Feed-in Tariffs–The Economic Case

There are a number of myths surrounding Feed-in Tariffs (FITs) and how they work because FITs fly in the face of conventional neoliberal economic policy. In conventional neoliberalism, the market sets the price. In FITs, price is set administratively and the market determines the volume. FITs are a market mechanism that can create rapid growth without subsidies and other incentives. Setting prices administratively is nothing new. Electricity prices have been set administratively–and still are–in most countries for a century or more. The links below touch on this and related issues.

Interview of Paul Gipe by Sandy LeonVest on RECs or Renewable Energy Certificates

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Paul Gipe

Since RECs vary in price and do not usually cover the costs of building generation (over and above wholesale or retail power prices in the US) plus a reasonable profit, doesn’t that makes them a little dicey to use as a means for project developers and home or business owners to install renewable energy generation?

CAP: A Properly Designed Feed-in Tariff Can Lower the Cost of Capital and Keep Electric Rates Down

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Richard W. Caperton

Conversations about building new renewable energy almost always come back to the electricity from these projects being more expensive than fossil fuel energy. This may be the case (although it’s almost certainly overstated), but this shouldn’t lead to the conclusion that the way to minimize rate impacts is simply to use less renewable energy. In fact, there are policy tools that can help lower the cost of renewable energy, letting us meet renewables goals at a lower price. . .

Ipcc Chapter 11 Chart

Feed-in Tariffs Best to Deal with Climate Change Says IPCC Working Group III Renewables

By

Paul Gipe

The 135-page report by the Intergovernmental Panel on Climate Change , especially Chapter 11 on Policy, Financing and Implementation, makes it clear that the overwhelming weight of academic studies conclude that feed-in tariffs–or fixed-price mechanisms–perform better at delivering renewable energy quickly and equitably than quota systems, such as Renewable Portfolio Standards in the US or the Renewable Obligation in Britain. This is not the unsurprising conclusion from a surprising source: the IPCC’s Working Group III on Renewables.

Ilsr Market Based Is Poor Policy

ILSR: Why ‘Market-based” is a Poor Criteria for Good Solar Policy

By

John Farrell

Many renewable energy advocates argue that the market for solar renewable energy credits (SRECs) is a more cost-effective tool for incentivizing solar power than a feed-in tariff (or CLEAN contract) set in a regulatory proceeding. . . Really?

Frenchrenewabletariffsovercost

Over Cost of French Renewable Tariffs Negative in 2008

By

Paul Gipe

Feed-in Tariffs Saved French Ratepayers Money They Would Have Otherwise Spent

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Development of Renewable Energies in France: What Contribution from the Carbon Market

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Paul Gipe

by Cécile Bordier, Caisse des Dépôts, December 2008 This was a report in English by the French Bank, Caisse des …

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