Feed-in Tariff Advances
Feed-in tariffs are starting to make headway into the renewable energy policy spectrum.
The California Public Utilities Commission (CPUC) last week issued a proposed decision to promote the feed-in tariff (FIT) as a means to encourage mid-sized renewable energy development. The FIT will require investor-owned California utilities to purchase electricity from renewable energy systems between 1 and 20 megawatts.
Advocates at the Vote Solar Initiative and the Interstate Renewable Energy Counsel (IREC) applauded the CPUC for its innovative approach to helping California meet its renewable goals and build a strong new energy economy.
"California has robust policies for developing large, utility-scale solar power plants and for putting smaller systems on homes and businesses, but there is a clear gap in the middle," said Adam Browning, executive director of the Vote Solar Initiative.
The CPUC proposal establishes a 1-gigawatt pilot program for power from eligible mid-sized renewable energy systems. The program requires Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric to hold biannual competitive auctions into which renewable developers can bid. Utilities must award contracts starting with the lowest cost viable project, moving up in price until the megawatt requirement is reached for that round. his so-called renewable auction mechanism (RAM) feed-in tariff model addresses many of the challenges facing wholesale renewable energy policy in California and around the world.
While the state has had difficulty developing enough transmission to serve large-scale projects, this program encourages immediate activity for renewable projects that can be incorporated into existing utility distribution infrastructure.
Vote Solar points out some of the pitfalls of the FIT. Getting the fixed pricing right is critical, it says. If the price is set too low, it does not stimulate the desired level of market activity. If the price is set too high, ratepayers pay unnecessary costs, suppliers throughout the value chain are not encouraged to reduce prices and the program can lose political support.
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