Feed In Tariffs

Renewable energy generators could take advantage of feed-in tariffs in the US under certain conditions, according to a report produced by the National Renewable Energy Laboratory (NREL). The legal analysis could set the scene for wholesale electricity prices that make renewable energy more competitive. Small capacity providers could make use of feed-in tariffs NREL hired the National Regulatory Research Institute (NRRI) as the lead author of the report, entitled Renewable Energy Prices in State-Level Feed-in Tariffs: Federal Law Constraints and Possible Solutions .

It found that a condition in existing legislation could enable the creation of financial incentives that produce the same effect as a traditional feeding tariff. Alternatively, altering another piece of legislation could achieve similar results. Two federal pieces of legislation govern wholesale electricity deals.

The Public Utility Regulatory Policies Act (PURPA), passed in 1978, defined ” qualifying facilities” as non-fossil generators. The 1935 Federal Power Act also puts contracts for wholesale electricity transactions under the Federal Energy Regulatory Commission (FERC). PURPA effectively forbids qualifying facilities from selling their energy to utilities above the price that they could buy it elsewhere.

However, qualifying facilities with less than 20MW of capacity are exempt, which could lead to a situation where these energy producers would be able to take advantage of a feed-in tariff. However some clarification of existing precedents would be needed An alternative involves setting criteria concerning the pricing for various technologies, project sizes, and geographic markets. However, this would require a rule making process.

Europe uses feed-in tariffs regularly to help make renewable energy pricing more competitive at a wholesale level. The tariffs mandate that utilities purchased renewable energy at a preset price, encouraging the creation of renewable energy projects, and fuelling economies of scale in a bid to help renewable energy achieve cost parity with more traditional fossil fuels. As of last month, California, Hawaii, Oregon and Vermont had all authorised or required renewable energy feed-in tariff programmes, the report said.

By: Danny Bradbury, BusinessGreen