How to Make Solar Powerful
By guest contributor Richard Feldman of Worker Center, the economic and workforce development division of the King County Labor Council, AFL-CIO, originally published in the Cascadia Scorecard Weblog.
This Friday, Governor Gregoire will sign a number of environmental and clean energy bills passed during Washington State’s stellar legislative session, including SB 5101. Denis Hayes, former director of the federal Solar Energy Research Institute and current President of the Bullitt Foundation, describes SB 5101 “as the most important solar legislation ever introduced in any American state legislature.”
SB 5101 is modeled after an energy policy first passed by the German government in 1990 that required utilities, among other things, to purchase any renewable energy electricity at fixed, minimum prices. This German law, also known as the feed-in tariff law, renewable tariff law or pricing law, has gone through several changes and is currently known as the German Renewable Energy Act (EEG).
Several other European countries including Spain have adopted similar policies. Under the German system, the prices paid for renewable electricity are higher than the retail cost of electricity and guaranteed for a set period of time. The prices are set in relationship to the cost of the renewable resource or may be set to spur investment and industrial development in renewables. The prices can account for improvements in technology and economies of scale by establishing a schedule that lowers the price over time for successive producers. The costs of higher payments to renewables are covered by a small additional per kilowatt-hour (kWh) charge on all consumers according to their level of use. Having the revenue source come from ratepayers instead of taxpayers has insulated the program from the vagaries of legislative renewal.
SB 5101 establishes a similar system of payments for kWh generated by wind, solar and anaerobic digesters except that the revenue source is a credit against a fixed percentage of utility taxes instead of a charge to ratepayers. In Washington State, a homeowner with a solar photovoltaic (PV) system will receive up to $2,000 per year, depending on how much energy is generated by their system.
Janet L Sawin of the Worldwatch Institute in a study of renewable energy policies notes that:
When the 1990s began, Germany had virtually no renewable energy industry and, in the view of most Germans, the country was unlikely ever to be in the forefront of these alternative energy sources. Yet, by the end of the decade, Germany had transformed into a renewable energy leader, with a new, multibillion-dollar industry and tens of thousands of new jobs.
For example, most of Germany receives less solar irradiation than Western Washington yet in 2004 it installed six times more PV than the entire US.
The reason Germany has been so successful? According to Sawin:
“[Several] policies have played an important role, but the pricing law has had the greatest impact on Germany’s renewable energy industries. It ended uncertainties regarding whether producers could sell their electricity into the grid and at what price, and provided investor confidence, making it easier for even small producers to obtain bank loans, and drawing money into the industries. Increased investment drove improvements in technology, advanced learning and experience, and produced economies of scale that have led to dramatic cost reductions. The average cost of manufacturing wind turbines in Germany fell by 43 percent between 1990 and 2000, and the cost of total PV systems has declined 39 percent over the past decade.”
Continue reading this story from the Cascadia Scorecard Weblog:
How to Make Solar Powerful