Renewable energy policy responsible for 50% of the world's renewable energy deployment
Job Creation, Energy Independence, Environmental Stewardship
The energy market has dominated headlines for as long as can be remembered. As we climb our way out of the current economic cycle, new leaders are created and new industries will lead the way back to a strong, robust economy. Those who look to the future of the energy market know that Renewable Energy is an industry that is boiling over with potential. A growing new Renewable Energy industry in Florida will create untold thousands of jobs, collect millions in local tax revenues, and bring us to the forefront of the national stage on energy independence and environmental stewardship.
Renewable Energy Payments are a policy mechanism that have proven to promote the fastest, cheapest, and most widespread growth of Renewable Energy anywhere in the world, with implementation in over 45 countries. Currently at least 8 states in the U.S. are considering a Renewable Energy Payment (also known as Feed in Tariff) policy mechanism. Today the State of Florida is positioning itself ahead of the curve and providing a beacon for the rest of the country to follow by considering this policy mechanism.
A Renewable Energy Payment (REP) provides a fixed contract to the producers of Renewable Energy. The contracts, which are fixed for typically twenty years, afford the producer the ability to borrow against a mandated, guaranteed payment from their utility company. Also, these contracts, which are transparent, simple to understand, and open for inspection, include long-term agreed upon prices that the utility company will pay the producers for the energy it buys. The prices are set high enough to be an incentive to new producers and encourage existing producers to maximize their capacity.
The key components to a proven successful REP model:
• Anyone can access the grid, democratizing the new market and allowing anyone to produce renewable energy.
• All producers will receive a fixed payment, at reasonable rate of return, for a fixed period of time, typically 20 years, for the renewable energy that they produce.
• There is no limit to the amount of renewable energy that can be produced.
• The contracts are transparent and simple to understand.
With these features included in the design, a Renewable Energy Payment policy would create a stable and competitive renewable energy marketplace. Imagine if homes, churches, schools, hospitals, condo associations and ranchers could all install solar, wind and other renewable energy sources on their rooftops or land and then produce energy and sell it to the utilities for profit.... It could completely transform our economic landscape. Floridians are owed the chance to participate in the Renewable Energy market with a level playing field, and Renewable Energy Payments are the single most effective way to make sure this happens.
The key results of a REP market include:
• Job Creation. All levels of jobs are created including high-skilled positions in engineering, manufacturing, agriculture, and electronics. Jobs in banking and finance, breathing life in to a lending industry.
• Stability and Investment Security. REP incentives also have massive appeal to investors and lenders. Unlike Renewable Energy Certificates (RECs) which have annually fluctuating values through a trading mechanism, REP incentives never change and never require any administration or additional cost. As long as the RE system is generating electricity it continues to make the system owner a guaranteed return on their investment.
• Stay at home revenue. With REPS, the revenue from producing renewable energy will stay in the county and state where it is produced. This will create "local wealth" and stimulate the local economy.
• Equality. REPs create a level playing field for all different sizes of renewable energy producers. It encourages individuals, small businesses and larger businesses to become renewable energy producers and rewards them all.
• Reduce Carbon Output. Burning fossil fuels releases 75% of the greenhouse gases that are heating the planet. It is estimated that by switching to renewable energy we can cut CO2 emissions in half by 2030.
• Stabilize Energy Costs. Communities that use locally produced renewable energy have more stable energy costs. Once the systems are set up, their renewable fuels such as sun and wind are low cost or free. Overall, energy costs will be more predictable and controllable, creating economic stability.
• Create Energy Security. Renewable energy production will lesson a community’s or nation’s vulnerability to increasing fossil fuel prices and will increase self-reliant economic growth. Those who install renewable energy the soonest will save the most. The costs for renewable energy are expected to decline due to economy of scale and technological progress.
REPs Basic Steps
1. Priority access to the grid over conventional fuel sources [prevents gaming from utilities inhibiting grid access] within [60] days for all systems
2. Purchase guarantee with standard offer contracts (SOC) with the local utility standardized by the Public Service Commission. Contracts shall be 20 years fixed price with an inflation escalator [makes projects financeable with low cost debt versus expensive equity – target should be >70% debt for most technologies]
3. The SOC will be the broadly the same for all system sizes under 20MW – with the intent that the SOC provides a speedy transparent method for a RE producer to sell power to the utility
4. Pricing will be determined by the PSC but would be based on cost plus reasonable profit
a. To mimic the regulatory returns that regulated utilities currently enjoy in Florida for fossil generation projects.
b. Pricing to be differentiated by system size to factor in economies of scale that typically reduce installed costs for larger systems
c. We recommend that the PSC include in its calculation of return all federal ITC and other benefits such as accelerated depreciation.
d. A pricing digression methodology would be employed whereby every [2 years] the PSC can alter prices for new RE producers to factor in changes in costs
e. REPs by utilities for RE would be allowed to be recovered in the normal regulatory adjustment mechanism via a RE surcharge that would be allocated to each customer bill. The surcharge would be allocated by the PSC state wide to ensure that all customers pay for RE not just those customers of any one IOU
Renewable Energy Payments
REPs are a simple, elegant, and cost-effective mechanism for supporting large-scale RE deployments in aggressive timelines. Germany alone has deployed 12 times the RE as the US since 2001, even though they have 1/7th the population and have ¼ the renewable resources for solar and wind (RE breakdown: 46% wind, 24% biomass, 4% solar). The Germans have already achieved the implementation of RE which accounts for >15% of their total power generation resources.
Germany’s FIT Success Story (through 2007)
1. Total Grid Contribution:
a. Baseline of 6.6% in 2005
b. 15% achieved by 2007
c. New 27% goal by 2020
2. Wind: 20,000+ MW installed (30.5 TWh generated) [45%+ of market]
3. Solar: 5000+ MW installed (US had 250 MW in 2007) [4%+ of market]
4. Biomass: 27% of market
5. Hydro: 24% of market
Approximate Cost in Germany
1. ~$2.80 (USD) a month (price of a loaf of bread)
2. Total Policy Cost of $2.4. B dollars annually
3. Net Policy Benefit of $4.8 B dollars Annually
Benefits of the REP Policy
1. Costs the ratepayers ZERO ($0) if the market does not support
2. REQUIRES NO STATE GOVERNMENT ADMINISTRATION or tax credit support
3. Incentives are calculated around each RE technology’s cost structure and are adjusted on a set performance schedule
4. Supports all RE technologies equally or can be adjusted for weighted average
5. Will help lower grid electricity prices through widespread adoption of RE into the power mix with low/no fuel input costs over the long term
REP Policies – Overview
1. Florida should immediately begin to increase its proportion of solar and renewable energy. In doing so it will:
• Improve Florida’s energy security by reducing its dependence on imported fossil fuels
• Create a wealth machine from solar and renewable energy. New construction, installation, electrical, manufacturing and finance jobs emerge as we expand on and establish a vibrant solar and renewable industry in Florida
• Improve our environment now and for the future citizens of Florida
2. REPs greatly increase competition in the renewable electricity generating sector in Florida. REPs policies allow everyone to become a solar and renewable energy producer up to 20MW per project, encouraging residential, commercial and larger investment groups to invest in and participate in solar and other renewable energy production. Each producer is allowed to self generate renewable power and sell the power back to their local utility
3. Utilities have hitherto been reluctant to invest the time and resources in building out small scale renewables projects since it adds minimal benefit to their earnings per share. Conversely, smaller renewable projects are best done by households, local community groups (churches/schools), farmers and developers, commercial groups and renewables companies. These policies therefore encourage renewable generation competition, and allow for a more efficient matching of producer and renewable resources. REPs allow a vast deployment of sub 20MW solar and renewable energy projects by providing solar and renewable energy priority access to the transmission grid and requiring that the utilities buy whatever power is produced.
4. Cost – REPs require NO taxation, NO upfront state payments or subsidies; the cost of paying the renewables producers is passed through to all utility customers through the usual PSC rate recovery mechanism. Costs will only rise if these policies are successful in delivering rapid deployment of renewables. Caps can be introduced to manage the desired growth.
5. Market mechanism – the state policy framework allows the private sector and market forces to work and invest; unlike renewable energy credits, there is no need for any state administration.
6. The solar and renewable energy REPs policy requires that all solar and renewable energy generating technologies are part of the solution. It is required that all renewable energy technologies as defined in [section 366.91] Florida Statutes, become part of the comprehensive REPs policy.
Florida Alliance for Renewable Energy.
Our mission is to educate, organize and represent beneficiaries in the adoption of a Renewable Energy Payment policy mechanism. We are launching a public relations marketing campaign focused on the advancement of a REP policy. By way of gaining broad support for this effort we will be engaging in a three pronged approach. First is to educate and influence the policy makers, elected officials and decision makers. Second is to educate the current and future members of the alliance through workshops, board meetings and presentations. Third is to educate and stimulate the public into taking action through their support and involvement.
The reasons we believe a REP policy will be effective are simple but very powerful. First they are transparent and easy to understand. Second they provide access to anyone and everyone who wishes to produce renewable energy, creating a level playing field for producers, individuals and businesses of all sizes. Third they provide no limit or cap on the upside of production, thus allowing a truly self directed market. Fourth and perhaps most important they offer ability to be financed, creating a whole new lending market and a whole new industry.
Stakeholders in FARE include renewable energy producers, individual residents of the state of Florida, community organizations, municipalities, elected officials, ranchers, farmers, commercial real estate holders, developers, manufacturers, non profits and associations.
Our goal is to represent one collective effort showing support for advancing rapid, widespread deployment of renewable energy in the state of Florida. Our alliance will act as a public face in front of elected officials, potential members, community organizations, municipalities, like-minded initiatives, and the media. The alliance will also serve as an information hub, acting as a central source for collection and distribution of news, whitepapers, press releases and member activity.
Our three basic platforms for the REP mechanism are job creation, energy independence and environmental stewardship. During the 2009 legislative session we will advocate implementation of REPs with the House and Senate in Florida as well as the Governor and his team.
Please visit www.FAREnergy.org today to endorse FARE. Or call 888.501.FARE
Recent REP Headlines
Nov. 18th Rep. Law introduces a feed in style renewable energy project in Michigan
Nov. 12th Gainesville Moves Forward on Feed-in Tariff
Nov. 7th. "Nov 4th" was a great day for Renewable Energy
Oct. 20th: Florida conference looks at German solar experience
Minnesota Renewable Energy Feed-In Tariff Bill
Illinois: Renewable Energy Feed-in Tariff Introduced in House of Representatives
Feed-in Tariff for California First
Germany sets shining example in providing a harvest for the world
Solar World expands in Orgeon
The energy market has dominated headlines for as long as can be remembered. As we climb our way out of the current economic cycle, new leaders are created and new industries will lead the way back to a strong, robust economy. Those who look to the future of the energy market know that Renewable Energy is an industry that is boiling over with potential. A growing new Renewable Energy industry in Florida will create untold thousands of jobs, collect millions in local tax revenues, and bring us to the forefront of the national stage on energy independence and environmental stewardship.
Renewable Energy Payments are a policy mechanism that have proven to promote the fastest, cheapest, and most widespread growth of Renewable Energy anywhere in the world, with implementation in over 45 countries. Currently at least 8 states in the U.S. are considering a Renewable Energy Payment (also known as Feed in Tariff) policy mechanism. Today the State of Florida is positioning itself ahead of the curve and providing a beacon for the rest of the country to follow by considering this policy mechanism.
A Renewable Energy Payment (REP) provides a fixed contract to the producers of Renewable Energy. The contracts, which are fixed for typically twenty years, afford the producer the ability to borrow against a mandated, guaranteed payment from their utility company. Also, these contracts, which are transparent, simple to understand, and open for inspection, include long-term agreed upon prices that the utility company will pay the producers for the energy it buys. The prices are set high enough to be an incentive to new producers and encourage existing producers to maximize their capacity.
The key components to a proven successful REP model:
• Anyone can access the grid, democratizing the new market and allowing anyone to produce renewable energy.
• All producers will receive a fixed payment, at reasonable rate of return, for a fixed period of time, typically 20 years, for the renewable energy that they produce.
• There is no limit to the amount of renewable energy that can be produced.
• The contracts are transparent and simple to understand.
With these features included in the design, a Renewable Energy Payment policy would create a stable and competitive renewable energy marketplace. Imagine if homes, churches, schools, hospitals, condo associations and ranchers could all install solar, wind and other renewable energy sources on their rooftops or land and then produce energy and sell it to the utilities for profit.... It could completely transform our economic landscape. Floridians are owed the chance to participate in the Renewable Energy market with a level playing field, and Renewable Energy Payments are the single most effective way to make sure this happens.
The key results of a REP market include:
• Job Creation. All levels of jobs are created including high-skilled positions in engineering, manufacturing, agriculture, and electronics. Jobs in banking and finance, breathing life in to a lending industry.
• Stability and Investment Security. REP incentives also have massive appeal to investors and lenders. Unlike Renewable Energy Certificates (RECs) which have annually fluctuating values through a trading mechanism, REP incentives never change and never require any administration or additional cost. As long as the RE system is generating electricity it continues to make the system owner a guaranteed return on their investment.
• Stay at home revenue. With REPS, the revenue from producing renewable energy will stay in the county and state where it is produced. This will create "local wealth" and stimulate the local economy.
• Equality. REPs create a level playing field for all different sizes of renewable energy producers. It encourages individuals, small businesses and larger businesses to become renewable energy producers and rewards them all.
• Reduce Carbon Output. Burning fossil fuels releases 75% of the greenhouse gases that are heating the planet. It is estimated that by switching to renewable energy we can cut CO2 emissions in half by 2030.
• Stabilize Energy Costs. Communities that use locally produced renewable energy have more stable energy costs. Once the systems are set up, their renewable fuels such as sun and wind are low cost or free. Overall, energy costs will be more predictable and controllable, creating economic stability.
• Create Energy Security. Renewable energy production will lesson a community’s or nation’s vulnerability to increasing fossil fuel prices and will increase self-reliant economic growth. Those who install renewable energy the soonest will save the most. The costs for renewable energy are expected to decline due to economy of scale and technological progress.
REPs Basic Steps
1. Priority access to the grid over conventional fuel sources [prevents gaming from utilities inhibiting grid access] within [60] days for all systems
2. Purchase guarantee with standard offer contracts (SOC) with the local utility standardized by the Public Service Commission. Contracts shall be 20 years fixed price with an inflation escalator [makes projects financeable with low cost debt versus expensive equity – target should be >70% debt for most technologies]
3. The SOC will be the broadly the same for all system sizes under 20MW – with the intent that the SOC provides a speedy transparent method for a RE producer to sell power to the utility
4. Pricing will be determined by the PSC but would be based on cost plus reasonable profit
a. To mimic the regulatory returns that regulated utilities currently enjoy in Florida for fossil generation projects.
b. Pricing to be differentiated by system size to factor in economies of scale that typically reduce installed costs for larger systems
c. We recommend that the PSC include in its calculation of return all federal ITC and other benefits such as accelerated depreciation.
d. A pricing digression methodology would be employed whereby every [2 years] the PSC can alter prices for new RE producers to factor in changes in costs
e. REPs by utilities for RE would be allowed to be recovered in the normal regulatory adjustment mechanism via a RE surcharge that would be allocated to each customer bill. The surcharge would be allocated by the PSC state wide to ensure that all customers pay for RE not just those customers of any one IOU
Renewable Energy Payments
REPs are a simple, elegant, and cost-effective mechanism for supporting large-scale RE deployments in aggressive timelines. Germany alone has deployed 12 times the RE as the US since 2001, even though they have 1/7th the population and have ¼ the renewable resources for solar and wind (RE breakdown: 46% wind, 24% biomass, 4% solar). The Germans have already achieved the implementation of RE which accounts for >15% of their total power generation resources.
Germany’s FIT Success Story (through 2007)
1. Total Grid Contribution:
a. Baseline of 6.6% in 2005
b. 15% achieved by 2007
c. New 27% goal by 2020
2. Wind: 20,000+ MW installed (30.5 TWh generated) [45%+ of market]
3. Solar: 5000+ MW installed (US had 250 MW in 2007) [4%+ of market]
4. Biomass: 27% of market
5. Hydro: 24% of market
Approximate Cost in Germany
1. ~$2.80 (USD) a month (price of a loaf of bread)
2. Total Policy Cost of $2.4. B dollars annually
3. Net Policy Benefit of $4.8 B dollars Annually
Benefits of the REP Policy
1. Costs the ratepayers ZERO ($0) if the market does not support
2. REQUIRES NO STATE GOVERNMENT ADMINISTRATION or tax credit support
3. Incentives are calculated around each RE technology’s cost structure and are adjusted on a set performance schedule
4. Supports all RE technologies equally or can be adjusted for weighted average
5. Will help lower grid electricity prices through widespread adoption of RE into the power mix with low/no fuel input costs over the long term
REP Policies – Overview
1. Florida should immediately begin to increase its proportion of solar and renewable energy. In doing so it will:
• Improve Florida’s energy security by reducing its dependence on imported fossil fuels
• Create a wealth machine from solar and renewable energy. New construction, installation, electrical, manufacturing and finance jobs emerge as we expand on and establish a vibrant solar and renewable industry in Florida
• Improve our environment now and for the future citizens of Florida
2. REPs greatly increase competition in the renewable electricity generating sector in Florida. REPs policies allow everyone to become a solar and renewable energy producer up to 20MW per project, encouraging residential, commercial and larger investment groups to invest in and participate in solar and other renewable energy production. Each producer is allowed to self generate renewable power and sell the power back to their local utility
3. Utilities have hitherto been reluctant to invest the time and resources in building out small scale renewables projects since it adds minimal benefit to their earnings per share. Conversely, smaller renewable projects are best done by households, local community groups (churches/schools), farmers and developers, commercial groups and renewables companies. These policies therefore encourage renewable generation competition, and allow for a more efficient matching of producer and renewable resources. REPs allow a vast deployment of sub 20MW solar and renewable energy projects by providing solar and renewable energy priority access to the transmission grid and requiring that the utilities buy whatever power is produced.
4. Cost – REPs require NO taxation, NO upfront state payments or subsidies; the cost of paying the renewables producers is passed through to all utility customers through the usual PSC rate recovery mechanism. Costs will only rise if these policies are successful in delivering rapid deployment of renewables. Caps can be introduced to manage the desired growth.
5. Market mechanism – the state policy framework allows the private sector and market forces to work and invest; unlike renewable energy credits, there is no need for any state administration.
6. The solar and renewable energy REPs policy requires that all solar and renewable energy generating technologies are part of the solution. It is required that all renewable energy technologies as defined in [section 366.91] Florida Statutes, become part of the comprehensive REPs policy.
Florida Alliance for Renewable Energy.
Our mission is to educate, organize and represent beneficiaries in the adoption of a Renewable Energy Payment policy mechanism. We are launching a public relations marketing campaign focused on the advancement of a REP policy. By way of gaining broad support for this effort we will be engaging in a three pronged approach. First is to educate and influence the policy makers, elected officials and decision makers. Second is to educate the current and future members of the alliance through workshops, board meetings and presentations. Third is to educate and stimulate the public into taking action through their support and involvement.
The reasons we believe a REP policy will be effective are simple but very powerful. First they are transparent and easy to understand. Second they provide access to anyone and everyone who wishes to produce renewable energy, creating a level playing field for producers, individuals and businesses of all sizes. Third they provide no limit or cap on the upside of production, thus allowing a truly self directed market. Fourth and perhaps most important they offer ability to be financed, creating a whole new lending market and a whole new industry.
Stakeholders in FARE include renewable energy producers, individual residents of the state of Florida, community organizations, municipalities, elected officials, ranchers, farmers, commercial real estate holders, developers, manufacturers, non profits and associations.
Our goal is to represent one collective effort showing support for advancing rapid, widespread deployment of renewable energy in the state of Florida. Our alliance will act as a public face in front of elected officials, potential members, community organizations, municipalities, like-minded initiatives, and the media. The alliance will also serve as an information hub, acting as a central source for collection and distribution of news, whitepapers, press releases and member activity.
Our three basic platforms for the REP mechanism are job creation, energy independence and environmental stewardship. During the 2009 legislative session we will advocate implementation of REPs with the House and Senate in Florida as well as the Governor and his team.
Please visit www.FAREnergy.org today to endorse FARE. Or call 888.501.FARE
Recent REP Headlines
Nov. 18th Rep. Law introduces a feed in style renewable energy project in Michigan
Nov. 12th Gainesville Moves Forward on Feed-in Tariff
Nov. 7th. "Nov 4th" was a great day for Renewable Energy
Oct. 20th: Florida conference looks at German solar experience
Minnesota Renewable Energy Feed-In Tariff Bill
Illinois: Renewable Energy Feed-in Tariff Introduced in House of Representatives
Feed-in Tariff for California First
Germany sets shining example in providing a harvest for the world
Solar World expands in Orgeon
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