RenewableEnergyWorld.com 2/9/2010

NREL: Feed-in Tariffs Legal in US When Certain Conditions Met
A new report charts path through the U.S. regulatory minefield.

There may be ways around the legal roadblocks that have heretofore made feed in tariffs (FIT) an illusory goal for those who would promote widespread adoption of solar PV. Feed in tariffs are widely seen as driving the German solar PV market, the densest penetration of solar PV in the world, but US legal restrictions on pricing and selling of power have kept FIT out of the US market so far. And price matters when it comes to the market success of a FIT.

Opponents have long argued that feed-in tariffs are illegal in the U.S. They will find ample solace in the report that the European or Canadian approach of setting specific tariffs directly won't comply with current federal law or its interpretation. Hempling says, in essence, that states can't set specific tariffs above "avoided cost" under the Public Utility Regulatory Policies Act (PURPA) of 1978.

However, Hempling goes on to chart a path to implementing feed-in tariffs that avoids the regulatory minefield under PURPA and the Federal Power Act. Hempling describes how states can set total payments, or equivalent feed-in tariffs, above avoided cost in compliance with federal law. The path may appear more circuitous, in comparison to that in other countries, but it is, nevertheless, clear.

Proponents of FITs argue that feed-in tariff programs work best (spur the development of significant amounts of renewable energy) when the tariffs are based on the cost of generation plus a reasonable profit. In these programs, there are a suite of tariffs for solar PV, another set for wind energy, and so on. The tariffs for solar PV in these programs are much higher than the "avoided cost" of a conventional natural gas-fired power plant in the U.S.