Solar feed-in tariffs have been extremely effective in Europe at promoting the use of solar power

Solar industry groups from 13 states have said it is high time for the entire country to make use of feed-in tariffs to encourage homes and businesses to generate their own solar power.

Meeting last week at the Intersolar North America event in San Francisco, the industry associations heard that feed-in tariff programs have proved “wildly successful” in Europe.

They issued a statement today suggesting that it was now “long overdue” for the US to make the most of such initiatives.

Feed-in tariffs are now in use in 64 jurisdictions around the world, and have been particularly credited with boosting take-up of renewable energy in Germany and Italy.

Essentially, they involve a long-term guaranteed level of income for electricity produced by small-scale renewable energy systems, usually above market prices for electricity, in order to make it financially attractive for homes and businesses to invest in solar panels or other renewable energy technology.

In some programs, companies are allowed to take on the feed-in tariff income rights from homes and businesses in return for providing renewable energy equipment for low or zero upfront costs.

State-level

In the US, there has been interest in feed-in tariffs in a handful of states including California and Oregon.

As hopes for a nationwide renewable electricity standard flounder in the US Senate this week, the solar industry groups believe state and local-level adoption of feed-in tariffs can spur on the growth in American solar power.

Gary Gerber, President of the California Solar Energy Industries Association (CalSEIA), said: “States can take action now. States can grow local renewable industry businesses and create local jobs. Feed-in Tariffs are simple, easy to use, stable, and effectively drive the costs of renewables down quickly.”

Officials in the European Commission have said experience over there suggests feed-in tariffs are “generally the most efficient and effective support schemes for promoting renewable electricity” .

Lower risk

While property tax-based PACE incentive programs have been criticized by certain sections of the investment sector (see this BrighterEnergy.org story), investors have suggested a properly developed feed-in tariff scheme could reduce risks for renewable energy projects.

Mark Fulton, Managing Director, Global Head of Climate Change Investment Research for Deutsche Bank Climate Change Advisors, said: “There is strong evidence that Advanced Feed-in Tariff (FiT) programs that exhibit Transparency, Longevity and Certainty (TLC) can clearly reduce project risk, allow renewable energy developers to obtain a lower cost of capital, and create new jobs.”

The solar groups said implementing a feed-in tariff system would also prove more effective than a credit trading system, such as a Renewable Energy Certificate program. Lessons from Europe have suggested a feed-in tariff would cut the costs of technology compared to alternatives.

Lyle Rawlings, President of the Mid-Atlantic Solar Energy Industries Association, which represents solar companies in New Jersey, Pennsylvania, and Delaware, said: “In New Jersey, the second-largest solar market in the U.S., a tradable market commodity system of incentives was adopted that has driven up the cost of solar power to more than double the cost that a Feed-in Tariff would produce, while falling about 50% short of the legislated goals for solar.”

However, the groups noted that feed-in tariffs could work well in addition to existing programs like net-metering.

California adopted legislation last summer to allow a statewide feed-in tariff to support projects less than three megawatts in scale, with funds for up to 750MW total. Oregon launched its version of a pilot feed-in tariff program on July 1.

States represented by the solar groups calling for feed-in tariffs included Arizona, California, Colorado, Florida, Hawaii, Maryland-DC, Massachusetts, New Jersey, New York, Oregon, Pennsylvania, Texas and Virginia.