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Illinois: Renewable Energy Feed-in Tariff Introduced in House of Representatives

Ironically, while the eyes of renewable energy policy wonks (yes, there are such a thing) have been looking to California, Michigan and Minnesota for a successful German-style feed-in tariff, Rep. May’s bill took people by surprise. But the fact that Rep. May has introduced it, is less surprising, as the four-term legislator has been the recipient of the Environmental Leadership Award from the Illinois Environmental Council and has been consistently endorsed by the Illinois League of Conservation Voters.

According to renewable energy expert Paul Gipe, “Representative May’s bill would create a full system of feed-in tariffs with prices for an array of renewable energy technologies. Currently, the only true feed-in tariff system in North America is the limited program offered in Ontario.”

The Ontario limited offer program, along with the regional climate change agreement signed by the Midwestern Governor’s Association last November, and talk of FIT legislation in Michigan, Minnesota and now Illinois, is positioning the upper midwest to compete with other emerging clean energy hubs like Colorado, California, and New York/New England.

The proposed Illinois tariffs are virtually identical to those equivalent to the actual ones in Germany as well as the proposed ones in Michigan.

  • Hydro less than 500 kW……………………………………………………………$0.10/kWh
  • Biogas/Biomass less than 150 kW………………………………………………….$0.145/kWh
  • Geothermal less than 5 MW…………………………………………………….$0.19/kWh
  • Wind……………………………………………………………………………..$0.105/kWh
  • Wind energy from small wind turbines…………………………………………….$0.25/kWh
  • Rooftop solar less than 30 kW………………………………………………………..$0.65/kWh
  • Solar façade cladding less than 30 kW………………………………………………$0.71/kWh

As you can see, not all technologies are treated the same in terms of the price the utility is required to purchase the electricity for. Solar PV has the highest payout because it is the most expensive to install, but it is also some of the easiest to adopt on a large scale. Wind has a much lower tariff because the technology costs much less to install, and the payoff-date would arrive more quickly. The formulas are essentially designed so that regardless of what RE technology you install, the payoff time will be roughly the same. And after you have finished paying off your initial investment, you begin to pocket the rest, or, as many are doing in Germany, you can re-invest in more panels with more long-term guaranteed power purchase agreements from the utility.

It should also be noted that most FITs are adjustable or they adjust automatically. By lowering the cost of the payout, it is believed to drive more technological investment and research in more efficient processes. In other words, if you have a guaranteed rate for 20 years with a 30% efficient solar panel, and businesses know that you have this guaranteed rate, why should they innovate?

Full Text of HB 5855

11 comments
  1. Timothy B. Hurst

    Good questions. I just looked over the text of the bill and it looks like biomass and biogas are covered by the same tariff. Thanks for pointing that out, I’ll update the post so that is clearer.-tbh

  2. Ending the ‘Feast or Famine’ Cycles of Clean Energy Development in the US : CleanTechnica

    […] Let me be clear, the production tax credit is not the perfect vehicle to grow our clean energy sources, it is just the one we have adopted because of its ‘market-friendly’ orientation. For those of you that don’t already know, I am a huge advocate of developing renewable energy in this country, but I think we should follow the lead of the Germans and others who have adopted feed-in tariffs (FIT). The FIT policy mechanism has largely been ignored in the US, although it is being experimented with in California, and it has been recently been introduced as proposed legislation in Michigan, Rhode Island, Minnesota, and Illinois. […]

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    […] Let me be clear, the production tax credit is not the perfect vehicle to grow our clean energy sources, it is just the one we have adopted because of its ‘market-friendly’ orientation. For those of you that don’t already know, I am a huge advocate of developing renewable energy in this country, but I think we should follow the lead of the Germans and others who have adopted feed-in tariffs (FIT). The FIT policy mechanism has largely been ignored in the US, although it is being experimented with in California, and it has been recently been introduced as proposed legislation in Michigan, Rhode Island, Minnesota, and Illinois. […]

  4. Don Young

    I wish to question whether Government Feed In Tariff schemes, although well intentioned, is poor economic policy in its current form, and whether it should be changed (or expanded) as described below.

    It costs about $20,000 for a household to install solar panels to offset their household energy usage, and it costs more than $1,000 per year for electricity consumers to ‘subsidise’ each household receiving the generous ‘feed-in’ tariff, not to mention the cost of any installation rebate subsidy.

    It is smarter if a household is able to invest in a 1/1000 share of a 2.5 mw Government large wind turbine (estimated cost $5,000 per household), which would generate the same amount of renewable energy.

    Households cannot do this themselves, and need Government to implement and manage the scheme.

    Potentially, it would
    (1) tap a very large funding source for renewable energy (which the Government cannot fund by itself),
    (2) enabling many more households who cannot afford $20,000 for solar energy to offset their energy consumption with renewables,
    (3) not require $1,000 per year per household premium for ‘feed-in’ subsidy.
    (4) not require installation rebate
    (5) run at no nett cost to the Government or other electricity consumers.

  5. Mike

    Feed In Tariff is only real solution to encourage alternative energy systems, and solar is just one, the most expensive at that, so with wind and new hybrid hydrogen generators, combining all three would be the most logical strategy to allow advancement of alternative energy industry. Sadly, with lobbyist payoffs to government for years, we see little progress, just the usual green talk, with little action. Germany and Denmark have proven how effective a good FIT would be, yet we still see little progress. We need this to encourage better system development than just solar.

    Push your gov. leaders to pass FIT fast.

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