While many have recently been praising Oregon’s new feed-in tariff (FIT) legislation, others are saying that the law is insufficient to encourage the state’s renewable energy industry.
Although it’s a positive development that more incentives programs are being formed in Oregon, critics argue that the new law is simply not a feed-in tariff at all and that the program lacks key elements of a true FIT.
Typically, a FIT encourages people to install systems that generate as much renewable electricity as possible, because they are paid for all of the electricity produced. FITs pay a fixed price for all the electricity generated, which enables solar manufacturers and installers to anticipate future demand and build their business. Setting the price and designing a simple program encourages the growth of the local industry, with small local businesses competing on equal footing with out-of-state installers.
Under Oregon’s new program, small and medium sized systems (systems up to 100kW) will not be paid for any electricity they generate that exceeds what they consume. Instead, the electricity generated under Oregon’s program is used on-site and never makes it to the grid. Which means that it’s really an incentivized net metering program, not really a FIT at all.
Also, large systems (up to 500kW) will participate in an annual bidding process under Oregon’s new program. Bids will be selected from lowest price to highest until the capacity target is achieved. This kind of bidding process fails to provide the pricing certainty that is a key ingredient of a FIT (because it enables businesses to project future demand for solar installations) and makes it harder for small, local businesses to participate.
Lastly, the new program is aimed at creating about 25 MW of generation over five years for the entire state. The city of Gainesville, Florida (pop. 125,000) is implementing a FIT that already has 25 MW of capacity enrolled (at least on the books) through 2016.
The good news? The new pilot program in Oregon may well boost solar production. But, it is not a FIT and we should not think that Oregon is testing how a FIT will work. As we search for energy solutions, we should be clear about what we are testing and what we are learning.