3 Responses to CLEAN Sweep: Feed-In Tariffs Build Stable Clean Energy Markets And Boost Local Economies
by Stephanie Wang
The collapse of Solar Renewable Energy Certificate markets, coupled with state and local government budget shortfalls, have resulted in unreliable funding for clean energy projects. In these lean economic times, Clean Local Energy Accessible Now (CLEAN) Programs have emerged as the most cost-effective solution for building stable clean energy markets.
Across the country, local and state policymakers are rolling out CLEAN Programs. Leaders in Gainesville, Florida ignited the trend by adopting the nation’s first CLEAN Program in 2009. Since launching their program, Gainesville has experienced a 3,400% increase in solar power capacity. In fact, the city’s 11.45 megawatts (MW) of installed solar capacity make it the national leader in per capita rate of installed solar. Over the last few years, policymakers in Indiana, Hawaii, Vermont, California, Rhode Island, and Maine have enacted innovative CLEAN Programs. Silicon Valley leaders approved Palo Alto CLEAN on March 5, signaling that forward-thinking leaders view CLEAN Programs as an ideal policy for expanding production of cost-effective, clean local energy.
CLEAN Programs, based on feed-in tariffs, are the most effective policy for bringing renewable electricity online. Feed-in tariffs require utilities to enter into standard contracts to purchase renewable electricity from any eligible generator at a pre-defined fixed rate for a long period of time, generally 20 years. Deutsche Bank Climate Change Advisors has found that these policies are successful because they provide “TLC” for clean energy markets: transparency, longevity, and certainty.
CLEAN Programs, which can be designed for the local, state or national level, increase local production of clean energy through a combination of standard contracts, predefined rates, and streamlined access to the grid. These programs reduce the risks, transaction costs, and complexities involved in selling renewable energy from under-used spaces in our communities, such as rooftops, parking lots, and landfills.
Rather than relying on government subsidies, CLEAN Programs are funded through small surcharges on ratepayers’ bills. CLEAN Programs create stable revenue streams for energy generators, which makes renewable energy projects more attractive to investors and lenders. In contrast, most clean local energy policies in the U.S. have been designed to help homeowners reduce their electricity bills by offsetting energy purchases from a utility. These “net-metering” policies fail to incentivize participants to produce more energy than they consume annually. Further, these net-metering policies are not attractive to owners of properties where onsite energy use is negligible or paid for by tenants.
CLEAN Programs are also cost-effective for electric ratepayers. In fact, many local and state leaders see CLEAN Programs as an excellent mechanism to lock in reasonable and stable electric rates for extended durations. As transmission infrastructure costs continue to rise and fuel costs continue to fluctuate, CLEAN Program energy prices will remain the same for the term of the contract, usually 20 years. Since implementing its CLEAN Program in 2009, Gainesville ratepayers have seen a less than 1% increase in electricity rates. Similarly, Sacramento’s CLEAN Program will add 100 MW of solar energy to its distribution grid by the end of this year, enough to supply the peak power needs of about 100,000 homes, with no ratepayer impact.
The simplicity of CLEAN Programs provides an opportunity for a broad range of community members, local business owners, and farmers to generate and sell clean local energy. By keeping energy dollars close to home, CLEAN Programs stimulate local economies. In addition, CLEAN Programs create jobs nearly immediately since the clean energy projects are sited within built environments. Unlike centralized renewable power stations, clean local energy projects are “shovel ready” – they avoid lengthy environmental reviews and transmission development processes. In Gainesville, job creation has been a key driver of continued support for their CLEAN Program, which is estimated to have created more than 260 local jobs.
Across the country, local utility policymakers and clean energy advocates are using the Clean Coalition’s Local CLEAN Program Guide to evaluate, design, and implement new CLEAN Programs. Long Island Power Authority, Tennessee Valley Authority, Fort Collins Utilities, and Los Angeles Department of Water & Power have already announced plans to launch CLEAN Programs in 2012. We expect the adoption of CLEAN Programs to continue to accelerate in the next few years.
Stephanie Wang is the Director of Programs & Campaigns of the Clean Coalition, a nonprofit organization that implements policies and programs that transition the U.S. to cost-effective clean energy now.