Feed-In Tariffs

An analysis last year by Gilbert Metcalf, of Tufts University, concluded that feed-tariffs – essentially a mandated price for utilities’ purchase of renewable energy – is the most effective tool encouraging investment:

The review of the European and US experience provides a number of lessons to guide future renewables policy in the United States. First, the European experiment with feed-in tariffs and renewable portfolio standards suggests that feed-in tariffs may dominate RPS systems as effective policy tools to encourage investment. Second, the US preference for tax incentives has clearly not had the same simulative investment impact as have feed-in tariffs. Third, a modest feed-in tariff for wind and biomass would make these technologies cost competitive with natural gas. Fourth, it is clear that considerable research and technological development will be required before solar electricity can compete in the market place regardless of the pricing support policy in place.

One might ask, then, why we don’t have more feed-in tariffs in this country?

That may be changing, according to Green Inc.:

Last week, the city of Gainesville, Fla., approved what the local paper called the “nation’s first solar feed-in tariff ordinance.”

Gainesville residents with photovoltaic panels on their roofs will get 32 cents a kilowatt-hour when they produce energy. (By contrast, homeowners in Florida last October paid on average 12 cents a kilowatt hour for their electricity, according to Department of Energy statistics.

One Comment

  1. John,
    Thanks for the link. The paper is interesting.

    These papers seem to leave out important topics that are beyond the interests of the writer.

    For instance, electricity from solar in Germany is $0.72 per kWh and the electricity from solar in your example in Florida is $0.32 per kWh. National average cost for energy from fossil fuels is $0.09.

    In Germany and in Florida, someone has to make up the difference in price, $0.63 and $0.23 per kWh respectively. As far as I know, the differences in price either come in the form of higher taxes or higher electricity bills, neither of which are popular in a recession.

    I wish that these articles would lay out who pays for these subsidies and how much the subsidies take out of the pocketbook of the homeowner, basically by subterfuge.

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