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Feed-in Tariffs in America: Driving the Economy with Renewable Energy Policy that Works

| Written by John Farrell | 5 Comments | Updated on Apr 9, 2009 The content that follows was originally published on the Institute for Local Self-Reliance website at http://ilsr.org/feedin-tariffs-america-driving-economy-renewable-energy-policy-works/

figure 1American renewable energy policy consists of a byzantine mix of tax incentives, rebates, state mandates, and utility programs.  The complexity of the system results in more difficult and costly renewable electricity generation, and hampers the ability of states and communities to maximize the benefits of their renewable energy resources.

Evidence from Europe suggests that a simpler, more comprehensive policy achieves greater renewable energy development, but at a lower cost and with greater economic and social benefits like local ownership.  It is called a feed-in tariff, a price for renewable energy high enough to attract investors without being so high it generates windfall profits. The tariff can be varied to spur new emerging technologies or to achieve social ends.  

Denmark and Germany both used a feed-in tariff to drive renewable electricity generators to more than 15 percent market share.  This policy also resulted in large-scale local ownership, with near half of German wind turbines and over 80 percent of Danish ones owned by the residents of the region.  

In 2009, one Canadian province (Ontario) and one US municipal utility (Gainesville, FL) have enacted a feed-in tariff.  As many as 11 U.S. state legislatures are seriously considering adopting the system as a complement to their renewable electricity mandates.   State and federal policy makers should strongly consider turning to a feed-in tariff as the key mechanism for encouraging renewable energy development.  It’s fairness, simplicity, and stability can help the United States maximize the benefits of the renewable energy revolution.

Update January 2011 : A new name for this policy has been adopted in the U.S.: CLEAN contracts, for Clean, Local, Energy, Accessible, Now.

Related Resource:

ILSR’S FEED-IN TARIFF CONFERENCE – 2009

ILSR held a feed-in tariff conference in Northfield, MN, in January 2009 to help bring visibility to this policy tool to people and organizations in the Midwest.  The meeting was attended by approximately 120 people -from regulators and legislators to renewable energy developers and activists.

  • We learned how cities, counties, non-profits and more individuals can become owners of renewable energy projects
  • We saw how renewable energy can promote more economic development
  • We discovered how developing renewable energy can be made more simple

View the presentations and video clips from the conference

 

Download the PDF

About John Farrell

John Farrell directs the Energy Self-Reliant States and Communities program at the Institute for Local Self-Reliance and he focuses on energy policy developments that best expand the benefits of local ownership and dispersed generation of renewable energy. More

Contact John   |   View all articles by John Farrell

  • hsr0601

    Under Feed-in Tariffs policy, the household outfitted with sustainable energy system may be seen as a sort of sound, reliable pension plan increasing the value of the house considerably, leading to renewed construction boom.
    In my mind, it might bring back much-anticipated economic growth as a cornerstone.

  • http://thinkirelandinc.com ThinkIreland

    Ireland understands the huge importance of the development of the global green economy, and can see itself playing a huge role in the development of the Island as a hub for Green Tech and the development of renewable energy. We have the opportunity to be a world leader in green energy export due to our abundance of natural elements, that support the development and generation of these technologies and energy.

  • http://Nano-Electric.com Anonymous

    Interesting,

    As our gov. leaders have tried to keep inovative incentives out of industry, finally the power of the people is starting to impact this reverse mentality. Face it, if not for the big oil and utility lobbyists lining the pockets of our so called leaders, we would be leading the charge towards energy independence, but no, that crown goes to Germany and Denmark. The back pocket senators in this country are the reason for the failure of country to move away from foreign oil dependency, it is as simple as that.

    It goes way back to 70’s and oil embargo, if that didn’t wake up government, nothing will. The more recent manipulated price increase to $150. oil did nothing but create a bunch of hot air from gov., and now that prices have dropped back due to recession brought on by more gov. corruption, creating banking collapse, when will these idiots wake up to what really needs to be done? Feed In Tariff is the only way to turn the corner and become energy independent to save the U.S. economy from years of depression.

    Think about it, what are the biggest problems facing the U.S. at the moment? Would lack of faith in gov. top the list? It sure tops my list, and for many reasons, banking collapse, housing collapse, record high foreclosures, bankruptcies, unemployment, it all falls on the gov. shoulders, and I do not mean the republicans or democrats, they are both a disgrace. With Feed In Tariff mandated, imagine how many homes could be saved if a home owner installed a home solar, wind, or better yet, new home generator systems which could earn an extra couple thousand a month, could that not save foreclosure of millions, while also putting millions back to work building and installing these systems in homes and businesses.

    All it takes is an incentive which is guaranteed not to change every few months as is the history of gov. incentives over the past two decades. Why else would solar be installed in so few homes after all these years? Feed In Tariff trumps Net Metering by a mile, and look how long it took for Net Metering to be mandated by gov., it makes you sick to see how slow we are to adapt new technologies in our homes and get out from under dirty coal and oil dependency. So easy a solution, yet watch how long it will take to be adopted here even with hard evidence it works in Germany and Denmark. lol

    Nano-Electric.com

  • http://www.wikipoquer.net poquer

    Feed-in tariffs may be the answer, but this article is political nonsense. “RPS policies tend to set the requirement and let the market figure out how to get there”??? What market??? The entire electricity industry is monopolized.

  • http://www.wakeupdemocracy.org Mark oceanoverde JohnMuirstyle

    I’ve looked closely at feed-in tariffs and want to read this report. It’s basically a good idea,
    but it involves a guessing game that raises prices. Net metering, on the other hand, avoids
    those levies all together.
    I really like ILSR’s local view. With the kind of influence and subservience the power companies
    have and have created, local advocacy from cities to states has a lot to recommend it.
    The Mayor’s Agreement almost invites that kind of outreach and citizen advocacy. Groups
    like ACORN might even be involved, but definitely the PIRG’s and Sierra Club, and other members
    of Energy Action Coalition.
    Bears hugs and stomping feet all around :^)

    http://www.wakeupdemocracy.org