Illinois Representative Karen May (D-Highland) has introduced a bill calling for a system of renewable energy “feed-in tariffs” (FITs) like those used in Germany to spur the development of electricity from renewable sources. After its initial reading, HB 5855, The Illinois Renewable Energy Sources Act has been reported to the House Rules Committee for initial action.
Feed-in tariffs have proven remarkably successful throughout Europe, and especially in Germany, where some 55% of the world’s solar power capacity resides. I have covered the nuts and bolts of the FIT here and I have made a short argument for them here (but for a more comprehensive treatment of how and why the policy mechanism works, I recommend visiting the World Future Council’s PACT website, which is a powerful resource for advocates, policymakers, environmentalists, tech geeks and regular folks).
In a nutshell, a feed-in tariff offers a long-term guaranteed price contract (usually about 15-20 years) to any entity that contributes electricity to the grid via renewable sources like solar, wind, biomass, landfill gas, small hydro, geothermal and methane. Whereas existing policy mechanisms like the production tax credit favor large corporations with sizable tax liability, and investment tax credits favor those folks who can afford a large upfront cost that comes with a 20-30 year payoff, this policy tool encourages the distributed generation of renewable energy and it levels the playing field by providing long-term investment security for small businesses, homeowners, churches, schools and others, so they are more willing to make the financial commitment that is necessary for installing renewable energy themselves.
This is not to say that our existing RE policy tools of choice (including renewable energy standards) are inherently bad, but they may be insufficient to spark the kind of growth in clean energy the public seems to be demanding.
The diffusion of renewable energy FITs has extended from Northern Europe to include some 47 countries worldwide, but the mechanism has yet to gain much political traction in the United States. The bill is modeled after the legislation proposed in the fall of 2007, when Rep. Kathleen Law introduced HB 5218 into the Michigan House of Representatives. Continued…