The Right FIT
A partnership for all Oregonians
By Ray Neff
Sierra Club and RS Energy have partnered to coordinate group-buying power with environmental ethics to create an affordable path for many Oregonians to install solar PV (6/23 news, “Sierra Club Spreads Solar Panels”).
Yet there is, in fact, an even better way to make solar PV affordable for all Oregonians while growing an entire industry rather than a single business — using Feed-in Tariffs (FITs) for renewable energy. Gov. Kitzhaber’s 2010 Strategy for Oregon’s Economic Prosperity states that, “A well-designed FIT encourages community buy-in and support, builds the local economy with green jobs, and provides stable markets that encourage local investment.”
Research and experience demonstrate that FITs are the most effective policy to rapidly deploy market-ready renewables. A FIT requires the utility to purchase all electricity fed into the grid from customer-generated renewables at a rate designed to cover all costs plus a return on investment over a 15- or 20-year contract period. FITs attract private capital and provide investment security to lenders since customer-generators have guaranteed revenue sufficient to ensure loan repayment. FIT rates are differentiated by technology type, size and location to encourage a diverse energy portfolio.
FITs are preferable to our current incentives, which are inefficient in using tax dollars to pay up front for a very limited amount of generation and compete with schools and other essential services for scarce public funds.
Ontario, Canada leads the way on FIT policy in North America with their Green Energy and Green Economy Act of 2009. In its first year the program accepted 22,000 installation applications initiating 5,000 MW of renewable energy (enough to replace more than 16 Boardman coal plants), created 43,000 jobs and attracted $9 billion in private capital investment. The ratepayer impact was about the cost of a doughnut per month added to customer electric bills.
Germany’s 12-year experience with FIT policy has established it as a global leader in renewable energy generation, building robust industries and creating thousands of local, family-wage jobs. As a result, Germany announced that it is completely shutting down its nuclear industry by 2022. Renewables currently supply almost 20 percent of their electricity at a cost equal to about a beer per month per household. The German solar industry alone employs more than 100,000 workers.
Oregon’s Solar Pilot Program (open only to investor-owned utility customers) is a first, if flawed, attempt at a FIT policy. Still, the concept has been very popular, as all three capacity reservation enrollment windows have filled in under an hour.
Locally, EWEB should be commended for its Direct Generation program for solar PV. It’s similar to a FIT yet is limited in scope by reliance on voluntary GreenPower contributions for support. EWEB staff recently indicated that they will include analysis of a FIT in the next stage of their Integrated Energy Resource Planning (IERP) process, as they prepare information on supply-side resources for the Citizen Advisory Panel for August.
My own 2006 research indicates that we could generate 68 megawatts of electricity annually (MWa) in Eugene from solar PV on large commercial and public buildings alone. As EWEB’s IERP process points out, balancing peak demand for energy with the baseload power needed to keep the lights on is a complicated process, yet 68 MWa from solar PV is a significant resource for meeting that demand.
LCC’s Northwest Energy Efficiency Institute continues to train the next generations of solar and energy efficiency professionals. Installing 68 MWa of solar in Eugene could create close to 900 installation jobs in the local economy. Eugene already has five solar installers, but there’s a lot of opportunity for both new businesses and new jobs as energy dollars recirculate longer in the local economy.
With a FIT, homeowners or small-business owners with little disposable income but good credit and a suitable rooftop can affordably install solar PV and receive a reasonable return on their investment. Farmers, agencies, schools, houses of worship and individuals with insufficient tax liability can all participate.
Acquiring a star player generates lots of excitement. Building a strong team creates champions. The right FIT democratizes the grid by providing opportunity for all Oregonians to participate in Oregon’s clean energy economy.
Ray Neff is research coordinator for Oregonians for Renewable Energy Policy (www.oregonrenewables.com). He can be reached at Ray@OregonRenewables.com