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Report: Feed-in Tariffs in America

| Written by John Farrell | 1 Comment | Updated on Apr 14, 2009 The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/report-feedin-tariffs-america/
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American renewable energy policy consists of a byzantine mix of tax incentives, rebates, state mandates, and utility programs.  The complexity of the system results in more difficult and costly renewable electricity generation, and hampers the ability of states and communities to maximize the benefits of their renewable energy resources.  Our April 2009 paper, Feed-in Tariffs in America: Driving the Economy with Renewable Energy Policy that Works, looks at how this European policy can be put in place in the U.S.

Download the report

Evidence from Europe suggests that a simpler, more comprehensive policy achieves greater renewable energy development, but at a lower cost and with greater economic and social benefits like local ownership.  It is called a feed-in tariff, a price for renewable energy high enough to attract investors without being so high it generates windfall profits. The tariff can be varied to spur new emerging technologies or to achieve social ends.

Denmark and Germany both used a feed-in tariff to drive renewable electricity generators to more than 15 percent market share.  This policy also resulted in large-scale local ownership, with near half of German wind turbines and over 80 percent of Danish ones owned by the residents of the region.

As of 2009, one Canadian province (Ontario) and one U.S. municipal utility (Gainesville, FL) have enacted a feed-in tariff. As many as 11 U.S. state legislatures are seriously considering adopting the system as a complement to their renewable electricity mandates.   State and federal policy makers should strongly consider turning to a feed-in tariff as the key mechanism for encouraging renewable energy development.  It’s fairness, simplicity, and stability can help the United States maximize the benefits of the renewable energy revolution.

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About John Farrell

John Farrell directs the Energy Self-Reliant States and Communities program at the Institute for Local Self-Reliance and he focuses on energy policy developments that best expand the benefits of local ownership and dispersed generation of renewable energy. More

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  • http://www.northwestsolarcenter.org Mike Nelson

    Washingtion State has had a production incentive (or FIT) in place and functioning for over 2 years and the state legislature just strengthened it in further the last session. Washington’s FIT pays up to 54 cents a KWH generated per year thru 2020 and if the system is community owned and on public buildings the FIT can be as high as $1.08. Its capped at $55000 per system over the remaining 11 years AND you can use the power yourself. You are paid for everything you generate adding about 8 cents more to the value to the home owner. Because of the cap on payments, this program is not of much interest to WAL MART or BOEING, but is of extreme interest to homeowners, schools and local governments (where all the votes come from)