Maine considers renewable feed-in tariff

Wednesday, March 20, 2013

The Maine legislature is set to consider a bill that would create a feed-in tariff for renewable energy.  Maine already has a renewable portfolio standard and other incentives for investment in renewable power production.  Will Maine add a feed-in tariff to the mix?
The Maine State House, home to a consideration of feed-in tariffs.
 A feed-in tariff is a policy tool intended to encourage investment in renewable energy technologies.  Feed-in tariffs typically offer long-term contracts under which utilities purchase power fromrenewable energy producers at predictable prices, often based on the cost of generation of each technology.  Where feed-in tariffs exist, developers of renewable energy projects gain certainty about the revenues their projects will create.  This certainty helps developers secure the financing they need to build projects.

A bill proposed by Maine state senator Christopher Johnson would require the state Public Utilities Commission to establish a renewable energy resources feed-in tariff program.  An Act To Establish the Renewable Energy Feed-in Tariff, also known as LD 1085, has the stated purpose of encouraging the rapid and sustainable development of renewable energy resources and technology for environmentally healthy generation of electricity.  Like feed-in tariffs in other jurisdictions, it would require that utilities purchase renewably produced electricity from all qualified suppliers.  It would have the Public Utilities Commission set the rate that electric utilities must pay for such power at a level sufficient to provide revenues to operate and to attract necessary capital and investment for small renewable electric generators.

Qualified suppliers would be limited to certain small renewable electric generators.  As defined in the bill, such generators would be limited to systems up to 500 kilowatts in size, that are majority owned by a person or entity that owns less than 500 kilowatts of electricity generating capacity in Maine, and that use solar photovoltaic panels or solar thermal or concentrating solar systems, generators fueled by methane from sewage treatment facilities, landfills or agricultural waste, generators fueled by combustion of biomass, tidal power projects, or wind energy.

Existing Maine law provides incentives for the generation of electricity from renewable resources.  Like most states, Maine has a renewable portfolio standard which requires electricity suppliers to source a specified portion of their power from renewable generators.  Maine also has a community-based renewable energy pilot program which functions like a feed-in tariff for eligible projects.  A feed-in tariff would add another incentive to build relatively small (non-utility-scale) projects.

LD 1085 has not yet been scheduled for a public hearing.  It will likely come before the Joint Standing Committee on Energy, Utilities and Technology later this spring.


Cliff Goudey said...

Todd, given the character sitting in the Governor's mansion do you think this bill has a prayer of passage?

Also, do you think the sponsor, state senator Christopher Johnson, would be amenable to altering the language to include wave power? How would that conversation be initiated.

Finally, you mention that the FIT is based on the cost of generation. Is that normally the case? In other words under a FIT is there no advantage to being commercially viable?

The Mainers paying the highest electrical rates are those living on the offshore islands. Wave power seems like a great opportunity to get them less dependent on diesel generation.

Todd Griset said...

Cliff, it's always hard to predict a bill's fate before the public hearing. I would guess that there will be support for the bill from those interested in promoting broader adoption of renewable distributed generation, but that utilities will oppose the bill on the ground that it could lead to higher costs to consumers. Another challenge arises in the interplay between the feed-in tariff and other programs designed to incentivize renewable energy, like Maine's community-based renewable energy pilot program or net energy billing. The community-based program in particular operates much like a feed-in tariff giving project developers the opportunity to get up to 20-year contracts to sell the facility’s output to a Maine transmission and distribution utility at average prices up to $100 per MWh (equivalent to 10¢ per kWh). Senator Johnson's bill would be limited to smaller projects (up to 500 kW each, as opposed to up to 10 MW for the community-based program), so there are some differences despite the potential overlap.

Here's a write-up of the community-based renewable energy pilot program:

For whatever reason -- possibly the success of ORPC's tidal power development -- policymakers tend to think of tidal energy before they think of wave energy. Senator Johnson might well be willing to broaden his bill to include wave power. You could approach him directly, or work with other stakeholders to do so.

Feed-in tariffs aren't always based on the cost of generation, but many have been - such as Nova Scotia's community-based feed-in tariff (COMFIT). Here's a write-up on the COMFIT program, and the proposed schedule of rates:

bardamu said...

The feed-in tariff is a European concept that has been implemented in 65 nations globally. Many of these are based on Germany's EEG (Renewable Energy Sources Act). Under this, the dominant model, payment is based on what is calculated to be the cost of generation.

A number of US jurisdictions have implemented policies they call feed-in tariffs, which may or may not conform to this model.

Feed-in tariffs are based on cost of production because they are designed to promote preferred forms of generation.

But let's be clear here - electricity generation procurement is based on more factors than levelized cost of electricity (cost per kWh). Utilities procure the source of electricity they want to best meet demand.

For this reason, overly simplified arguments about what is a "competitive" form of generation don't match the reality of how utilities buy electricity.

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