Is New York FIT for Solar?

Germany, a nation that has less sun than New York, is installing solar electric (photovoltaic) power capacity at the rate of 20 megawatts per day. Every 100 days, owners of German farms, factories, apartment buildings, and homes install as much solar power capacity as both Indian Point 2 and 3 combined supply here in the lower Hudson Valley.

In New York, we have more sun per square meter that in Germany, especially downstate and in the NYC area.  In 2011, New Yorkers installed just over 30 megawatts of solar electric power.  That sounds like a lot, but is not in the greater scheme of things!*

At the rate we are going (of circa 30 megawatts of solar per year), it will take us 166 years to reach the Empire State’s goal of 5000 megawatts of renewable generation capacity by 2026. 

There is a much faster way! Why not do what Germany and almost 50 other jurisdictions are doing?

After all, the Germans are installing more solar electric in 2 days than all of New York installed all of last year.  

So what are the Germans doing that is so different?

In a word, they have feed in tarrifs, and we do not. 

Property owners in Germany–and Italy, Spain, Denmark, the United Kingdom, Thailand, Uganda, China, Australia, India, Iran, Israel, and about 30 other nations and provinces–have access to a simple way to finance a renewable energy installation that we do not have in the United States. It is called a feed in tariff (or “FIT”), renewable energy payment, standard offer contract, or  advanced renewable tariff.

For a good explanation, see this short video from NYC-based Solar1.

Every country or province (Ontario has a FIT) that has adopted a feed in tariff policy has seen a dramatic rise in privately funded renewable energy installations.

How does it work?

Designed to speed up private investments in renewable energy technologies, a FIT does so by offering long-term contract to renewable energy producers, typically based on the cost of generation of that technology.

In short, a good feed in tariff has three simple components: (1) your utility is required to allow you to connect your system to the grid (assuming you pass inspections), (2) your utility is required to offer you a long term contract to buy the power you produce (assuming your system proves reliable), and (3) your utility is required to pay a “living wage” for the kilowatt-hours your new system will produce based on the cost of generating that power.  

The key is you–as a producer–get stable income under a long term contract for your solar or wind or biogas system. This base lets you make a business case to your investors, your spouse, or your coop board.

You take that 20-year income contract with your local utility to your bank and ask for a loan. The bank says, “Sure! You have a 20 year contract that will pay for the entire loan long before the contract expires.”  The bank lends you the money you need to construct the solar array, erect the wind turbine, or the biogas digester.

I don’t know why we do not have a feed in tariff for renewable energy producers in New York. But we should.

If Ontario, which is much cloudier than New York, can succeed with a FIT program, surely we can. In fact, Ontario wants to phase out all coal-fired power generation by 2014!  Their relatively new FIT has led to hundreds of solar installations since 2010 worth $8 billion.

Some 80% of the solar electric systems that have been installed in Germany under their feed in tariff are small-scale systems (under 100 kilowatts in capacity). That tells me that the feed in tariff works very well as a stable business proposition for the average middle-income building owner and is not solely the province of the big utilities. 

A FIT bill almost made it out of the State Senate and Assembly two years ago.  If we ever want to get serious, we need to keep the incentive policy simple and effective to motivate private sector investment to act boldly!

So, how about getting New York FIT for solar?