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Can California Lead the Nation on Feed-In Tariffs?

Reviews are mixed, as efforts get underway in the state to pass a somewhat improved FIT bill

By Leslie Berliant

May 31, 2010

California legislators have struggled to pass a "feed-in tariff" for renewable power that actually works. But a new push looks to fix past mistakes and make California a national model for a financing technique that has helped to turn Germany and Spain into world leaders in solar energy.

Feed-in tariffs guarantee higher electrical rates to qualified renewable energy projects. In jurisdictions across North America, there are over a dozen such programs in place. Paul Gipe, an energy analyst with the , a research and advocacy group, graded them all in a recent report. California, he said, received an F.

"California is known for writing great press releases but comes up short on substance," said Gipe. The state "technically has a feed in tariff — it's what we call a FITINO, a feed-in-tariff in name only."

Gipe said the problems with California's current system — , a 2006 law that directed the (CPUC) to create a feed-in-tariff program — boil down to its small size and poor pricing.

The system, officially created in 2008, caps out at 500 megawatts, and only projects up to 1.5 megawatts are eligible. Gipe said that that amount of renewable energy is insignificant in a state like California, which uses around 300,000 gigawatts of electricity annually.

The second major problem Gipe sees is the way the energy is priced. The current system, known as "avoided cost," bases the tariff on the price of a conventional fossil-fueled power plant that would be avoided by installing renewable energy. It doesn't take into consideration the specific costs of the clean energy projects.

"It's a regulatory policy that allows renewable energy to connect but it's not a renewable energy policy," said Gipe. "In no place in the world has avoided cost resulted in the massive adoption of renewable energy. So why do we think that would do that here?"

Ted Ko, associate executive director of the FIT Coalition, an organization advocating for California's feed-in tariffs, agrees that AB 1969 didn't get the job done.

"Nobody wanted to build projects for that price, so it only put 14 megawatts into the ground," Ko said.

The organization recently announced a new board of directors that includes former CIA Director James Woolsey and Hunter Lovins of the . Ko said that the new board members all understand the importance of developing an effective feed-in tariff program in California that can set the standard for the rest of the United States.

Another bill, , was passed in 2009 and looked to fix some of the problems of AB 1969 by increasing the program to 750 megawatts and making renewable energy plants up to 3 megawatts eligible. It has not yet been implemented, however, and according to Gipe, it won't improve things in California anyway.

"SB 32 only looks at solar photovoltaics — that's one problem," said Gipe. "The second problem is that it only looks at the value of solar photovoltaics, not the cost of what it takes to install and make a profit. It is one step better than California's FITINO, but no where near goes far enough to be a feed-in-tariff like you see in Germany, Spain, Portugal, Ontario, Great Britain and so on."

 

Proposed FIT Gets Better — But Not Yet Good

It'll be tough

This is definitely true - "If we raised the visibility on feed-in-tariffs, there probably would be attacks," Ko said. "But ultimately, it might be good to have more people understand how they help." There is going to be a lot of resistance to raising tariffs, and it will definitely not be easy. But in the end it's probably for the best. -Dan from

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