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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

In making recommendations to the city of Los Angeles on a feed-in-tariff program, the and the conducted that looked at both statewide bills, along with a Renewable Auction Mechanism (RAM), proposed by the CPUC, where renewable energy would be procured on a twice-yearly auction basis.

They found that current policies "will not significantly contribute to Los Angeles' renewable energy or economic development goals."

"The tariff structures are not high enough to cover the costs of in-basin solar projects or to provide any return on investment," the study, released in March, said. "In the case of the RAM, competitive forces will favor larger projects sponsored by professional developers. None of these programs or proposals will induce any significant in-basin solar."

To ensure better policy, the FIT Coalition is supporting new legislation in California, called . The bill is currently in the senate appropriations committee and is one step from reaching the senate floor.

The legislation contains an earlier, much-reduced version of the more ambitious Renewable Energy and Economic Stimulus Act (REESA), Ko said. Still, the coalition believes AB 1106 will move California's feed-in tariff policies forward. Ko said he is optimistic that they can get the legislation passed while Gov. Arnold Schwarzenegger, who has voiced support for the bill, is still in office.

Under AB 1106, two tiers of projects would be eligible; those up to 5 megawatts and those from 5 – 10 megawatts. The price would include cost of generation plus reasonable profit — the same as any other utility generation in the state.

Ko said the timing is good because the price of solar energy components have come down about 40 percent in recent years. He also said that a report coming from a research team at the University of California, Berkley over the next few weeks is expected to show strong economic benefits of a feed-in tariff system in terms of both job creation and revenue.

On jobs in particular, Ko said the data is "pretty significant, especially compared to other jobs bills in Sacramento right now.”

But Gipe only gave AB 1106 a D grade. He said the program and project caps are still too low to allow renewable energy generation to reach economies of scale.

"Why put renewable energy in a small energy ghetto when what we need is renewable energy of all sizes, big and small?"

The FIT Coalition similarly prefers a more robust program with feed-in tariffs for renewable energy projects of up to 20 megawatts. Ideally, they want the tariff to deliver an incremental two percent of California's delivered energy from renewables every year through 2020.


The Ticket to California's Laggard RPS Compliance?

California utilities did not come close to meeting their 20 percent by 2010 Renewable Portfolio Standard (RPS). And under current conditions, they may not even get there . This creates greater pressure and doubt for meeting the state's next goal of 33 percent by 2020.

The FIT Coalition and others see a strong, comprehensive feed-in-tariff program — like those in Germany and Ontario — as the road to success.

Ko said that while there has been some resistance from Republicans in the state legislature, there have been no direct attacks, in part because it's not a topic that ratepayers are particularly engaged in.

"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."

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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