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Sacramento Roundtable On Boosting Rural Economies With Renewable Power - And How A Stronger Feed-In Tariff Would Help

Sacramento, CA - On Thursday, March 1, 2012, Renewables 100 Policy Institute and World Future Council hosted a roundtable with farming community members and their advocates on how stronger renewable electricity policies in California could benefit rural areas. The discussion, which took place at the Capitol in Sacramento, particularly focused on how adjustments to the state's feed-in tariff policy, which mandates that renewable power generators for the electricity they produce, would create added revenue options for agricultural communities.   

Opening remarks were offered by World Future Council's USA Director Randy Hayes, Renewables 100 Policy Institute Founding Director Diane Moss, and Wind-Works Founder and journalist Paul Gipe. The ensuing dialogue took place between representatives of different sectors, including agricultural professionals, government, technology companies, and NGO's.      

Randy Hayes shared his perspective gained from decades of working on environmental sustainability and climate protection. Hayes, whose history prior to his work with World Future Council includes founding the Rainforest Action Network and serving as Oakland Sustainability Director for then Mayor Jerry Brown, said, “There are no slow solutions for fast problems.” He expressed his strong opinion that a robust feed-in tariff is the best policy for rapid and economical installation of renewable electricity, which is critical to planetary habitability.   

Paul Gipe offered an international perspective on renewable energy policy, pointing out that 23 out of the 27 EU countries use a feed-in tariff and that 75% of the world's solar energy, and most wind energy, has been created through feed-in tariffs. He described the stunning progress that countries like Germany have made by implementing an effective feed-in tariff policy. Feed-in tariffs' success is based on a three-fold set of mandated guarantees: 1) Generators of renewable energy are paid fixed prices per kilowatt hour they produce at a reasonable profit for a long term. 2) Renewable power of all sizes and types are guaranteed access to the grid with a simple, inexpensive, and streamlined interconnection process. 3) Costs for any required upgrades to the grid paid for by utilities. These factors must be  coupled with simple permitting procedures, such as exempting residential solar installations from building permits like in Germany, France, and Japan.

To illustrate Germany's success, for the past two years in a row, the nation has installed more than twice the solar power that the entire U.S.. At about 60 percent the average installation cost. And with the solar irradiation of Juno, Alaska. Approximately 400,000 jobs have been created in the clean energy sector in Germany since the turn of the millenium, about half being the direct result of the feed-in tariff.  

Gipe noted that unlike in the U.S., the majority of renewable power in Germany is owned by farmers, private citizens and small businesses. This means much of the financial benefits of renewable power go toward reinvigorating communities, rather than to lining pockets of large energy businesses and developers. He added that this democratic renewable energy system has taken hold both in areas considered politically conservative, as well as liberal.  In the northern region of Schleswig-Holstein, for instance, which typically swings to the right politically, farmers are so engaged in advancing the renewable energy economy, that they are pooling together to build a new transmission line to ensure their renewable energy development.

Gipe mentioned that the feed-in tariff has been implemented in dozens of countries and regions outside Europe, including Ontario, Canada. While California has had a feed-in tariff since 2008, he said it was unfortunately too flawed at this point to be effective. He shared hope that renewable energy pioneer Governor Jerry Brown would make needed changes, as he moves forward on his stated priority to install local, distributed renewable power supply with the help of a feed-in tariff.   

Diane Moss elaborated on the current feed-in tariff in California and its failure so far to significantly incentivize renewable power uptake. She summarized the problems, including that the price is not yet right, the rates are not differentiated by technology, the interconnection agreements are still far too complicated, and with an overall cap of 750 megawatts, the program is too small to be a game changer.    

Moss shared concerns of several farming groups about the recent California Public Utilities Commission (CPUC) staff proposal to base the feed-in tariff price on results of the state's Renewable Auction Mechanism (RAM). RAM is a renewable electricity procurement program wherein utilities take lowest bids on renewable power projects of up to 20 MW in size.  Moss explained that tying the price of the feed-in tariff to RAM is a non-starter for several reasons, including the lack of transparency of RAM prices, uncertainty about whether the RAM bids will reflect final project prices, and the fact that RAM is targeting larger projects than the feed-in tariff program, which has a project size limit of only 1.5 MW. Even if CPUC expands the feed-in tariff project size limit to 3 MW, which the Commission is currently considering, Moss explained that it is still problematic to base pricing for those relatively small projects on RAM projects of up to 20 MW because of the impacts of economies of scale.    

She added that the latest draft proposal issued by CPUC for a standardized feed-in tariff contract "seems intended to streamline the cumbersome interconnection process. But it has 94 pages. Germany's has 6. California needs to do better. Otherwise, farmers and other citizens are not going to be able to be full partners in the state's renewable energy transition, they are not going to reap their fair share of the economic benefits, and ultimately, California will likely remain unable to reach its renewable energy goals and compete globally in the renewable energy economy."   

Also discussed were the permitting challenges in California to getting renewable electricity installed. Of specific concern to farming communities are issues with permitting biomass based technologies. The trouble is due in part to struggles between the state's greenhouse reduction goals and its tight air quality standards.

Take, for example, anaerobic digesters that can convert biomass sources like dairy manure and other agricultural waste into biogas, which can then be used to create electricity (or other energy products like heat or liquid fuel). This technology significantly reduces methane, a potent greenhouse gas normally created by waste like cow manure. But using the biogas to create electricity can create local air pollutants like NOx, if the proper technology is not used. This proper technology is unfortunately cost prohibitive for farmers, and effective incentives are not yet in place. 

A stronger feed-in tariff could help provide the incentives for farmers to pay the costs of the cleaner technology. With approximately 900 dairy farms in California and only 11 using their waste to make renewable electricity, California's agricultural community clearly has a great deal of untapped potential for biomass based electricity.

The state is also rich with abundant sunshine and windy passes, among other renewable energy sources. These riches will only be rendered of value, however, if political will is marshalled to advance the right policies. The message coming out of the meeting was that political will has been growing, but extreme regulatory complexity and well funded resistance from the conventional energy industry continue to slow progress on proven policy solutions like an effective feed-in tariff. Overcoming those hurdles will take a longer conversation, persistent effort, and even stronger political muscle. To be continued.