Energy | February 21, 2009 |
Could U.S. Follow South Africa With Feed-in Tariff?
South Africa, which has a government energy monopoly and cheap coal, is nonetheless considering a FiT to encourage private entities to join the renewable energy game. The big challenges to growing renewables there are the low proposed tariff (about 66c/kWh) compared to the amount that some say is needed (1.5 Rand per kWh), and the indifference for clean power from dominant power producer Eskom. If a FiT law can succeed in South Africa, then there's no reason why it shouldn't pass here given the current climate in Congress.
Feed-in tariffs, which have been wildly successful in creating renewable energy markets in Germany, Spain and Denmark, are gaining interest here. Gainesville, Florida recently passed the first FiT in the nation for solar. Earlier this month a bill to create a FiT was introduced in Washington State, and Michigan and Illinois have also considered similar measures.
Last year, progressive Washington Congressman Jay Inslee sponsored a bill for a national FiT (see HR 6401 below) , with the tariff rate to be determined by the Federal Energy Regulatory Commission. Thus far Congress has preferred to enact production tax credits, which provide a write-off for investments in renewable energy capacity, to feed-in tariffs which directly pay energy producers for each kilowatt hour of clean energy produced.
Under Inslee's plan, additional tariff premiums would be paid for electricity produced from biogas from animal waste (appeasing rural constituents) and to facilities that also include energy storage.
The stimulus package extended the production tax credits for another three years, and provided loan guarantees for up to $6 billion in renewable energy and transmission upgrade projects.
While this will encourage the development of large scale renewable energy projects, a feed-in tariff would increase the likelihood that corporations and individuals would add wind and solar power generation.