Feed-In Tariff Policy for Wind and Solar Systems
by FrancisThickeI have been calling for the installation of wind turbines on farms and rural residences all across Iowa. How can we make that happen? How could we make that not only affordable but an attractive option for Iowans?
The Europeans have already designed a good policy model for innovative energy systems: feed-in tariffs. Feed-in tariff (FIT) policies are used in over 40 countries and are considered to be the primary reason for the rapid growth of the German and Spanish renewable energy markets. A number of U.S. states are now considering FIT policies to speed up the adoption of renewable energy systems. 
A FIT policy can be designed in a number of ways, but in general it requires a utility company to purchase electricity from eligible renewable-energy sources (for example, targeted wind and solar systems) at an increased price for a guaranteed period of time (typically 15 to 20 years). To spur the rapid adoption of farm-scale wind turbines across the state, a FIT policy could be implemented that would allow a landowner to install a wind turbine on her land and receive a payment rate per kilowatt hour that would equal the payment installments of the loan the landowner had on the wind turbine. At the end of the time specified by the FIT policy, the turbine would be paid for and the rate the landowner received per kilowatt hour would drop down to wholesale rates.
The obvious benefit of an FIT program to a landowner is that the landowner could have a wind turbine up and running with little or no cost. A down payment could be offset with tax credits. Or down payments might be unnecessary with the use of guaranteed loans. When the FIT time period ends the turbine will be paid for and the kilowatt hour payment rate will drop to wholesale. Then the turbine will still provide electricity for the farm and serve as a farm profit center.
The costs of building farm-scale wind turbines under an FIT program would be covered by all electricity users, just as the costs of building new coal-fired or nuclear power plants are. The benefits of this type of FIT program to a power company are 1) after the FIT time period expires, the power company will get “green” energy at low cost for the lifetime of the wind turbines; and 2) during the years of the FIT period, as electricity costs rise (as expected) the FIT rate will increasingly become a better deal for the power companies.
The state’s economy would also receive a boost from the investment and jobs created for manufacturing, installing and maintaining the many farm-scale wind turbines.
4 Comments
Dear Francis
The sooner we embrace alternative energy, the sooner we pull ourselves out of this recession. Wind and solar are no different than color TVs in the
sixties. The revenue generated will fit a trickle up model and put revenue strait into our rural economies. Bernie Sanders is on the same page. I will contribute what I can and vote for sustainable policy.
Randy
Thanks, Randy. I like your “trickle up” theory. – Francis
Common sense, creativity, practicality. It’s so refreshing!
From Australia, i hope you win