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US Rep Inslee to Introduce Bill for Feed-In Tarriffs PDF Print E-mail
US Rep Inslee To Introduce Bill For Feed-In Tariffs

NEW YORK -(Dow Jones)- U.S. Rep. Jay Inslee (D-Wa.) plans to introduce a bill into the House this month to establish a federal feed-in tariff for renewable energy similar to European incentive programs, Inslee told Clean Technology Investor.

Under the bill, utilities would be required to pay a specific price for renewable energy to suppliers. The Federal Energy Regulation Commission would set the prices, said Inslee, and these would decline every two years. Prices would also differ depending on technology in use. Only systems with 20 megawatts or less of capacity would qualify, as the bill is aimed primarily at distributed energy, the representative said. Suppliers of renewable energy would receive the guaranteed payments for a 20-year period.

"We would provide entrepreneurs and venture capitalists with steady demand. If they produce clean energy they will get a guaranteed rate of return," Inslee said.

(This story also appeared in Clean Technology Investor, a daily newsletter published by Dow Jones & Co.)

The tariffs, or renewable energy payments, as Inslee calls them, would apply to various new clean energy technologies such as solar photovoltaics, solar thermal, wind, geothermal, wave, biogas, hydro kinetic and others. The cost for this would spread out over ratepayers in multistate regions, so that impact on individuals would be minimized.

The goal of the bill is to give clean technology developers the promise of demand that will fuel investment and innovation, as well as attract new manufacturing and create jobs in the U.S., said Inslee.

"A nationwide feed-in-tariff, if saleable (big if) politically, and well- structured, could be a great platform for solar industry growth in the U.S.," Julie Blunden, vice president of public policy for one of the U.S. largest solar companies SunPower Corp. (SPWR), wrote in an email.

The congressman plans to introduce the bill to the House Energy and Commerce Committee, of which he's a member, in the next week or two. "Next year I expect to have a very serious discussion of this and perhaps passage," he said. Inslee is also part of a 15-member Select Committee on Energy Independence and Global Warming. Inslee, author and supporter of other clean energy-supporting legislation, is the lead sponsor on the proposed bill and hopes to have co- sponsors.

The bill will come out at a time when the extension of the current federal tax incentives for renewable energy, called vital by the industry and due to expire at the end of the year, is still mired in congressional deliberations.

"We're still in the frustrating days, with the dying gasp of ancient technology and policy levers," said Inslee. But, "you'll have a political revolution starting on Jan. 20, 2009."

Inslee hopes for a Democrat in the White House and new members of Congress on Capitol Hill to propel his legislation next year. He added that either presidential nominee would be "an improvement over the current administration," but that there are huge differences between Sen. Barack Obama and Sen. John McCain in regard to clean energy.

Overall, Inslee said that requiring utilities to pay a mandated amount for renewable energy is "a new idea to D.C., and like a fine wine it'll need time."

This type of incentive, adopted in Germany since 2003, has vaulted that country to be the biggest producer of solar energy in the world and one of the leading exporters of solar products. Tariffs there decrease gradually each year. About 40 governments worldwide, including Ontario's, have similar legislation right now.

Current U.S. incentives, including state-specific mandates for utilities to draw a certain percentage of generation from renewable sources and federal and local tax incentives, are not enough, Inslee said. "We've fallen behind in the clean energy race versus the other markets. When they're leaving you in the dust, you need to change something," he said.

In Inslee's view it's the entire gamut of legislation in support of clean energy - a federal renewable power standard, tax incentives, a carbon emissions law, and a feed-in tariff - that must exist in order to truly bring about change in reducing global warming and seeing the U.S. charge ahead of other nations in this area.

States have been taking the initiative on passing aggressive legislation in favor of clean technologies. So far about six states have introduced feed-in tariff bills, and another eight have considered, or are considering, similar legislation, according to a May report prepared for the Heinrich Boll Foundation and co-authored by James Bradbury, a legislative assistant to Inslee and two other authors, Wilson Rickerson, a renewable energy consultant and Florian Behnold, director for regulatory affairs at start-up company Wilson TurboPower Inc.

But in Inslee's view the scope of the issue is too wide for any state to tackle individually.

Over the few months that Inslee has been working on the proposed bill he said a number of changes have been introduced. "We lightened up on the federal pedal to give states more discretion," he said.

"We have literally thousands of rates in the U.S, so a single [feed in tariff] would have substantially different impacts in different regions," SunPower's Blunden wrote. She also added that retail power markets in the U.S. are regulated on the state level and that makes a "national [feed-in tariff], or even net-metering, a big stretch."

Conversations that Inslee's staff had with utilities also led to changes that Inslee declined to describe but which he said would enable utilities to look at this bill without fear.

Utilities may be concerned over having to raise rates to accommodate a faster deployment of renewables, as well as about having to pay a specified rate for a particular technology, as opposed to choosing the most cost-competitive project.

"There's a real concern about the impact of higher [electricity] rates on the economy," said Shawn Cooper, spokesman for Pacific Gas & Electric.

Cooper said it's premature to discuss a potential national feed-in tariff before seeing a specific bill. However, he said that the current system in which utilities request renewable energy proposals and evaluate them "hopefully benefits the customer price-wise" because of the competitive nature of the process.

He also noted that it's important for utilities to have the flexibility to meet a renewable energy mandate by choosing the resource that is the "most reliable, cleanest and hopefully cost effective."

Representatives of such utilities as Southern California Edison, part of Edison International Inc. (EIX), and Duke Energy Corp. (DUK), both actively procuring renewable energy under state mandates, declined to comment on the potential impact of a national feed-in tariff.

Asked whether people may feel that a law like this would be viewed as forcing them to pay for something they didn't choose or benefit from, he said that every person benefits from other people's use of clean energy that lowers carbon dioxide emissions.

"When a guy is using solar energy in Germany, he's reducing CO2 emissions in the world. But the problem is he's got a job in Germany. I want the jobs in this country, I want the capital invested here," Inslee said.

The Boll Foundation paper notes that moving a feed-in tariff bill through Congress won't be easy, partly because of state and federal jurisdictional concerns, a lack of unanimity from solar supporters on which legislation is most important to the industry, and the continuous resistance from the conventional energy industry. The report was also sponsored by The World Future Council and The North Carolina Solar Center.

- By Yuliya Chernova, Dow Jones Newsletters; This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

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