feed-in tariffs
-
A closer look at PG&E's immensely promising solar proposal
Last Tuesday, PG&E, the second largest utility in California, announced a major new solar initiative: 250 megawatts (MW) of utility-owned, distributed generation solar, and a further 250 MW to be built by private solar developers, under fixed-price contracts, at the utility's cost of service.
This is very good news, with implications I predict will reverberate through the solar policy community for quite awhile.
First, let's take the issue of utility involvement in the distributed generation solar market. I co-wrote an article on this last fall with my colleague Kevin Fox. The upshot: utility involvement in solar brings the opportunity for new economies of scale, but can also raise concerns about the potential of monopoly power crowding out private solar developers and stifling competition. The future of solar is dependent on nurturing a competitive workforce throughout the value chain, and healthy competition to foster a robust market and bring costs down for consumers.
Our suggested cure: utility involvement in the distributed generation solar industry should be conditioned on opening access for private solar companies to provide the same value to ratepayers. On first look, PG&E's application appears to meet this standard. The program maximizes the benefits of utility involvement while minimizing the potential drawbacks.
PG&E's solar program follows on the heels of similar announcements from Southern California Edison, San Diego Gas & Electric, and Los Angeles Department of Water and Power. SCE and LADWP's approaches contained efforts to limit markets and exclude participation, and as a result have been met with robust challenges.
The second policy implication concerns discussions around feed-in tariffs. While this is not a classic feed-in tariff in that it doesn't contain a must-take element (developers will submit projects to PG&E under standard contract and prices, winners will be selected based on assessed project viability and other elements), this proposal will re-introduce the spirit of competition when discussing fixed price contracts. More on this later.
Finally, we are going to see a lot of discussion on the price. PG&E projects that its cost of service will be the equivalent of $0.246/kWh, plus time-of-delivery adder, totaling $0.295 kWh. Given that the San Francisco Public Utilities Commission just signed a contract for 5 MW at $0.235 in one of the least sunny places in California, and Austin Energy signed a 30 MW contract for a reported $0.165 c/kWh, I believe this is a case of PG&E underpromising so as to overdeliver. We'll see once they make their actual bid. In any event, it's sunny days for the California solar industry.
-
Green Energy Act introduced to Ontario's provincial parliament; feed-in tariffs key mechanism
The following is a guest essay by author, advocate, and renewable energy industry analyst Paul Gipe. His latest book, Wind Energy Basics, will be published by Chelsea Green in early 2009.
-----
On February 23, Ontario's powerful Minister of Energy and Infrastructure George Smitherman introduced into provincial parliament in Toronto Bill 150, to be known as the Green Energy Act.
The massive and far reaching bill -- the summary alone is eleven pages -- tackles renewable energy, energy efficiency, and building codes as well as streamlines project permitting.
Among its many provisions is the Ministers ability to use feed-in tariffs as a key implementation mechanism. Unlike the German Renewable Energy Sources Act, Bill 150 does not include specific feed-in tariffs. The tariffs will be determined in a separate administrative process.
Minister Smitherman is not only the Minister of Energy and Infrastructure but also Deputy Premier. As such, Smitherman is second only to Ontario's premier Dalton McGuinty in the cabinet.
In recent public presentations, both Minister Smitherman and Premier McGuinty have emphasized that they intend for the Green Energy Act to push Ontario to the forefront of renewable energy development in North America. Most ambitiously, they have said that the Green Energy Act will create 50,000 new jobs in the province within three years.
Ontario has been hard hit by the collapse of the auto industry. Before the financial crises, there were more people employed in the auto industry in Ontario than in the entire state of Michigan. Since the middle of 2008, Ontario has been shedding tens of thousands of auto industry jobs.
The government hopes to turn some of the now idle factories to manufacturing green products such as wind turbines and solar panels.
In Ontario's Westminister form of parliamentary rule, a majority government can almost guarantee passage of a bill introduced with the support of the cabinet. Amendments may be offered and debated but passage of the bill is almost certain.