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NREL Study Finds Feed-in Tariffs Are Responsible for 75% of all Solar PV Deployments

Feed-in tariffs (FITs) are responsible for 75 percent of all solar photovoltaic (PV) and 45 percent of all wind development worldwide, according to a new report from the National Renewable Energy Laboratory (NREL), reports Wind-Works.com. The report provides a best practices design guideline for U.S. policymakers, showing the benefits and disadvantages of different FIT polices around the globe.

The report, “A Policymaker’s Guide to Feed-in Tariff Policy Design,” finds that FITs are the most widely used renewable energy (RE) policy in the world, accounting for a greater share of RE development than either tax incentives or renewable portfolio standard (RPS) policies. It has fueled significant growth of renewable energy in Europe over the past decade, reports Wind-Works.com.

The report reveals that FITs have resulted in the deployment of 15,000 MW of solar PV, and 55,000 MW of wind power from 2000 to 2009 in the European Union. In comparison, there was only 25,000 MW of wind in the U.S. and 1,250 MW of solar PV at the end of 2009.

The report provides a complete overview of policy options and highlights key elements that make the policies successful, reports Wind-Works. Policies covered include long-term policy stability, payments based on the cost of generation, guaranteed access to the grid, eligibility to all end users and project developers ( including some utilities), “must take” provisions for the electricity generated, and differentiating tariffs by technology, size, location, and resource intensity.

NREL researchers say FIT policies offer a number of design options to meet policy goals for renewable energy deployment, but policy designers must evaluate the different design options based on how they will function together as an integrated framework.

NREL’s analysis on U.S. FITs in a previous report indicates that states can offer FITs but the programs must be tailored to meet federal requirements. The report cites two legal ways to implement feed-in tariffs — under the Public Utility Regulatory Policies Act (PURPA) of 1978 and the Federal Energy Regulatory Commission (FERC).

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One thought on “NREL Study Finds Feed-in Tariffs Are Responsible for 75% of all Solar PV Deployments

  1. In the absence of any comprehensive energy strategy in this country, feed-in tariffs and on-bill financing are two of the most effective tools we have to broaden the roll out of renewables and energy efficient technologies. These are essential items, and it is important that they begin to be implemented in more states. Only 10 states currently have on-bill financing programs operating; it is essential to increase this number and make these available to the other 80% of states.

    Here in Northeast Ohio, COSE is working to advocate for an on-bill financing program with the area’s investor-owned utility (IOU), FirstEnergy. OBF & feed-in tariffs have the potential to generate considerable savings in energy and energy costs for small businesses and residential customers, the two major sectors that need these programs to offset the high cost of RE and EE technologies.

    Many IOUs may be hesitant to create OBF and feed-in tariff programs because they don’t wish to act as lenders and/or are concerned about potential defaults. But two of the largest programs that have been implemented, Sempra Energy (California) and United Illuminating (Connecticut) have both kept default rates at around or under 1%. Clearly the benefits of these programs outweigh any potential risk that the IOUs might take on.

    – Tim Kovach
    Product Coordinator, Energy at COSE

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