fixed price paid for electricity produced by a renewable technology over a fixed term. And for many, unfortunately, this is only the price paid for solar PV.

While a sufficient price is necessary for the rapid development of renewables, price alone is insufficient. Successful renewable energy policy requires a full suite of complimentary measures, most notably that access to the grid be quick, easy, and inexpensive.

Most renewable energy advocates overlook the sub-title of Germany's Renewable Energy Sources Act: the "The Act on Granting Priority to Renewable Energy". The authors wanted to make the law's purpose and intent clear from the title alone, so there would be no ambiguity. They could have used deceptive euphemisms like those so popular on this side of the Atlantic, such as "The Full Employment and Jobs for Americans Act" to mask their intent. Instead, they wanted it to be clear to all stakeholders, and to their parliamentary colleagues, that the law required that renewables be given the "right to connect", and the "right to sell electricity to the grid" as well as priority over electricity from fossil-fired and nuclear generation. The success of the German program is as much about the right to connect and to sell electricity as it is about the specific payment per kilowatt-hour for each technology.

Nevertheless, without a price that permits profitable development no one will build renewable generation and connect to the grid. Price remains critical, and for that reason, I've summarized below some of the prices paid--the tariffs--for various technologies during the first year of operation.

Renewable Tariffs & Heritage Resources

The tariffs in the following tables are arranged from the highest to the lowest and are not sorted alphabetically. The reason for this is to help the reader gain a quick grasp of what is being paid for a particular technology around the world.

Consequently, it is important to note the difference between these posted prices and the price of generation from "heritage", or existing, sources. In most cases, renewable tariffs are higher than those of heritage resources. There's good reason for this. Renewable tariffs pay only for new generation. The capital cost of heritage sources have often, if not nearly always, already been recovered--some many times over. Thus, the price paid for heritage generation is very low in comparison to the price needed to pay for electricity from newly installed generators like a new nuclear plant, a new coal plant, or a new wind plant. This distinction is often lost on policymakers and even on some in the electric utility industry and its regulators.

Contract Term

Best practice worldwide is to offer contracts for a period, or term, of 20 to 25 years. Some jurisdictions are successful with terms of 15 years. Some, such as Ontario, offer terms of as much as 40 years for long-lived technologies such as hydro.

Longer contract terms lower the initial price necessary for the same level of profitability. Thus, longer contract terms may be more politically palatable, especially in North America where the price from heritage resources is so low.

However, longer contract terms increase the risk from inflation. Some mistakenly believe that inflation only affects the operations and maintenance side of the profitability equation, or the cost of fuel for biomass and biogas plants. Inflation affects the real rate of return that an investor can expect from the equity or capital invested in a project. Inflation erodes the real rate of return over time and as the time period becomes longer, the risk increases. For this reason many programs include inflation protection to cover a portion of this risk.

Inflation Adjustments

If productivity is determined by the resource, and all other factors remain the same, then profitability is determined by the tariff and the inflation adjustment. To improve profitability, the price can be increased, or the inflation adjustment can be increased, or some combination of the two can be used. In no case can the tariff be lowered and the inflation index lowered at the same time without hurting profitability. To maintain profitability when the tariff is lowered, the inflation index must be increased to compensate.

Programs in Germany and Spain represent two extremes in how they respond to inflation. Germany's Renewable Energy Sources Act does not account for inflation outside the contract. In the early Spanish program, tariffs increased annually 100% with the inflation in electricity prices under the fixed-tariff option. This feature was built into the program because Spanish renewable tariffs were calculated as a fixed percentage of the "Average Electricity Tariff" determined annually. (This system has since been changed.)

Most programs fall somewhere in between these two extremes.

France includes both an adjustment in the base tariff for inflation, and, within a contract, an adjustment of the contracted tariff. Once the contract has begun, the tariff paid increases with 60% to 70% of inflation.

First Year Price

The design of feed-in tariffs can be as flexible and as complex as policymakers desire. Consequently, it is very difficult to summarize worldwide tariffs for a particular technology with a single entry.

The "first-year price" shown in the following tables is just a snapshot of the tariffs for a particular technology in a particular jurisdiction.

Best practice worldwide is to provide tariffs that are differentiated not only by technology but also by size, application, and, in some cases, by resource intensity. For example, there are six different tariffs for solar PV in Ontario and twelve different tariffs in Germany.

One could sort the tariffs for a particular technology, for example solar PV, by size and application. Unfortunately, that would make this article even longer than it already is.

Further, the price or tariff paid during the first year may not accurately reflect what will be paid during the full duration of a feed-in tariff contract. This is particularly true where tariffs are adjusted for resource intensity after several years of operation. For example, wind energy tariffs in Germany, France, and Switzerland can be reduced in later years depending upon a measure of the productivity of the wind resource. Lowering the tariffs in later years cuts the average price paid over the full contract term relative to the initial price shown in the tables.

Keep these caveats in mind when reading the following tables.

Small Wind Tariffs

While they are not as well known as solar PV tariffs, there is an increasing number of policies paying specific tariffs for electricity generated by small wind turbines. In September, Nova Scotia launched its ComFIT program, which features one of the world's highest tariffs for generation from small wind turbines.

The following table lists only one entry for Great Britain. However, Britain offers four different tariffs for small wind turbines and two tariffs for medium-size wind turbines.

Small wind development is now proceeding apace in Great Britain and Italy. Since Britain's feed-in tariff program was begun in the spring of 2010, small wind generating capacity has more than doubled.

Wind Tariffs

Tariff levels are a function of resource intensity for all technologies, but more so for wind energy than for any other technology. The power in the wind is a cubic function of wind speed. Slight changes in average annual wind speed from one site to the next can have a profound effect on the amount of electricity that a wind turbine can produce. As a consequence, the tariff necessary for profitably operating a wind turbine on the windswept west coast of Ireland is far lower than that for mid-continent sites like those in Ontario, Canada.

Tariff levels may also reflect the type of application envisioned by policymakers. Nova Scotia's tariff is applicable only to wind turbines that are community owned. To qualify for the tariffs in Rhode Island and Vermont, wind developers are restricted to effectively one wind turbine.

Wind energy is more expensive when produced by one wind turbine than by a cluster of turbines or a small wind farm, because costs of operation and maintenance can be spread across more wind turbines. Thus, programs limiting feed-in tariffs for wind energy to only one turbine will of necessity pay higher prices for the same wind resource than programs allowing greater installed capacity.

As noted previously, a simple summary of first-year tariffs across jurisdictions may not capture program subtleties, such as tariffs that vary with resource intensity.

Wind tariffs in Germany, France, and Switzerland vary by resource intensity. In all three countries, electricity from wind turbines is paid a fixed price--the price listed in the table above--during an initial or trial period. After this period (five years in Germany and Switzerland, ten years in France), the tariff may change.

In Germany and Switzerland the base tariff is extended by a specified number of months after the trial period, when the productivity of the turbines is less than the target; that is, if the site is less windy than that used in the tariff calculations. At a windy site in Germany, after year five the tariff falls to the value listed in the table below.

In France, after year ten, the tariff is adjusted based on the productivity of the turbine.

Thus, in Germany, France, and Switzerland the time-weighted average tariff for wind energy is less than the first-year tariff. Sometimes the time-weighted equivalent tariff is much less than the first-year tariff. It is for this reason that the cost of wind energy to ratepayers in these countries is not simply the product of the terawatt-hours produced times the posted tariff. This subtlety is not only lost on many politicians but also on many renewable energy advocates.

Tariffs differentiated by resource intensity are not limited to wind energy. For a brief period France employed feed-in tariffs for solar PV that differed by insolation. Sites in cloudy northern France were paid a higher price for solar-generated electricity than sites along the sunny Riviera.

Offshore Wind Tariffs

As noted in the section above, the tariffs for offshore wind energy in Germany and France vary by resource intensity. The table below lists only the first-year tariff.

Geothermal Tariffs

Outside of Italy, there's very little geothermal development in continental Europe. There's especially little experience with small geothermal projects in the 10 MW to 20 MW range. Thus, the tariffs below are based on limited experience and intended to pay for the high costs of early high-risk projects.

See Geothermal Feed-in Tariffs Worldwide for more on geothermal tariffs.

Biomass Tariffs

Biomass tariffs are as complex as the other technologies. Each jurisdiction defines biomass differently. Some include biogas under biomass. Others list them separately. Most jurisdictions vary tariffs by project size. Some also vary the tariff by fuel source and even the percentage of various fuel sources used. The table below is only a gross approximation. For details see the listing for each individual jurisdiction in Tables of Feed-In Tariffs Worldwide

Biogas Tariffs

Biogas may include landfill gas, sewage treatment plant gas, gas from farm wastes (manure), or gas from a host of other sources. Some jurisdictions lump these sources together, others calculate a separate tariff for each while also varying the tariff by project size. For example, Ontario offers five tariffs for biogas depending upon project size. Germany and France offer separate tariffs for landfill gas, sewage gas, and gas from on-farm anaerobic decomposition.

Hydro Tariffs

Most feed-in tariffs for hydroelectric generation are limited to "small" hydro or run-of-the-river hydro. In many jurisdictions, large hydro is restricted to state enterprises, as sites for large projects are extremely limited.

As with other technologies, most hydro tariffs vary by project size. The summary below is just a snapshot of first-year tariffs for the smallest projects.

Wave & Tidal Tariffs

As with continental European geothermal energy use outside Italy, tariffs for wave and tidal generation are based on very limited data and practically no real-world experience. Thus, the tariffs below are conjecture on what projects might need if built. As projects come on line and experience is gained from operation, the tariffs could be decreased for new projects over time.

Portugal specifically limits its tariffs for wave generation to the first plants in each size category.

Interestingly, Nova Scotia defended its decision not to include solar PV in its ComFIT program by noting that solar PV was "immature". Yet Nova Scotia proceeded to offer the world's highest tariff for "immature" tidal power.

Solar PV Tariffs

In many jurisdictions, tariffs for solar PV vary by application (rooftop or groundmounted) and by size. As noted previously, there are six different tariffs for solar PV in Ontario and twelve different tariffs in Germany.

In 2010, solar PV tariffs in France for projects greater than 250 kW varied by département from a base rate representing the sunny Riviera to a high of 1.2 times the base rate for cloudy northern France along the Belgian border.

In the following table, the first set of tariffs represents small rooftop systems. The second portion represents large groundmounted systems.

First-year tariffs for solar PV in Italy during 2011 decrease--degress--by month. The value for September is shown below.

Summary of Heat Tariffs

Tariffs for heat are not included in this snapshot. Though Luxembourg, for example, pays a tariff for commercial heat from biogas or solid biomass of €0.03/kWh (~$0.04/kWh), there is no summary table of heat incentives in this snapshot. The tariff is included in the table for Luxembourg and will be included in a future article summarizing renewable heat tariffs.

More Information Needed

More detail on the tariffs in a number of countries is needed to keep Tables of Feed-in Tariffs up-to-date. While there are reports of feed-in tariffs in Nicaragua and Honduras, I have not found any specific information. Similarly, my information is incomplete on Sri Lanka, Moldova, and Armenia, to name only a few.

Photo Credit: Kevin Baird

Rhode Island Posts Proposed Tariffs--Meets Deadline

2011-10-06T11:31:02-04:00

October 3, 2011

By Paul Gipe

In record time, the government of Rhode Island and Providence Plantations has posted proposed feed-in tariffs for renewable energy.

Only signed into law by Governor Lincoln Chafee on 29 June, 2011, Rhode Island determined a methodology for calculating the tariffs, held four public hearings, and posted their findings by the statutory deadline at the end of September.

Rhode Island's fast action should allay any further hand wringing by North Americans that calculating feed-in tariffs is difficult and time consuming.

Rhode Island becomes only the second state in the Northeast to implement a feed-in tariff program and one of the few states in the US to do so.

The Rhode Island Office of Energy Resources managed the expedited process and filed their recommendations September 27, 2011 in compliance with the law.

State Level Feed in Tariff and Federal Preemption Papers released

2011-07-20T15:12:43-04:00

Jennifer Gleason of ELAW (Environmental Law Alliance Worldwide), and the Alliance for Renewable Energy has finished two exceptional papers on the issues of state level Feed-in Tariffs.

The first paper, Adopting State Feed-in Tariff Laws without Federal Preemption is intended to help renewable energy advocates understand the concerns about federal preemption and understand possible paths forward for states to adopt robust FITs that are not preempted.

The second, accompanying paper Available Paths for Designing Strong State Feed in Tariffs is intended to provide sample language that could be used by states to implement a Feed-in Tariff that should not be preempted by federal law. This language only addresses how the rates would be set.

Harvesting Clean Energy on Ontario Farms. A Transatlantic Comparison

2011-06-29T13:54:59-04:00

With Harvesting Clean Energy on Ontario Farms. A Transatlantic Comparison, the Heinrich Boell Foundation just released a new report on how renewables energies provide benefits for rural communities and what steps need to be taken to engage more farmers in renewable energy production. Some farmers in northern Germany make $2.5 million in a good year growing wheat. They make $15 million harvesting the wind, as the Ottawa Citizen reports.

What Feed-in Tariffs Could Do for Japan's Electricity Shortage

2011-04-14T17:43:23-04:00

What Japan Could Do if It Followed Germany's Lead on Renewable Energy

Within one Decade Japan Could Halve its Dependence on Nuclear Power

April 14, 2011

By Paul Gipe

If Japan adopted an aggressive renewable energy policy like that of Germany, it could, within ten years, generate more than four times the electricity lost at the Fukushima 1 nuclear power plant, cutting the country's reliance on nuclear power by one-half or more.

As Japan expands the evacuation zone around the damaged Fukushima 1 nuclear plant from 20 km to 30 km and Tokyo Electric Power (TEPCO) skirts the edge of bankruptcy, the country confronts a stark choice: undertake a massive construction program to replace the nuclear reactors with more of the same, or, instead, follow a new, less risky, and potentially more strategic path toward rapid renewable energy development. The stakes are high and the fight is already intense as Japanese elites debate the future of their electricity system, and literally, the future of their country.

However, it is clear now that if Japan were to follow the path blazed by Germany, it could more than replace the electricity generation lost by the damaged plants at Fukushima in less time than it would take to build new reactors.

Germany alone added as much new renewable generation in less than five years as Japan lost at Fukushima. Wind energy alone generates more electricity in Germany than the doomed Japanese reactors once did.

If Japan were to develop renewable energy at the same pace as Germany has over the past decade, it could add 120 TWh per year of new renewable generation. It could add significantly more, if it kept up with Germany's blistering pace of solar energy development over the past five years.

Using a system of Advanced Renewable Tariffs, the modern version of feed-in tariffs, Germany added 80 TWh of new generation from wind, solar, and biomass between 2000 and 2010.

The six damaged reactors at Fukushima 1 generated about 30 TWh in 2010, and Japan's fleet of aging nuclear reactors generate a total of about 260 TWh per year.

Japan and Germany

Japan and Germany are two of the world's economic powerhouses. Their economies rank third and fourth, respectively, behind the USA and China.

Though Japan and Germany occupy about the same land area, Japan has ~50% greater population density and its economy is 1.5 times larger than that of Germany.

Somewhat surprisingly for its technological sophistication, Japan consumes 70% more electricity than Germany, far more than would be expected by its greater population. This has not been lost on international observers of Japan's economy following the disaster at Fukushima. There's a lot of room in the Japanese economy for improvements in energy efficiency and conservation.

If Japan were to emulate the spectacular growth of renewable energy in Germany over the past decade by implementing similar policies, it's reasonable to expect that the amount of new generation to be added would reflect the greater size of the Japanese economy. Thus, it's reasonable to expect that Japan could install 1.5 times the new generation Germany added during the past decade over a similar period.

Japan has abundant wind, solar, biomass and geothermal resources, but has not been an international leader in any of these technologies except solar photovoltaics (solar PV). Instead, the country has been content to export what technology it does have, while relying on nuclear power and fossil fuel imports for its own electricity generation.

Renewable Energy in Japan

Japan generates only 1% of its 1,025 TWh of electricity consumption per year from new renewables. In contrast, Germany generates 14% of its supply from wind turbines, biomass plants, and solar panels, and another 3% from previously existing hydro plants.

Nuclear power provides one-quarter of Japan's electricity supply. The plants at Fukishima 1 alone provided nearly 3% of Japan's electricity.

Geothermal

Japan began developing its geothermal resource in the mid-1960s. Today, Japan operates nearly 540 MW of geothermal power and generates 3.5 TWh per year. This modest fleet puts Japan eighth in world geothermal rankings--behind Iceland and New Zealand, and well behind the developing countries of Mexico, Indonesia, and the Philippines in absolute capacity installed.

However, on a per capita basis, Japan falls even farther behind the small island nations of Iceland and New Zealand. Iceland operates more than 400 times more geothermal capacity per capita than Japan, and New Zealand operates more than 30 times more geothermal generation per capita than Japan.

Wind Energy

Japan does not rank in the top ten nations developing wind energy, even though it has a leading wind turbine manufacturer, Mitsubishi, that still builds its wind turbines domestically. Despite its industrial stature, its long coastline and its mountainous interior, Japan ranks 12th in development of wind energy, following Portugal.

France, where nuclear power provides more than 80% of generation, has installed twice the wind capacity of Japan.

On a per capita basis, Japan fares even worse. Denmark has more than 35 times the installed wind capacity per capita of Japan. Both Germany and Spain operate nearly ten times more wind generating capacity than Japan. Tiny Portugal has installed nearly 50% more wind capacity than Japan.

Only India, a developing country, has done worse for its size and population than Japan.

Even the USA, a relative laggard in developing most of its renewable resources, has installed seven times more wind generating capacity per capita than the Japanese.

Solar PV

After the US faltered in the early 1980s, Japan took the lead in developing solar PV technology, and, from the mid 1980s through the 1990s, dominated the industry. Since the turn of the century, Japan's lead has quickly eroded with the rapid rise of European solar markets.

Today Japan is third in total installed solar PV capacity, but falls to fifth place on per capita installations. On a per capita basis, Japan is ahead of only the US and nuclear France. Germany has installed seven times more solar PV per capita than Japan, and, as a result, German companies have become strong industrial competitors to Japanese manufacturers.

Even Italy, once the poor man of Europe, has installed 1.7 times more solar PV per capita than Japan.

Japan's Solar Resource

Solar PV already generates more electricity than geothermal power plants in Japan, though not by much.

While the solar resource at some locations in Japan is no better than that of Germany, there are sites where the solar yields are as much as 1,200-1,300 kWh/kWdc/yr. On average, Japan's solar resource is 14% greater than that in Germany's.

What Japan Could Do

What could Japan do if it were to implement an aggressive renewable energy program using, as in Germany, a system of feed-in tariffs to encourage rapid development of its indigenous resources?

Japan certainly has the industrial capacity, an educated and industrious people, and an immediate need for reconstruction that would make such an ambitious program both possible and necessary.

While Japan and Germany are decidedly different cultures, Germany has proven that a massive amount of new generation can be added quickly. Equally important, German policy spread the economic opportunity afforded by the program equitably across all sectors of society through its system of Advanced Renewable Tariffs. Under such a policy, all renewable generators, regardless of size, are guaranteed access to the grid. Everyone can participate in the program--from the humblest farmers and homeowners to multinational companies.

Germany's development of renewable energy contrasts markedly with the way nuclear power was developed in Japan. As in most other countries, the decisions to build nuclear plants in Japan were concentrated in the hands of a few industrial titans.

Unlike the development of nuclear power, which weakens democratic institutions, the development of renewable energy, because it is so dispersed, can strengthen democratic society where feed-in tariffs are used to create equal opportunity for all players-big and small alike.

Assuming that Japan did make such a commitment, and did so this year, it could rapidly ramp up installations of wind, biomass, and solar PV capacity at a pace comparable to that of Germany between 2000 and 2010.

Because Japan's economy is 1.5 times larger than Germany's, wind energy and biomass could theoretically be scaled up at 1.5 times Germany's pace. Under this scenario, Japan would be generating more than 100 TWh from wind energy and biomass by 2022

Japan already has a jump on rapidly expanding solar PV. Several of the world's leading solar PV manufacturers are based in Japan and there is a sizeable existing home market.

It is rumored that Japan installed possibly as much as 1,000 MW of solar PV last year, bringing total installed capacity to 3,700 MW.

Germany didn't reach an equivalent stage of annual installations until 2005 and 2006. Thus, Japan's pace of solar PV development could replicate Germany's pace between 2005 and 2010, as well as its expected installations through 2015.

Thus, solar PV grows rapidly from a modest contribution in 2012 and begins to nearly double from one year to the next, beginning in 2015. By 2022, solar PV could be generating more than 50 TWh of renewable electricity--widely distributed across Japan--increasing the resiliency of the country's electricity network from large-scale disturbances, such as earthquakes and tsunamis.

Germany has only just begun to develop its geothermal resource. Consequently, there's no comparable decade of growth to pattern Japan's renewable policy after. However, wind energy in Germany has grown 20% per year, on average, during the past decade.

If Japan could add new geothermal generation at a 20% growth rate from its current contribution, geothermal generation could reach more than 20 TWh per year by 2022.

All together, if Japan followed Germany's pace of development, it could add more than 180 TWh of new generation within the next decade, or six times the generation lost at Fukushima 1 or more than two-thirds the generation from Japan's entire fleet of nuclear power plants.

Japan's Renewable Policy

What Japan must avoid is the piecemeal policy approach that has characterized its policy in the past, and bedeviled renewable policy in the US for decades: One policy for wind, another for solar PV, and yet other policies for geothermal and biomass.

To emulate Germany's success, Japan must similarly implement a comprehensive policy that includes all renewables--not just solar, or not just wind. Feed-in tariffs are well suited for this task because of their reliance on tariffs differentiated by technology, project size, and other factors. This is one of the reasons why 23 of 27 European Union countries rely on feed-in tariffs as the principal mechanism for meeting their renewable energy targets.

The policy must also be long-term--at least a decade or more--to give Japanese industry and its people time to build the institutional capacity needed to locate sites, manufacture equipment, and install increasing number of solar panels, wind turbines, biomass and geothermal power plants. The policy must be in effect at least as long as it would take to build a new series of reactors.

Japan's policymakers might be well served by looking to the province of Ontario, Canada, as well as to Germany for a sophisticated system of feed-in tariffs. The policies in both jurisdictions have unique qualities. Ontario's program has elements that Germany's does not, such as, specific tariffs for community-owned renewables. For its part, Germany has differentiated tariffs for geothermal energy that Ontario does not. Japan could pick the best elements from both jurisdictions.

But Ontarians have done the one thing unthinkable in Germany; they have specified domestic-content requirements for participation in their feed-in tariff program. Ontario's objective was to create a domestic industry for the 21st century and to ensure that some of those future green jobs go to Ontarians.

The Unthinkable: Domestic Content Requirements

Japan may want to consider the unthinkable as well, and incorporate a domestic content requirement into their feed-in tariff program, in part to regain the technological edge it lost in the past decade.

This would indeed be ironic, since Japan filed a trade complaint against the province of Ontario for its domestic content requirement, arguing that this puts Japanese companies at a disadvantage.

In the short-term Japan will be importing more oil and liquefied natural gas to replace the lost nuclear generation at Fukushima. Such a controversial policy as a domestic-content requirement could make sense, since the astronomical costs of reconstruction and repowering of Japan's electricity infrastructure, and the necessity of limiting the nation's foreign exchange expenditures for imports of fuel and manufactured goods, could force the government's hand.

The concepts of trade protection and aid to domestic industry, of course, are not foreign to any nation, including Japan. This may be easier to implement quickly in the Japanese context, where major industries and the government itself form pacts and partnerships to further their own internal interests.

Japan could limit its expenditures to the internal economy as much as possible, using Japanese labor, materials, and industrial resources. This may appeal to Japanese industry and, perhaps, even some of what Rikkyo University's Andrew DeWitt calls its "power elite". Such a domestic content requirement could conceivably circumvent GATT, on the grounds of emergency reconstruction and environmental protection, as Japan tries to reduce its vulnerability to more nuclear disasters like that at Fukushima.

Japan's current ruling party came to power in part on a commitment to implement an aggressive renewable energy policy based on feed-in tariffs. It has failed to do so. But the opportunity remains and the need to implement an aggressive yet equitable policy is now greater than ever.

As Japan first and foremost grapples with the urgent need to care for those displaced by the earthquake, tsunami, and the subsequent nuclear disaster, it must also begin planning for the future. That future can include the rapid development of massive amounts of renewable energy by all sectors of Japanese society, if the "power elite" can adapt the German model to "Japan Inc."

Photo by Flickr user taiyofj, shared under a Creative Commons license.

New Record for German Renewable Energy in 2010

2011-03-25T10:23:22-04:00

One-Quarter Million New Solar-Electric Systems Installed

New World Record: 7,400 MW of Solar Photovoltaics Installed in One Year

Renewable Electricity Penetration More than 30% of Supply on February 7th

New Renewables Near 17% of Electricity Supply

Renewable Generation Greater than Natural Gas--Closing in on Nuclear

March 24, 2011

By Paul Gipe

As the nuclear reactor accident at the Fukushima Daiichi plant continues to dominate the world's attention, Germany has quietly broken more renewable energy records.

The conservative government of Chancellor Angela Merkel, struggling to stay ahead of public attitudes toward nuclear power in the run-up to regional elections, issued its annual report on the contribution of renewable energy to the German energy market in 2010.

Wind turbines, hydroelectric plants, solar cells, and biogas digesters now provide nearly 17% of Germany's electricity.

Meanwhile, the German network agency (Bundesnetzagentur) issued its final update on the installation of solar photovoltaics (solar PV) in 2010.

The results are nothing short of startling and will add fuel to the heated debate about how countries such as Japan can meet their electricity needs without reliance on nuclear power.

In the immediate aftermath of the Japanese nuclear accident, Germany's Merkel closed two reactors permanently, and another five temporarily. She also called on her government to revisit its controversial decision to extend the life of its aging reactors.

The reactors at Fukushima Daiichi are 40 years old and their license to operate had been extended by the Japanese government.

The reports on the rapid growth of renewable energy in Germany may give Merkel's government the cover it needs to reverse direction on nuclear power, and by doing so reverse its faltering political fortunes.

Germany uses an advanced system of feed-in tariffs to pay for renewable energy generation, and has an aggressive target of meeting 39% of its electricity supply with renewable energy by 2020. Its system of advanced renewable tariffs has enabled Germany to exceed its 2010 target of 12.5% by a wide margin.

New Renewables Near 17% of Electricity Supply in 2010

The German Ministry for the Environment and Reactor Safety reports that in 2010 renewable energy generated more than 100 TWh (billion kilowatt-hours) of electricity, providing nearly 17% of the 600 TWh of supply.

Wind turbines and biomass plants delivered more than 70% of renewable generation.

Biogas plants powered with methane from manure alone generated nearly 13 TWh.

In 2010 renewables generated more electricity in Germany than gas-fired power plants--nearly as much as hard coal--and are fast approaching the contribution of nuclear power.

7,400 MW of Solar PV Installed in One Year

Doubling their previous record, the German solar PV industry installed 7,400 MW from nearly one-quarter million individual systems in 2010, according to the finial report by the Bundesnetzagentur.

In December alone, Germans installed more than 1,000 MW of solar PV, enough solar capacity to generate 1 TWh of electricity under German conditions. While they represent only half that installed in June 2010, the December installations were 50% greater than total solar PV installed in the USA in 2010 and as much as that rumored to have been installed in Japan last year.

Nearly 700 MW from some 100,000 systems were installed in a size range typical of that installed by German homeowners.

An astounding 3,700 MW from more than 135,000 systems were installed in a size range representative of that installed by farmers and other small businesses.

Another 1,700 MW were installed in a size class characteristic of small businesses and large industrial rooftops.

Large, multi-megawatt systems comprised 1,400 MW of capacity or nearly one-fifth of total capacity installed in 2010.

Renewable Electricity More than 30% of Supply on February 7th

A further sign that renewable energy has come of age as a commercial generating technology, certainly in Germany, is that penetration of wind and solar reached more than 30% of supply on February 7, 2010, according to data posted publicly by Germany's electricity transmission exchange, EEX.

The exchange posts online the amount of capacity of conventional generation, wind generation, and solar PV generation delivered to the grid by time of day.

On Monday, February 7, 2011, the combined real-time wind and solar generation varied from a high of 32% of supply at midnight to a low of 18% of supply at sunrise. Solar PV generation delivered more than 8,000 MW for the two-hour period from just before noon until 2:00 pm, reaching a peak of nearly 8,500 MW at noon. During the same time period, conventional sources contributed 50,000 MW and wind delivered another 10,000 MW to the network.

There is 16,500 MW of solar PV capacity now on line in Germany. Solar insolation is weakest in mid winter, and highest in mid summer. The solar industry's February 7th performance bodes well for this coming summer, when solar PV can be expected to break new records.

In other observations:

PV produced 13% of supply at noon on February 7, 2011,
Wind reached nearly 1/3 of generation at midnight,
Wind and solar's combined 18,500 MW at noon met 29% of demand,
PV was producing 1/2 of its nameplate in mid winter, and
Wind was producing near its total installed capacity.

With the Japanese nuclear calamity fresh in everyone's mind and upcoming elections staring the government in the face, the success of Germany's rapid development of renewable energy may give Chancellor Merkel's conservative government the flexibility it needs to weather the nuclear crisis. It would not be surprising to find the government proposing an even more aggressive pace of renewable energy development than that seen in 2010.

Who Invented the Solar Feed-in Tariff (FIT)? --Or What We Can Learn From Aachen's Success in Harnessing Clean Energy

2011-03-25T10:22:05-04:00

March 24, 2011

by Bob Johnstone

The following is an excerpt from Bob Johnstone's new book Switching to Solar.

The solar industry is booming. During the past decade PV shipments have grown by three orders of magnitude. In 2010 shipments were up over a hundred percent on 2009.

How to account for this explosive growth? Though success has a thousand fathers, most analysts agree that the trigger was Germany's solar feed-in tariff, first enacted in 2000 then turbocharged in 2004.

Who deserves the credit for this extraordinarily effective policy mechanism? That was my question when I began research for my book, Switching to Solar. In November 2007 I flew to Germany to find the answer.

In Berlin I interviewed Hans-Josef Fell, the hands-on Green politician who crafted the Renewable Energies Act, the legislation that launched the solar FIT. I also met the now, alas, late Hermann Scheer, the canny deputy who did more than anyone to popularize solar, and who was responsible for shepherding the Act through Germany's parliament, against government wishes.

But the politicians did not originate the solar FIT. That distinction belongs to a little-known activist named Wolf von Fabeck, a retired soldier who lives in the provincial German city of Aachen. In November 2008 I returned to Germany to meet this humble man.

Like many of his fellow-countrymen von Fabeck is a nature lover. In 1984 he was upset by damage to forests caused by acid rain from coal-fired power plants. Then in April 1986 came Chernobyl.

Spurred by the catastrophe, von Fabeck began investigating alternatives. He bought a solar panel and hooked it up to his wife's food processor. The blades turned very slowly. "But at least it worked," he noted.

With seven friends Von Fabeck formed a group, the solar energy supporters association of Aachen. From the outset the group realized they would have to pay more for solar. But they were willing to bite the bullet, to make the conceptual leap and say, We want photovoltaic, and we're prepared to pay what it takes. But how would they pay for it? That was the question.

"We were idealists, but we were not many," von Fabeck told me. "Most people are not idealists, they act in their own economic interest." If the solar movement was to go mainstream, financial incentives would be necessary. "We had to change the market environment so that non-idealists would be rewarded for doing the right thing."

Von Fabeck's original thought was that purchasers of solar systems should be eligible for a hundred percent rebate. But he soon realized that such a scheme would subsidize the purchase of even the most expensive hardware, a wasteful use of public funds.

Inspiration came from the Swiss town of Burgdorf. There, to encourage citizens to instal solar systems, the local utility offered a premium price for electricity thus generated, paid for by setting aside one percent of electricity rates.

"Burgdorf was paying higher tariffs long before we had the idea," von Fabeck admitted. "But it wasn't a cost-covering feed-in tariff - [the Swiss] just paid a little bit more, and that was a good idea. But they didn't make a broader concept or principle from it."

Until then, the reason most people installed PV systems was for their own use, because they wanted to do good for the planet. Any leftovers went to the grid.

But under the system pioneered in Bergdorf, none of the electricity generated was for personal use, it was all fed into the grid. The intention was to help meet society's need for clean energy, not the individual's.

This radical new scheme fundamentally altered the role of the private generator. "The main idea," von Fabeck explained, "was that private owners of solar systems should be treated exactly as if they were utilities.

"Owners should be able to feed the electricity they generate into the public grid and receive in return a payback rate that allows them to finance and maintain their systems, plus a small profit. Since everybody consumes the clean energy that the owners generate, everybody should pay for it, via their electricity bill.

"This way, the utilities would be responsible for reimbursing private producers. There would be no need for state-funded subsidies, or new taxes, or any government involvement at all."

Ultimately, it boiled down to a simple equation. Given that (a) the rated lifetime of a household PV system is twenty years, and that (b) the average annual insolation is known, then (c) the number of kilowatt hours a system will generate over twenty years can be calculated.

The upfront cost of a typical residential PV system was around $25,000. The question was thus, How much would a utility have to pay system owners per kilowatt hour over twenty years to compensate them for their investment?

Von Fabeck worked out that the answer was about $1.20 per kilowatt hour, around twenty times the cost of conventionally-generated electricity. To pay for this, as at Burgdorf, a one percent surcharge on electricity rates would suffice. The annual increase in cost to an average family would be just $18.

"The initial thinking was that [the surcharge] would be too heavy a burden," Hans-Josef Fell told me. "But Wolf von Fabeck was the first who calculated this, and he opened our eyes - it is nearly nothing for consumers."

Von Fabeck's feed-in tariff methodology was published in 1994. Over the next six years, thanks to efforts by grassroots groups, it was adopted across Germany in small towns and big cities like Hamburg and Munich. In 2000 the methodology would serve as the basis for Germany's "ecological masterpiece," the Renewable Energies Act.

"My book, Switching to Solar, is mainly a history of the post oil-crises solar industry. But as its subtitle - What We Can Learn From Germany's Success in Harnessing Clean Energy - indicates, the book is also partly intended as a primer. Lessons include:

Don't try to reinvent the wheel. The Germans have a wealth of experience with feed-in tariffs. Yet instead of benefiting from their experience, other countries (Spain for example) ignore it and come unstuck.

Keep it simple. Feed-in tariffs are easy to understand. Buyers of solar systems in Germany merely inform their local utility that, as of a certain date, they will be supplying electricity to the grid. The paperwork is minimal, unlike the bureaucratic nightmare that confronts would-be PV purchasers in the US.

- Never give up. To get feed-in tariffs adopted, Wolf von Fabeck fought a recalcitrant local utility for years. Now aged 75, he is still campaigning, for one hundred percent renewable energy."

Bob Johnstone is a writer based in Melbourne, Australia. His previous book was Brilliant! Shuji Nakamura and the Revolution in Lighting Technology (2006).