Last Updated May 9, 2008 12:38 PM EDT
Unlike the centralized renewable energy feed-in tariff (REFIT) model common in Europe, which requires utilities to pay customers a guaranteed rate for any renewable power they feed into the electric grid, renewable energy directives in the United States are principally legislated at the state level, where differing degrees of incentives are offered, ranging from a renewable portfolio standard (RPS), which mandates that a state's electricity portfolio must contain a certain percentage of renewable energy, to tax credits or sales tax exemptions.
As evidenced by the production numbers, feed-in tariff schemes paid on total production from renewable energy systems, such as in Germany and elsewhere, seem to offer more attractive economics to manufacturers. By design, the European REFITs provide certainty of return (making it easier to calculate payback times), and it is this guarantee that encourages manufacturers and consumers alike to adopt these technologies.
Global production of solar photovoltaic (PV) cells increased 51 percent in 2007, to 3,733 megawatts (MW).
Germany, which implemented its first Feed Law in 1990, is now the global leader in solar cell manufacturing, surpassing Japan in 2007. The country produced an estimated 1,063 MW in 2007. PVs now meet about 1 percent of Germany's electricity demand; a share that some analysts expect could reach 25 percent by 2050.
Spain ranked second after Germany for total installations in 2007, but accounts for only an estimated 3 percent of global production. As in Germany, the Spanish market is being driven by a strong guaranteed price for PV electricity.
In March 2005, The People's Republic of China passed its own comprehensive renewable energy law, which included tariff provisions. China raced past the United States for PV cell manufacturing in 2006 to place third globally, and it now ranks second only to Japan for national production. Over the past two years, China's PV production has increased more than six-fold, to 820 MW in 2007.
Studies show that REFIT laws are more economical for encouraging the growth of renewable energy than are RPS mandates. Feed-in tariffs marginally increase the cost of electricity to consumers as renewable electricity capacity expands. In most cases, the costs are shared by all ratepayers as a per kWh surcharge. In Germany, the massive expansion of renewable capacity has cost average ratepayers less than $2.00 per month, according to a Minnesota renewable energy policy brief, January 2008.
The International Solar Energy Society (ISES), a non-profit global NGO, at its spring 2008 board of directors meeting voted to endorse feed-in tariffs, calling REFITs "the world's most successful renewable energy policy tool." The action was noted on ISES' web site on May 5, 2008.
California became the first state in the U.S. to introduce a REFIT policy. On February 14, 2008, the California Public Utilities Commission made new feed-in tariffs available for the purchase of up to 480 MW of renewable generating capacity from small facilities throughout the state.