Feed-in Tariff Primer Feed-in tariffs are successful

• They have created rapid growth in new renewable generation

• They have created the most kilowatt-hours of actual renewably-generated electricity of any policy

• They have proven successful in Germany, France, & Spain

Feed-in Tariff PrimerFeed-in tarifs are adaptable to North America

• No intrinsic limitations to use inCanada or the United States

• No intrinsic limitations to use inStates, Provinces, or at the Federal level

• Have been successfully used in both Ontario, Canada and California (early 1980s)

• Currently being considered in severalUS States & Canadian Provinces

Feed-in Tariff PrimerFeed-in tariffs go by many names

• Advanced Renewable TariffsA system of feed-in tariffs (prices or payments) for

different technologies

• Renewable Energy PaymentsBecause the “tariffs” are a payment per kilowatt-hour

of electricity generated

• Standard Offer Contracts (Incorrect!)Feed-in tariffs use “standard contracts” but not

“standard offers” as the “offers” differ by technology (one price for solar, another for wind)

Feed-in Tariff PrimerFeed-in taiffs are more equitable

• Everyone can participateHomeowners, farmers, Native Americans,

small & large businesses

• Payments not tax creditsParticipants do not have to be rich or have

tax liability to participate

• Payments not subsidies for hardwarePayments for electricity generated

Payments are bankable

Feed-in Tariff PrimerFeed-in tariffs are bankable

• Predictable revenuesEnable traditional financing

• Tariffs are high enough to workPrices based on the cost of

generation plus a reasonable profit

Prices not based on “value” of electricity

Feed-in Tariff PrimerKey program elements

• Priortity access to the grid for all

• Long contracts (20-25 years typical)

• Prices DifferentiatedBy technology, size, application, and resource

intensity (wind and now solar)

• Prices determined by cost plus profitFair but not excessive profit

• Inflation protection

• Periodic Review (every 2-4 years)

Feed-in Tariff PrimerAccess to the grid

• Must be able to connect

• Connection must be simple, timely, and at reasonable cost

Feed-in Tariff PrimerPriority purchase

• Renewable energy must be first priority

• Take or pay contractsProducer must be assured that the electricity

they produce is purchased

Only exception is “system emergencies”

Feed-in Tariff PrimerContract length

• 20 years or more

• Longer contracts = lower initial tariffShorter contracts = higher initial tariffs

• Germany: 20 years

• Spain: 25 years to life of plant

Feed-in Tariff PrimerDifferentiated prices

• Differentiated by technlogywind, solar, biomass, geothermal, hydro, etc.

• Differentiated by sizehigher prices for small projects

lower prices for large projects

• Differentiated by applicationhigher prices for rooftop solar

lower prices for ground-mounted solar

Feed-in Tariff PrimerDifferentiated prices for wind energy

• Differentiated by resource intensityLower prices for windy sites

Higher prices for less windy sites

• Ensures nearly all can participateLandowners can’t move to windier sites

• Limits excessive profits at windy sites

• Distributes development geographicallyAvoids concentrating wind development

Feed-in Tariff PrimerPrices determined by cost

• Prices (tariffs) determined by costOf generating electricity by each different

technology, and

• Reasonable profitDetermined by existing regulatory practiceFair but not excessive profit

• Prices are not basedOn the cost of conventional fuels, orOn the “avoided cost”, orOn the “value” of the electricity

Feed-in Tariff PrimerInflation Protection

• Protects invested capitalHigher protection = lower initial tariffs

• Prices adjusted periodicallyFor new projects

Inside existing contracts

• Inflation indexing often less than 100%France & Spain: 50% to 70% indexing

Feed-in Tariff PrimerPeriodic Review

• Determines if program is robust

• Determines if targets being met

• Allows price adjustmentIf profits are too high

If targets are not being met

• Allows addition of new technologies

• Every 2-4 years

Feed-in Tariff PrimerSolar Growing with Feed-in Tariffs

• Major Solar PV MarketsGermany--1,500+ MW/year

Spain--500 MW/year

Italy--300-500 MW/yr

Japan--250 MW/year

California--200 MW/year

• Markets with Feed-in TariffsGermany, Spain & Italy

Paul Gipe, wind-works.org

World Solar PV Capacity 2008~13,000 MW

Germany41%

Spain25%

Japan17%

USA9%

Rest of World8%

Renewable Tariffs & Solar Photovoltaics in Germany

Renewable Tariffs Launched

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

Year

0

1

2

3

4

5

6

MW Total (Thousands)

Advanced Renewable Tariffs Launched

1,000-Rooftops (2,500 x 3kW)

100,000 Rooftops

Paul Gipe, wind-works.org

Feed-in Tariff Primer Solar PV Success in Germany

• 500 MW on Home Rooftops/year

• 2,000 MW+ Total

• 2 TWh/yr

• ~ €1 Billion/yr Revenue

• Anyone with a Roof Can Do Solar in Germany!

Because revenue stream is bankable

20007

Feed-in Tariff Primer Solar PV for German Homeowners

• 150,000 New Systems• €6 Billion• Total of 600,000 Systems in Operation• ~1,500 MW in 2008!• ~2,000 MW in 2009 (Estimated)• Total 5,000 MW, 2008; 7,000 MW, 2009• ~2%Supply in Conservative Bavaria• ~1%Supply in Germany

2007

Feed-in Tariff PrimerSolar New Farm Crop in Germany

• 700 MW on Barn Roofs in 2008

• Total of 1,500 MW in Operation

• ~€9 Billion Invested by Farmers

• 1.5 TWh/year

• ~€700 million/year Farm Revenue

Feed-in Tariff PrimerEuropean Wind Market

• Europe = 2/3 of World Wind Capacity

• Gemany, France & Spain = 2/3 of Europe’s Wind Capacity

Top European Markets

• Germany, France & SpainAll Three Use Feed-in Tariffs

Feed-in Tariff PrimerWind Growing with Feed-in Tariffs

• Germany 2004-2008: ~2,000 MW/year30,000 MW by 2012

• Spain 2004-2008: ~2,000 MW/year

• Germany50% Community Owned

~€20 billion from Small Investors

Geographically Distributed

7% of Supply

Feed-in Tariff PrimerResults of German Feed-in Tariffs

• Renewables 15% of Supply12% of Supply from New Renewables

• Renewables 9.6% of Primary Energy• 90,000 Employed in Wind Industry• 50,000 Employed in PV Industry• 8,000 Employed in Biogas Industry• 280,000 Employed in Renewables• €32 (~$50) Billion Turnover

2008

Cost of German EEG~$50/yr/household

Paul Gipe, wind-works.org

EEG 5%Generation 58%

CHP Act 2%Concession 10%

VAT 14%

Eco Tax 11%

North American Jurisdictionswith Modern Feed-in Tariffs

• Ontario, CanadaFirst comprehensive system of feed-in tariffs in North America (2009)

• Vermont (2009)

Ontario’sAdvanced Renewable Tariffs

• Technology differentiationSolar, Wind, Hydro, Biomass, Biogas

• Size & application differentiationSolar: 5 classesWind: On Land & OffshoreBiogas: 5 classes

• Prices based on cost of generation• Community & aboriginal bonus• No program cap

Vermont’s Feed-in Tariffs

• Technology differentiationSolar, Wind, Hydro, Biogas, Biomass

• Includes small wind tariff

• Prices based on cost of generation

• Modest program cap (50 MW)

• Limited project size cap (2.2 MW)

Hawaii’s Proposed Feed-in Tariffs

• PUC rules in favor of feed-in tariffsFall 2009

• Technology differentiation

• Size differentiation

• Prices based on cost of generation

• Limited project size (5 MW)

• Final rules end of 2009

Feed-in Tariff PrimerNorth American Experts

• Toby Couture, E3 Analytics, toby@e3analytics.ca,

506-292-3585

• Karlynn Cory, NREL, Karlynn.Cory@nrel.gov, 303

384-7464

• John Farrell, Insitute for Local Self Reliance,

jfarrell@ilsr.org, 612-379-3815 x210

• Wilson Rickerson, Rickerson Energy Strategies,

wilson@rickersonenergy.com, 617 930 5502

Feed-in Tariff PrimerFor More Information

• www.wind-works.org/articles/feed_laws.html

• www.allianceforrenewableenergy.org

• www.worldfuturecouncil.org/arguing_fits.html

• International feed-in tariff news group

• The Feed-in Tariff Channel