Feed In Tariffs - Cooperation Between Distributed Energy and Utlity Providers

This is a excerpt from the Fast Company series on Distributed Energy Generation. It reviews the emerging Distributed Energy Industry, ,and suggest feed in Tarrifs funded by a gneral utility tax.

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In fact, wherever a little public funding has gotten the ball rolling, consumer appetite for micropower has been essentially bottomless. To see just how fast the microgrid can emerge, there's no better place to look than Germany, where the market has been blown open thanks to what's known as a feed-in tariff.

• If net metering is simply the right to sell your power back to the grid at retail price, a feed-in tariff adds a little sweetener on top, paid for by a surcharge on all customers' bills.


• In effect, feed-in tariffs offer the same financing deal to citizens at large that utilities get on any power plant they build.
  
• The tariffs have been successfully adopted in 47 countries -- but Germany is by far the global leader.


• The policy was introduced there back in 1999, and the incentive increased in 2004, guaranteeing the small rooftop-solar producer four times the market rate for 20 years for any electricity he sells back to the grid.

That year, installations of solar panels jumped from an average of less than 6 megawatts annually to 600 megawatts; the total 5.4 gigawatts of solar now operating in cloudy Deutschland make up a jaw-dropping third of the entire world's supply. That increased volume, meanwhile, has sent the price of solar panels plunging and created a world-leading industry with a quarter-million jobs.

• All this for just an extra euro on the average monthly bill, a charge that can be avoided by anyone who becomes a net-power producer.
  
• In March, Gainesville, Florida, became the first U.S. locality to adopt a feed-in tariff, targeted to add 4 megawatts of solar a year for the next 10 years.


• The city reached its 2009 cap in just three weeks and its 2010 cap days later. Entrepreneurs are moving in to finance, install, and maintain solar panels on homes and malls across the city.

The idea, here and elsewhere, is that eventually higher volume will bring down prices enough so that incentives can be phased out.

If there's so much potential in the microgrid, why hasn't it already hit gigawatt scale in the United States?

• One answer is that it pits local producers against the utilities themselves. If the distributed-generation scenario resembles cell phones, that casts the utilities in the role of Ma Bell -- as outdated, monopolistic incumbents. Ed Legge of the Edison Electric Institute, the lobbying organization for the utility industry (and leader of the national effort to oppose federal renewables targets), is surprisingly frank on this point: "We're probably not going to be in favor of anything that shrinks our business. All investor-owned utilities are built on the central-generation model that Thomas Edison came up with: You have a big power plant and you move it and then distribute it. Distributed generation is taking that out of the picture -- it's local."

This attitude is understandable. After all, if utilities don't own it, they can't bill for it. And with close relationships between power companies and state regulators, they can and do throw up a variety of roadblocks to see that rooftop-solar programs and the like remain tiny.

The nonprofit Network for New Energy Choices puts out an annual report called "Freeing the Grid," tracking the growth of microgrid-friendly policies. These are trending up -- 42 states now have rules allowing some form of net metering. But based on the fine print, 28 of those states earned Ds or Fs because their rules are too restrictive to allow the average person to participate.

James Rose, who wrote the report, singles out Texas as an egregious example: In June 2007, Governor Rick Perry signed into law House Bill 3693, a big efficiency and conservation bill. Though the new law called for net metering to be deployed "as rapidly as possible," the report explained, utilities took a "hard line" against it at the regulatory level, and ultimately state regulations allow no such thing. "There was the feeling that some of the people who were interested in not having net metering had a lot of say in how net metering was defined," says Rose, choosing his words quite carefully.

The tactics utilities deploy to protect their profits can make a reasonable person's head spin. "

In Arizona a couple of years ago, we got a renewables incentive passed," says Adam Browning, executive director of Vote Solar, a national advocacy group. "A local utility proposed that it collect money for all the electricity that you didn't buy from it. The argument was: We've got fixed costs associated with maintaining the transmission and distribution grid. So if you don't buy from us, we want to charge you for your 'fair share' anyway," which it reckoned as everything but the avoided fuel costs -- the oil that you don't burn by choosing renewables. So regular customers would pay 11 cents a kilowatt-hour, but customers with solar panels on their roofs -- not even using the utility -- would still have to pay 6.8 cents an hour. "We hired a lawyer contesting this, and eventually we won," says Browning. Today, Arizona has decent, though not finalized, net-metering rules.

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