California Energy Commission Weighs Feed-in Tariff

By Paul Gipe


The continuing failure of California’s much vaunted Renewable Portofolio Standard (RPS) to develop any significant amount of renewable energy has prompted some commissioners at the California Energy Commission to consider a renewable energy feed-in tariff.

The groundwork was laid in December 2006 when the CEC issued its lengthy status report (Integrated Energy Policy Report Update) on the performance of the state’s RPS program. In short, the report all but called the program a failure. More surprisingly, the report for the first time suggested that a feed-in tariff might be an alternative to the RPS.

As part of the CEC’s statutory requirement to produce a periodic energy plan for the state, the IEPR, the CEC arranged a workshop feed-in tariffs in Sacramento on May 21, 2007. The workshop included four presentations. One by the CEC’s contracted consultants KEMA, one by Wilson Rickerson, one by Paul Gipe, and one by a consulting economist.

Three presentations, those by Kema’s presenter Hans Cleijne, and that by Wilson Rickerson and Paul Gipe all reported on the success of such programs in Europe and the key elements of good renewable tariff design. The fourth presentation by the consulting economist followed a traditional neo-liberal approach to markets and suggested that a bonus program with an auction (tendering) was superior to all others.

Not unexpectedly, the state’s three major electric utilities all opposed any change to the RPS program, argued that the RPS program was working well, and that there would be nothing to gain by switching to a feed law except higher prices.

A developer of central-station solar thermal also testified that he had a good working relationship with one of the utilities and opposed the use a feed law. He argued that his bilateral negotiations were sufficient for developing large amounts of solar thermal generation.

Gipe pointed out that last year Germany installed 1,100 MW of solar PV and asked how much wind energy had been installed last year in California, “200 MW? 400 MW? Maybe 500 MW?” Commissioner Geesman replied slowly and deliberately that “since the RPS program has been in effect there has been a total, from all sources, of about 200 MW.”