Feed-in tariffs become hot topic of conversation

With a new Feed-In Tariff in Virginia, the topic of tariff’s are back in the news and conversation and in addition the U.S. Energy Information Administration published a brief.

Feed-in tariffs are still limited in the United States, but popular in other countries, said Gwen Bredehoeft, an analyst with the Energy Information Administration. But they are gaining popularity in the U.S. 

Feed in tariffs are meant to encourage use of renewable electricity technologies by guaranteeing customers a set price from their utility for all the electrify they generate and provide to the grid.

In Virginia, Dominion Virginia Power’s voluntary feed-in tariff will allow participants 15 cents per kilowatt hour for five years for electricity provided to the grid and also will pay the retail rate for all electricity that they consume. According to the brief, Virginia’s average 2012 retail electricity price was 10.4 centers per kilowatt hour for residential customers.

It’s interesting to see the different levels of experimentation and ways utilities and states are finding to procure renewable energy, Bredehoeft said.

People often think of feed-in tariffs has a single type of policy. Feed-in tariffs but there a variety of ways the tariffs can be applied.

“Actually there’s a great deal of flexibility there,” Bredehoeft said.

Feed-in tariffs that lead to significant additional renewable energy investments are generally set above the retail cost of electricity. The premium is set depending on the program’s motivation and goals, like reaching a capacity target.

A feed-in tariff is a performance-based incentive rather than an investment-based incentive, the brief said. Feed-in tariffs are often used in combination with other incentives.

People need to really look at the details in feed-in tariff plans, she said.

Different states are doing different things. There also are programs that might look like feed-in tariffs but aren’t called feed-in tariffs, she said.

“There is some uncertainty about what the best policy approach is and what the best programmatic approach is,” Bredehoeft said.

Feed-in tariffs are similar to the federal Qualifying Facility incentives available in the United States since the 1970s and similar to net metering programs, but differ in keys ways.

“Feed-in tariffs are not exactly a recent idea, although (the idea) has been rebranded and re-concepted,” Bredehoeft said.