WHERE GERMANY’S FEED-IN TARIFF ISN’T

Why California Doesn’t Have a German-Style Solar Feed-In Tariff
Jennifer Kho, June 18, 2009 (Earth2Tech via Reuters)

"…German utilities pay a high [feed-in tariff] price for any solar electricity fed into the grid, with the cost distributed among the country’s ratepayers. The much-esteemed policy made Germany a huge solar market, with 1.5 gigawatts of new capacity installed last year…[T]he United States would need 6 gigawatts of annual solar installations, 20 times more than it has today, to reach the same level of market penetration.

"…[S]ome California solar insiders [recently] voiced skepticism about whether a German-style feed-in tariff would be the end-all policy for the state…California already has a feed-in tariff, but it’s ineffective because the price is low, based on prices for natural gas. The state also has a net-metering program in which solar customers use the electricity they generate for their own use, then feed excess electricity into the grid, running their meters backward. In addition, California has a solar incentive program, which offers declining rebates for solar projects, and a renewable portfolio standard, which requires utilities to get 20 percent of their electricity from renewable sources by 2010."

Germany's success began with the feed-in tariff. (click to enlarge)

"… Why hasn’t California copied Germany for its much-lauded feed-in tariff? Here are some of the reasons California solar insiders have put forth:

"1). A feed-in tariff doesn’t factor in where and when the electricity is generated: Because a feed-in tariff pays the same price for any kilowatt-hour of solar electricity, it doesn’t encourage generation when and where the electricity is most needed…[by incorporating market signals] such as time-of-use and location…

"2) Germany’s feed-in tariff led to higher panel prices: Because the tariff offered such a high price for solar electricity, it created a shortage of panels that led to much higher prices…Germany [grew] the global manufacturing base but…it built the manufacturing base around the $4-a-watt panel…"

California has a traditional program like Gainesville, Fla, had before it moved to the feed-in tariff. (click to enlarge)

"3) California’s many utilities, each with their own unique conditions, make it more difficult to create a feed-in tariff: …[California] has more than 30 vastly different utilities. Some are legally prohibited from increasing some of their rates…[O]thers have very low prices for conventional electricity…[P]rices — and peak demand — in Germany don’t vary as widely.

"4) The feed-in tariff only addresses wholesale electricity sold to utilities, and doesn’t encourage energy efficiency: California’s mix of policies encourages a wider range of solar projects than Germany’s feed-in tariff, which is focused mainly on wholesale electricity…[California’s policy mix needs to include] a retail-electricity program to help consumers reduce on-site demand, a utility-scale program, and a wholesale-electricity program like a feed-in tariff…"