Germans Debate Renewable Energy Supports

Conservatives call into question highly successful feed-in tariff

[Originally posted at Red, Green, and Blue on 5.19.08] There is a reason that Germany has half of the world's installed solar generating capacity, and it is not the Northern European country's boundless sunshine. Renewable energy capacity has achieved such tremendous growth because of the German government’s aggressive energy policy.

The policy vehicle responsible for the rapid acceleration of the country's renewable energy capacity, known as a feed-in tariff (FIT), guarantees a fixed-rate of return for homeowners and farmers who install solar, wind, small hydro, biomass, and methane capturing systems and sell their surplus electricity back to the grid. Germany has Europe's highest feed-in tariffs, allowing consumers to earn around 40 euro cents ($0.62) per kWh compared to paying retail rates of 18 euro cents per kWh after taxes and support fees.

Electricity generated through Germany's feed-in law produces about 50 terawatt-hours (billion kilowatt-hours) of electricity per year, or nearly 15% of German electricity consumption (1). This adds an average of only 1.01 euros ($1.69) a month to a typical home electricity bill.

Bu, despite the law's success, conservatives in the German Bundestag want to ratchet back the incentives that support renewable energy development. It seems that the members of the Free Democratic Party (FDP) and the conservative wing of the Christian Democratic Party (CDU) argue that solar generation is growing so fast that it threatens to over burden consumers with high electricity bills, according to an article in the New York Times.

Joachim Pfeiffer, a Member of Parliament who is drafting the plan to cut incentives, says solar power could end up adding 8 euros ($12.32) to a monthly electricity bill, “which would alienate even the most green-minded.”

Opposition to Feed-in Tariff is Not New

But calls for paring back the renewable energy feed-in tariff are nothing new, according to wind energy expert Paul Gipe. Gipe, an outspoken advocate of the FIT and has written extensively on on the subject wrote in an email, "The FDP and the conservative (utility) wing of the CDU have wanted to ratchet back the tariffs all along [and] It's unlikely they will succeed."

Other supporters of the German feed-in tariff point to the unparalleled growth in renewable energy capacity reason enough to maintain the system as it currently stands. "The general target is to mobilise all renewable options, producing a renewable energy mix and reducing the dependency on conventional energy over time," says Hermann Scheer, one of the principal drivers behind Germany’s renewable resurgence.

So far, 15% of Germany's energy comes from renewables, an increase of 11% in just eight years. "We could increase the speed of this growth if it weren't for the barriers we're facing at local and regional levels," says Scheer.

Importantly, Gipe did add that the CDU could grant some concessions by throttling back on the proposed offshore tariffs "which are widely seen as a gift to the utility companies."

I would argue that it would be foolish for Germany to nip the most successful renewable energy policy this planet has ever seen in the bud. Especially with the certain increase in demand for electricity, and the rising pressures on the coal-industry in Germany, Germans may be better off absorbing a slight increase in their electricity bills that is calculable, as opposed to drastic increases used to offset certain shortages.

Other posts about feed-in tariffs and German energy policy:

• "Illinois: Renewable Energy Feed-in Tariff Introduced in House of Representatives"
• "High Winds + Wind Farms = Falling Electricity Prices"
• "Germany to Phase Out Coal Industry; U.S. to Not"

Photo: Jeff Poskanzer via Flickr under a Creative Commons License

British MPs Spurn Renewable Energy Feed-in Tariff

I wish the U.S. Congress operated with more of the same ground rules (both official and unofficial) as does the British Parliament. You see, yesterday I found myself watching the House of Commons proceedings as MPs deliberated the merits of a renewable energy feed-in tariff (FIT). I mean they actually deliberated.

I've always gotten a kick out of watching the Prime Minister's question and answer session, and have ever since C-SPAN started carrying it many years ago. But I am less accustomed to watching the rank-and-file debate the specifics of policy. That's why I appreciated the level of back and forth as compared to what I am used to watching from Capitol Hill when they are "debating" policy.

Unfortunately, for those who support FITs as the best mechanism for growing renewable energy capacity, Labour party rebels failed to convince enough of their fellow MPs to support the proposal. According to the BBC, the move, led by Labour's Alan Simpson, was defeated by 250 votes to 210. It had garnered cross-party support with some 276 MPs from all parties signing a Commons motion ahead of Wednesday's vote. 35 Labour MPs voted against the government.

"MPs reject renewable energy move" BBC NEWS (430/07)
Photo: Timothy B. Hurst

British Parliament to Vote on Renewable Energy Feed-in Tariff Today

Ahead of a crucial House of Commons vote on Wednesday, which aims to add a renewable energy feed-in tariff (FIT) to the energy bill currently working its way through parliament, a broad-based coalition says that parliament has no time to waste and must act to adopt more aggressive clean energy policies. Farmers unions, environmental groups, and mechanical engineers, are banding together and displaying the widespread political support for changes in the UK's energy portfolio.

FITs have been introduced in nearly 5A0 countries around the world, and they have been particularly successful in Germany where the guaranteed rate for solar power fed to the grid has made it the world leader with 55% of the global installed solar capacity. And as the evidence from Germany shows, not only is the FIT a powerful tool for building renewable energy capacity, but it is arguably the most cost-effective way of doing so.

The Guardian (4/28/2007)

Feed-in Tariff Introduced in Illinois House

Last week, I wrote a post at sustainablog about the second renewable energy feed-in tariff being introduced through legislative channels in the United States. Illinois Representative Karen May (D-Highland) has introduced HB 5855, or, the Illinois Renewable Energy Sources Act, which is more or less based upon the feed-in legislation introduced in Michigan last fall. The bill would require utilities to purchase renewable energy from any producer at a fixed rate for a fixed period of time.

Read more at sustainablog...

WFC Unveils Climate Change Policy Toolkit

The World Future Council has just rolled out their new PACT website at www.onlinepact.org. The very cool new site will serve as an online community for the diffusion of climate relevant policy knowledge. According to Miguel Mendonça at the World Future Council, PACT is a free online resource designed to speed up the exchange and utilization of best policy practices to mitigate the dangers of climate change.

The first policy domain covered by the PACT concerns Feed-in Tariffs (FITs), which are used to cheaply and rapidly accelerate the deployment of renewable energy installations. The site offers a means of assisting legislators and advocates with the initial development of, or improvements to, a FIT law for their country or region. These draft laws can be developed by lawyers and used for local debate, and the site offers the user legal text for each of the core elements of a good FIT.

The FIT policy mechanism is now in place in 47 countries, states and provinces around the world, with the greatest success coming in Germany and Spain. A major benefit of the spread of FITs is that they bring many more players into the energy production market, including homeowners, small businesses, cooperatives, farmers and businesses. The decentralization of energy production that occurs as a result of a healthy FIT is challenging the traditional dominance of utility-scale energy generation and transmission. FITs are often politically popular amongst the masses, but less so with the utilities and corporations that stand to lose out on the revenue. Other than one bill introduced in Michigan, powerful interests in the U.S. have, thus far, all but quashed any discussion of FITs. American lawmakers are preferring instead to go with the renewables portfolio standard (RPS or RES), which mandates minimum levels of electricity utilities must supply from renewable sources.

Hopes for Michigan Feed-in Tarriff Fading

Not too much has been heard about Michigan's HB 5218 since it was introduced by Rep. Kathleen Law earlier in this legislative session. HB 5218 was the first proposed legislation containing a 'feed-in tariff' for renewable energy in the U.S. If you don't know, a feed-in tariff or 'fee-schedule' is a policy mechanism which guarantees a premium rate payed to any entity that adds renewable energy to the power grid. Feed-in tariffs have been wildly successful at building the distributed generation of renewable resources very quickly in Germany and Spain -- but not without substantial cost and commitment.

But the latest out of MI is that the proposed tariff because it has not gained the same amount of support as a different bill that would require Michigan get 10 percent of its electricity from renewable sources by 2015. I think nearly any move toward promoting renewable energy is a move in the right direction - and it is also quite possible that Michigan just wasn't ready for the economic commitment to such an aggressive policy as a feed-in tariff. The point will be moot if the U.S. Senate includes a 15 percent RPS possibly in their version of the bill which may be voted on as early as Saturday. Then again, if President Bush follows through on his veto promise, then Michigan might have something after all.

So what's the deal with feed-in tariffs, and why haven't they caught on in the U.S.? I will suggest that there are two very formidable structural impediments standing in their way:

1. The modern grid was not built with distributed generation in mind. Distributed generation brings fluctuations in generating capacity that would need to be addressed by making substantial investments in infrastructure.
2. There are corporate and interests heavily invested in keeping things pretty much as they are. Power providers and utilities are trying to solidify the futures of their enormous corporations by institutionalizing the process by which power is generated, bought, and sold.

Basically what it will take in this country to move to a more decentralized grid is a whole new politics. We need to reassess how to think about electricity generation and distribution in this country. Decentralization of the power grid will be the future of electricity in the United States, the only question is how long it'll take to get us there.

BC Advisory Council Endorses Feed-in Tariff for Renewables

An advisory council to British Columbia Premier Gordon Campbell has issued a report suggesting that the province adopt feed-in tariffs (FITs) to generate growth in new sources of renewable energy. The report suggests that the province should adopt:

“Legislation that governs the energy system mandates that higher rates be paid for power supplied by deploying emerging technologies. This guaranteed rate allows for the development of the project. As the technology becomes more viable, the incentive rates are lowered until over time that particular technology becomes commercially competitive."

FITs have had a tremendous impact on growing renewable energy production throughout Europe, but in Germany especially. The German Renewable Energy Sources Act introduced in 2004 mandated such a system. High electricity rates coupled with guaranteed purchase agreements have contributed to the explosion of micro-scale wind and solar energy in Germany. According to the report:

“Appropriate feed-in tariffs can be a powerful stimulus to the industry. Of all the different measures used to encourage development, tariffs have been the most successful at developing renewables markets and domestic industries, and achieving the associated social, economic, environmental, and security benefits."

Presently, the only hope for a FIT-type policy mechanism is in the Michigan state legislature, where such a bill has been proposed. As it currently stands, legislatures in the U.S. have clearly favored renewables portfolio standards (RPS) as the policy mechanism of choice. I believe the RPS is a step in the right direction, but the exclusions for municipalities and electric co-ops make it so that a goal of 15-20% renewable energy only applies to about 60% of the electricity purchasing public. But these mandatory quotas are creating a stable arena for large-scale utilities to continue to dominate energy production and transmission.

For more on feed-in tariffs and renewable energy policy in Canada, the U.S., and Europe, visit Paul Gipe's Wind-Works page.

Photo Credit: Paul Gipe

Germany to Phase Out Coal Industry; U.S. to Not.

The German government is making headway on a proposal that would seek to totally phase out the country's entire coal mining industrial sector by 2018. The proposal, which is subject to approval by both houses of the German Parliament, will ensure structured

compensation payments for the country's 34,000 coal workers. The German Social Democratic Party has secured a review of the plan in 2012 before it goes into full effect. This reflexive approach is intended to safeguard the mining industry, which was largely responsible for the success of the Social Democrats in the 19th century.

How is Germany able to take such aggressive steps towards eliminating coal? For one thing, the cost of coal-mining in Germany is making the practice economically unattractive. Stringent safety measures, high labor costs and the increased expense to dig deeper to find untapped coal seams has driven the cost of German coal to about 180 euros ($250) per ton, more than three times the global market price. Second, and not completely unrelated, the German feed-in tariff which I have written about here, mandates that utilities enter into purchase agreements for any producer of renewable electricity to the grid.

The formidable presence of the Greens in the German Bundestag has had the ultimate effect of 'devolutionizing ' electricity generation and revolutionizing grid interconnectivity. Now, it looks like their aggressive push for renewable energy sources will help anchor renewable energy sources as the essential ingredient in the German energy mix.

So, with that said, what is the future of coal in the U.S.? Well, put it this way, there seems to be an inverse relationship between the amount of coal development in a country and the number of Green Party representatives in that country's legislature (Congress, Bundestag, Parliament, etc.). The preceding assertion would certainly need to be tested to find a statistically significant correlation, but the point is that there is virtually no third party presence, Green or otherwise, in the American system of interest representation and there is also no significant political efforts toward phasing out coal development.

In fact, one reporter from the Voice of America, has suggested that "like it or not, coal is here to stay." I think those types of blanket statements can be problematic, especially when we are addressing the mobilization of political action. Reporting that something cannot be changed can have the effect of suppressing thought and action. Yes, coal is currently the number one source of electricity in the U.S. And yes, the most powerful coal advocate's national political action committee CoalPAC donates tremendous sums of money to the campaign coffers of legislators in both parties in hopes of perpetuating the 'we need coal' myth. But one of the beauties of democracy is that just because it is here now, does not mean it will necessarily be here later.

Despite the fact that coal is often projected to be our primary source of electricity for some time to come (and I generally agree with this statement), asserting that it must, or accepting such assertions as a predestined certainty precludes the possibility of any discussion of other alternatives. Some will just shrug and accept their perceived reality of a coal-based future, because that is what the 'experts' are saying. Fortunately there are increasing numbers of people and organizations that are not limiting their discussion to the alternatives that provide no alternative

Michigan Bill Proposes First U.S. Renewable Energy Feed-in Law

State Representative Kathleen Law(D) of Michigan's 23rd district has introduced House Bill 5218 (the Michigan Renewable Energy Sources Act), which is the first comprehensive renewable energy "feed-in tariff" (FIT) introduced in any American legislature. By fixing a guaranteed price for small-scale electricity generation, the proposed legislation would help build the distributive infrastructure needed for dispersed electricity generation by "non-traditional" energy providers; in other words, FITs allow individual homeowners, farmers, electric cooperatives, businesses, and other associations sell to the energy grid for a potentially healthy profit.

As proposed, the tariffs rates proposed in the bill are on par with similar feed-in rate structures that I have alluded to in this blog before. The aggressive rate structure in Germany's Renewable Energy Sources Act has produced well documented growth in aggregate-level and micro-level generation of renewable energy. It has even been suggested that the proposed fee schedule would be the most aggressive and comprehensive tariff schedule in North America, surpassing Ontario's Standard Offer Program (For further reading, I highly recommend Paul Gipe's Wind-Works, a sort of cyber-clearinghouse for feed-in laws, renewable energy, everything you could want to know about wind and decentralizing the grid with renewable energy). The proposed legislation, if passed, would be more comprehensive in breadth (in terms of the greater diversity in renewable energy sources included), as well as depth (in terms of the newfound deep pockets in the pants of the small-scale electricity providers).

This legislation is a move that will most certainly invigorate small-scale renewable energy production in Michigan. However, I also see that it while it is diverse enough to include a fee schedule for a broad array of potential sources, it particularly favors some sources over others (i.e. mandating much higher rates per kWh for solar compared to other sources.)

Summary of Proposed HB 5218 Tariff Rates:

Hydro less than 500 kW..........................$0.10 kWh
Biogas less than 150 kW.........................$0.145 kWh
Geothermal less than 5 MW....................$0.19 kWh
Wind.........................................................$0.105 kWh
Small wind................................................$0.25 kWh
Rooftop solar less than 30 kW................$0.65 kWh
Solar façade cladding less than 30 kW...$0.71 kWh

I am witholding too much judgment on this particular bill as of yet, but I applaud its creativity and will be following it as it progresses through the legislative process.