Feed-in tariffs responsible for 75% of solar deployment, says study

The lure of feed-in tariffs (FITs) has been responsible for around 75% of solar photovoltaic (PV) deployment around the world and 45% of wind power, according to a study by the US National Renewable Energy Laboratory (NREL).

The study by analysts Karlynn Cory and Claire Kreycik, along with Toby Couture of E3 Analytics and Emily Williams of the Department of State, A Policymaker’s Guide to Feed-in Tariff Policy Design, looked at the use of FITs around the world.

FITs are the most widely used renewable energy policy, in operation in over 75 countries, outweighing both tax incentives and renewable portfolio standard (RPS) policies.

The use of FITs has been particularly prevalent in Europe over the last 20 years, where it has led to the deployment of more than 15,000 MW of solar PV and 55,000 MW of wind between 2000 and 2009.
The US, by comparison, had around 25,000 MW of wind installed by the end of 2009 and only 1250 MW of solar PV.

Germany has been very successful in its use of FITs to drive renewable energy deployment and leads the region in renewable energy capacity.

In Spain, however, aggressive tariffs and inadequate oversight have overheated the market.

This can be avoided, says the NREL guide, by integrating effective policy caps or cost containment mechanisms into an FIT scheme from the outset.

Three states – Hawaii, Maine and Vermont – are already experimenting with FIT policies and a further ten are considering similar measures.

But the widespread introduction of European-style FITs in the US is hampered by the Federal Power Act (FPA) and the Public Utility Regulatory Policies Act (PURPA), which would require an investigation and specific rulemaking or declaratory order.

Alternatively, Congress could take action and had the Waxman-Markey climate bill – the 2009 American Clean Energy and Security Act – been passed this would have clarified a number of the issues.
NREL’s guide provides a complete overview of the policy options for FITs, and the key elements that US states should consider if introducing FITs.

For further information:

Related stories:
Local councils join microgeneration bandwagon, but is policy sound? (10-Aug)
Feed-in tariff will increase UK solar PV market five-fold, says PricewaterhouseCoopers (8-Jun)
UK feed-in tariffs will benefit homes but not businesses, say critics (2-Feb)