Feed In Tariff for California
SB 32, enacted in 2009, directs the CPUC to approve standard contracts and pricing for renewable energy generators (nicknamed a ‘Feed In Tariff”). The price for the contracts would be set based on the wholesale price of energy and the valuable attributes like reducing emissions, reducing the need for adding new transmission lines, and generating electricity during hours of peak demand.
The California Solar Energy Industries Association (CALSEIA) released a study on Feed in Tariff (FIT) pricing showing that the value of renewable generation is between 5 and 12 cents per kWh over the wholesale price of electricity from natural gas, a fossil fuel. This additional value is based on the environmental, transmission, and reliability values of adding renewable generation to California’s electricity supply. CALSEIA is the largest solar industry trade association in California, representing more than 200 solar companies doing business in California. Sue Kateley, Executive Director of CALSEIA, said, “These attributes are beneficial to ratepayers. Currently, the only rate that the utilities will pay for local renewable generation is 9 cents per kWh, which has the effect of zeroing out the added value of renewable generation. SB 32 corrects this by authorizing the California Public Utilities Commission to include these values when it sets the rates for local renewable generation.”
Senator Negrete-McLeod (D-Chino), the author of SB 32, welcomed the study. “The Commission needs to take action now to implement SB 32,” said Negrete-McLeod. “There’s no reason to delay and plenty of important reasons to move ahead. My district has a vast supply of empty warehouse roofs that can support solar power generation, and many people who are looking for work. The Feed in Tariff will help to bring clean power to California and jobs to people who need them now.”
Bernadette Del Chiaro, Director of Energy Policy for Environment California said, “This study further proves the need to build more clean energy generation in California. California needs to meet its long-term environmental and greenhouse gas reduction goals through encouraging solar projects within our communities. It is critically important that the CPUC act now to implement the FIT.”
Dan Geis, spokesman for the Agricultural Energy Consumers Association added his support to FITs, “The agricultural industry sees this as a major step forward in reducing the barriers to developing small renewable projects in California. The CALSEIA study shows that there is an excellent opportunity to build solar and biogas projects quickly in an equitable way for ratepayers.”
California organizations supporting the implementation of Feed in Tariffs include the Environment California, the Sierra Club, the Center for Energy Efficiency and Renewable Technology, The California Building Industry Association, the Inland Empire Utilities Agency, the California bio-energy providers, Sustainable Conservation, and the FIT Coalition.
Sue Kateley said that, “This report demonstrates a clear way to establish Feed in Tariffs in a sensible way and will create thousands of jobs for electricians, laborers, designers, engineers, and administrative personnel, which would be a welcome relief to California’s jobseekers. We look forward to working with the Commission and the state’s utilities to get this done this summer. There’s no reason to delay what will be a major benefit for this state.”
“Feed-in tariffs have proven to be the most effective policy instrument to support solar energy development,” said Dan Martin, senior vice president, SEMI PV Group, the global trade association serving the photovoltaic supply chain. “The report makes a strong case for implementing existing state legislation with meaningful rate incentives that will encourage fair and responsible outcomes for all energy stakeholders in California.”
The CALSEIA study follows the recent report issued by the Los Angeles Business Council, which reached similar conclusions to the CALSEIA study and recommended that the Los Angeles Department of Water and Power move forward to implement a FIT. The LADWP has already proposed a FIT and is expected to initiate the program later this year. The Sacramento Municipal Utility District implemented a FIT in January 2010 and sold out 100MW of FIT contracts on the day it opened.
Kateley adds, “The SMUD FIT demonstrated that with the right policy mechanism, the market will respond. No new transmission lines were involved in these projects, saving ratepayers millions of dollars and years of delays in bringing new solar projects on line.”
A copy of the report is available to download here: pv-above-mpr-methodology-final-20100423