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.

"House energy bill, this is Senate energy bill. Say hello"

On a Saturday flurry that encroached one day into their summer vacation, the people's house passed an energy bill that should have put a smile on a few faces. For those who believe that we have not seen decent renewable energy incentives in the U.S. since the Carter administration, there is reason to feel somewhat victorious. But before you pop the cork on that bottle of Cold Duck or, as Fred Sanford liked to call it, "the good stuff," I must remind everyone that the Senate passed a different collection of energy bills, and now the two must be reconciled into a bill that President George W. Bush might just veto. That is, unless the most significant language in the bills is tempered rather considerably in an effort to get it past the White House.

The differences between the two bills are many. Some of the highlights include a solar energy tax incentive and the elimination of a multi-billion dollar tax break for big oil companies (coupled with a redistribution of those funds toward renewable energy research/production.). But the most significant piece of legislation in the Senate energy bill was completely omitted in the House version; the House did nothing in terms of raising automobile fuel efficiency standards. The Senate bill increases the requirement to 35 mpg by 2020 for cars, SUVs and small trucks, about a 40% increase. Simply put, the House dropped the ball, and the fact that they whimped out on CAFE standards is not particularly surprising.

Oddly, the part of the House legislation which had the most potential for inducing any sort of real change, was also the most yawn-inducing. The House bill energy mandates that investor-owned utilities purchase 15% of their power from renewable sources by 2020. Beside the point that this renewable portfolio standard (RPS) may get by fillibustered by senate Republicans, the language of it has considerable weaknesses.

I am not as optimistic as some that: a) The bill is an effective policy tool, and; b) The bill will even be passed by Congress. First, RPSs are a little clunky as a policy mechanism; they lack flexibility, and do not incentivize renewable energy prodcution the way European and Canadian mechanisms do. The EU, and parts of Canada have used renewable energy tariffs, feed laws, and fee schedules that mandate utilities to purchase renewable energy from any provider at a (fairly high) fixed rate; a rate high enough that makes buying solar panels and sticking them on your roof fiscally attractive. This very aggressive yet somewhat draconian provision has pushed Germany to the forefront of micro-scale renewable energy generation. Just last month, the German Ministry of Environment announced that the targets for 2020 had increased to 27% from the previous 20% and had added a target of 45% by 2030. If there is to be a substantial increase in renewable energy generation, this is perhaps the fastest way to achieve that goal--but politically it is unlikely.

The second shortcoming of the House RPS is that it is only for investor-owned utilities. The House RPS exempts rural electric cooperatives, municipal utilities, the Tennessee Valley Authority and the state of Hawaii from the mandate. Not surprisingly, the investor-owned utility lobbies were a little disappointed for being singled out in the house's legislation; Thomas Kuhn, president of the Edison Electric Institute, called the House vote “very disappointing.” (I bet you're disappointed, Thomas.)

The third reason I am disappointed with the house RPS is that several states have already enacted renewable energy standards that are considerably tougher than the federal mandate. The cartographic wizards over at the Pew Center on Climate Change have put together the handy little map below that shows the states which have enacted some sort of renewable standard. Doesn't it look strikingly similar to another map of the U.S. you saw last November? Well I have news for everyone, even that map is a little misleading. Can we break those units down a little more? Try this more detailed map from 2004 on for size! (to be continued...)

In Support of a Federal Solar Tax Credit

The House of Representatives will soon vote on HR2776, which will extend and enlarge vital tax credits for solar energy installations. Please call your Representative today and urge a 'YES' vote for this vital bill.

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Spain Passes Law Legalizing Offshore Wind Farms

Spain -- the world's second leading producer of wind power -- has passed a new law allowing wind parks to be built off its coast. It is predicted that the offshore wind parks will generate between 2,000 and 3,000 megawatts (MW) of electricity by 2020. That would represent a major contribution to Spain's future wind power production.

Meanwhile in the U.S., we stand idly by and watch as the world erects offshore wind facilities off their coasts.