Source: www.RenewableEnergyWorld.com
By: Paul Gipe
The National Renewable Energy Laboratory (NREL) has issued a long-awaited legal analysis of how states could implement feed-in tariffs and still comply with federal law.
The January 2010 report, Renewable Energy Prices in State-Level Feed-in Tariffs: Federal Law Constraints and Possible Solutions, was written principally by Scott Hempling with the National Regulatory Research Institute (NRRI) under contract to NREL.
Hempling treads ground that others have tread before him, including California’s Attorney General, Edmund G. (Jerry) Brown. The Attorney General filed comments on who has jurisdiction to set feed-in tariffs with California’s Public Utility Commission in August of 2009. Brown concluded that the state could set feed-in tariffs sufficient to pay for renewable energy development while complying with federal law.
NRRI’s Hempling, like Brown, concludes that states can offer feed-in tariffs, but the programs creating the feed-in tariffs must be structured in a way that meets federal requirements.
There’s ample ammunition in the Hempling report to stoke either side in the feed-in tariff debate.
Opponents have long argued that feed-in tariffs are illegal in the U.S. They will find ample solace in the report that the European or Canadian approach of setting specific tariffs directly won’t comply with current federal law or its interpretation. Hempling says, in essence, that states can’t set specific tariffs above “avoided cost” under the Public Utility Regulatory Policies Act (PURPA) of 1978.
However, Hempling goes on to chart a path to implementing feed-in tariffs that avoids the regulatory minefield under PURPA and the Federal Power Act. Hempling describes how states can set total payments, or equivalent feed-in tariffs, above avoided cost in compliance with federal law. The path may appear more circuitous, in comparison to that in other countries, but it is, nevertheless, clear.
Proponents of FITs argue that feed-in tariff programs work best (spur the development of significant amounts of renewable energy) when the tariffs are based on the cost of generation plus a reasonable profit. In these programs, there are a suite of tariffs for solar PV, another set for wind energy, and so on. The tariffs for solar PV in these programs are much higher than the “avoided cost” of a conventional natural gas-fired power plant in the U.S.
California’s largely ineffective feed-in tariff introduced at the end of 2008 pays US $0.096/kWh for projects installed in 2010. The tariff, there is only one tariff, is based on the Market Price Referent, California’s term of art for the avoided cost of a natural gas-fired plant. By mid-2009 the tariff had resulted in only 17 MW of generation. Even with generous federal subsidies, FIT proponents say that this tariff is insufficient for most technologies, but especially for solar PV, the most expensive of the new renewable energy technologies.
There are two paths to lawful feed-in tariffs argues Hempling: the PURPA path, and the Federal Energy Regulatory Commission (FERC) path.
Continue reading article…
Related posts:
Federal tax incentives and state rebates can take up to 50% off the upfront cost of your PV system. As more homeowners install solar, the state rebates are decreasing. To maximize your full financial benefits and to secure a low electricity rate, act now.
