Feed-In Tariffs Account for 75 Percent of Solar Installations

Forget tax credits. Forget rebates. Forget renewable energy standards. It is feed-in tariffs (FITs) that are really driving the global solar market. According to a study by the National Renewable Energy Laboratory, FITs are responsible for 75 percent of global solar panel installations.

“A Policymaker’s Guide to Feed-In Tariff Policy Design” found that FITs are the most popular and most effective incentive for solar power across the globe, reports Environmental Leader. The effect is most notable in Europe, where FITs facilitated the installation of 15,000 MW of photovoltaics (PV) and 55,000 MW of wind power from 2000 to 2009.

Comparatively, in the United States (with no broad FITs and no energy mandates), only 25,000 MW of wind and 1,250 MW of solar power were installed by the end of 2009.

The report goes into detail about policy options when it comes to implementing feed-in tariffs. It examines where programs have been successful and where they have failed. Areas of interest include policy stability over the long term, grid access, payment structures, and varying tariffs based on technology, system size, location and resource intensity.

While there are plenty of design options for FITs, designers must be careful (especially in a country so climatically diverse as the U.S.) to ensure the program parts integrate well together into a far-reaching and successful whole.

Experimenting with FITs is underway in the United States, with California and Oregon leading the way at the state level. A previous NREL study demonstrates that states can legally offer their own FITs but they should be attentive to federal requirements.

As important as it is for bureaucracy to have things quantified and printed on paper, the NREL study (at least in general) says little that isn’t obvious to the watchful solar-aimed eye. The easiest example being Germany, a relatively cloudy country with less-than-great solar resources that is far and away the world leader in the production of solar energy. The ONLY way this odd leadership came about was by way of the high premium the German government has been paying solar energy producers. Should countries like the United States, with a much higher overall solar intensity, choose to adopt the FIT model, the growth of the global solar industry would almost certainly be monumental — quickly dwarfing Germany in terms of solar production.

The true importance of the report, however, is likely in the details. Other countries, most notably Spain, have seen incredible growth through FIT programs only to experience a decisive crash within a few years because the program was designed in an unsustainable way. A report such as this from the NREL will no doubt do its part to learn from and help correct such errors, paving the way for a long-term FIT program that would catalyze a domestic green energy industry into its own self-sustainability.

But alas, the U.S. at present is a country that can’t even get a national renewable energy standard passed…yet.

Source: Environmental Leader
Photo Credit: NewEnergyFocus

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