Powerful Wisconsin legislators were first out of the gate in a brewing race to be the first to pass feed-in tariff legislation in the Midwest. The bill, AB 649, a comprehensive revision of laws governing energy and electric utilities in Wisconsin, includes a section creating a system of feed-in tariffs for renewable energy and specifies that 6 percent of all electricity generated by 2020 must be produced from in-state renewable resources, and 10 percent by 2025.
The bill’s section on feed-in tariffs directs the state’s Public Service Commission to determine the specifics of the program. After a lengthy docket in 2009, Wisconsin’s PSC had deferred implementing its own feed-in tariff program without a clear mandate from the legislature. AB 649 is in part a result of the PSC’s earlier inaction and a desire by Governor Doyle and the legislature to lead off the new year with action on climate change.
The bill must pass both the assembly and the senate and be signed by Governor Doyle before it becomes law. Indiana, Michigan, and Minnesota legislators are also expected to introduce feed-in tariff bills this legislative session.
AB 649 includes provisions for wind, solar PV, biogas, and “other” renewable technologies. Only utilities with sales greater than 2.5 TWh per year will be required to offer the feed-in tariffs.
The bill’s objective is “to maximize the development and deployment of distributed renewable energy generation technologies . . . without unreasonable impacts on electric utility rates.”
Importantly, AB 649 stipulates that the price paid per kilowatt-hour must include the cost of generation for that type of generator, a reasonable rate of return, and any federal or state incentives, such as the federal renewable energy tax credit. Thus, the tariffs offered will not be based on “avoided cost” as in California, or the value of the electricity to the utility.
The PSC is to set limits on the amount of generation permitted under the program for each technology. As a consequence, there will be a rush by commercial developers to seize as many contracts as possible, potentially squeezing out homeowners, farmers, and small businesses from developing their own resources.
In a nod to a key provision in successful European policies and that in Ontario as well, the bill says tariffs “may” be based on different size classes within each technology. Creation of different size tranches within technologies, especially for solar PV, is regarded as a critical measure to prevent hoarding of contracts by large, multi-national developers.
Ontario, with five tranches of feed-in tariffs for solar PV alone, went even farther than that proposed in Wisconsin and set aside a special micro-FIT program for systems less 10 kW. Ontario also guaranteed expedited connection for systems less than 500 kW. Both measures were intended to insure that local residents and businesses could profit from the program despite the pressure from out of province and out of country developers.
Wisconsin’s AB 649 assigns any renewable energy credits produced to the purchasing utility.The bill also specifies that 6 percent of all electricity generated by 2020 must be produced from in-state renewable resources, and 10 percent by 2025.
In 2007, Wisconsin generated 60 terrawatt-hours (TWh). The in-state 2020 target of 6 percent would require approximately 3.6 TWh per year. The 2025 target would require about 6 TWh per year from in-state renewables.
Under Wisconsin conditions, such a requirement could result in the installation of thousands of megawatts of wind or solar PV. Typical wind farms in the Midwest generate about 2,000 kWh/kW/year of installed capacity. Typical solar PV systems generate about 1,000 kWh/kW/year of installed DC capacity.