Feed-In Tariffs: Taking Net Metering to the Next Level

Feed-in tariffs are similar to net metering, well, as a matter of fact, it is net metering, only with a much higher payoff to solar users. Under such a tariff, homeowners are paid more than three times the retail price for electricity fed into the grid. Feed-in tariffs, while mostly unheard of in the United States, are quite popular and effective in many foreign countries. They have been implemented in over 45 countries worldwide including Germany, Switzerland, Korea, Japan, and Great Britain.

Germany, the world leader in solar power, is a prime example of the effectiveness of feed-in tariffs to motivate consumers to take up solar power. The tariffs have been around since 2000 in Germany and, in that time, the proportion of energy derived from renewable sources has doubled. Germany actually reached their goal of 12.5% green energy three years early and increased its target to 27% green energy production by 2020.

Not only that, but the booming solar industry, thanks in large part to feed-in tariffs, is starting to have a real effect on the economy in Germany with 250,000 people employed in renewable energy thanks to 400,000 home with rooftop solar power systems.

What really makes progressive tariff programs such as Germany’s so effective and likewise separates them from the net metering incentives we’re so familiar with in the U.S., is that money is paid based on the entire production of solar energy by any one system. That is to say that homeowners are paid for every kilowatt hour provided to the local grid, not just the excess left over after deducting the amount of energy taken from the grid.

In essence, the feed-in tariff guarantees a return on your investment and a much faster payback rate—hence the staggering solar statistics for Germany mentioned above.

But could such a program work here in the United States? Well, it seems obvious that its impact would be remarkable at least and would definitely have more homeowners rocking to the solar beat, but could it even pass a local legislature in a country where just getting the retail price for excess power production is a fairly new and still progressive idea?

Such programs would no doubt require some significant subsidizing. It seems doubtful that utility companies will pay, willingly, three times the retail price to consumers. In the U.S. it will probably take a substantial nudge from the federal government to get a feed-in tariff up and out the door. But who knows? If solar is the energy source of the future, then there seems no better way to embrace it. Its impact on the solar industry would be monumental. By way of tariffs, Germany is set to achieve over 25% renewable energy usage, primarily solar, in just 20 years. Granted Germany is much smaller than the United States but such rapid growth is hard to ignore.

Would a feed-in tariff work in the United States? It’s hard to tell. It would almost definitely dramatically increase the amount of solar systems in use. But is it cost effective? If the federal government were to subsidize the program, would it be, for the taxpayer, money out of one pocket and into the other? Not necessarily, although subsidies of fossil fuels such as oil and gas would likely have to be stopped or cut considerably—not really a new idea and one with a fair chance of happening under a new, less veto-prone, white house.

Source: The Age

Posted on June 10 in Solar News by .

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