Feed-in Tariff Archives - ENERGY BUSINESS LAW

Feed-in Tariff

Italy: Incentive Regimes for Renewable Energy Plants

by McDermott Will & Emery and Anna Vesco | Mar 26, 2015 | Renewables

The introduction of retrospective tariff cuts to photovoltaic (PV) plants and the abolition of the Robin Tax by the Italian Constitutional Court, combined with simplified regulation and taxation of new forms of debt financing, have turned the attention of foreign investors from PV assets to other renewable energy sources (RES) assets.

Italian plants producing energy from RES other than PV have been supported by public incentive schemes since 1999, and have not been hit by the tariff cuts introduced by legislative decree 91/2014 (the so-called “spalma incentivi”). It is, however, easy for foreign investors to become confused by the complex set of rules governing the incentives granted to RES plants.

This Special Report provides a complete and updated overview on the Italian regulation of incentives given to RES plants. It will help investors find their way through the jungle of rules and identify and understand the incentives that apply to a potential investment.

Read the full Special Report here.

Iowa Considers Feed-In Tariff for Wind

by McDermott Will & Emery | Mar 21, 2013 | Project Development and Finance, Renewables

by Ari Peskoe

The Iowa state legislature is moving forward with a bill that would create the first U.S. feed-in tariff specifically for wind generation. If the bill is enacted, Iowa would join Vermont, and the cities of Los Angeles, and Gainesville, Florida as the U.S. jurisdictions currently offering a feed-in tariff. While it may seem like investors need little inducement to invest in wind capacity in Iowa, which already ranks third in wind capacity among U.S. states, the new incentive is aimed at mid-sized facilities, a neglected market in that state.

Under a feed-in tariff, a utility sets a long-term price for renewably generated electricity. A feed-in-tariff benefits generators by providing a standard offer contract and favorable rates, often based on a generous estimate of production costs. Feed-in tariffs are generally credited as one of the main reasons for large increases in renewable generation in several European countries. In the U.S., feed-in tariffs have been less popular. Under the Public Utilities Regulatory Policy Act (PURPA) of 1978, California offered a feed-in tariff in the 1980s that led to a proliferation of wind generation. While other states also offered similar programs under PURPA, none were as successful as California’s.

In Iowa, a state senate committee passed a bill earlier this month that would provide a feed-in tariff to wind facilities smaller than twenty megawatts in capacity and located on agricultural land. Under the standard offer contracts, the rate will be based on each utility’s cost, including a rate of return, for the new development of wind generation, and the term will be 10 years or until construction and financing costs have been recovered, whichever is earlier.

The new tariff is designed to address a gap in the state’s wind portfolio. As of the end of 2011, about 85 percent of the state’s wind capacity was from facilities larger than 100 megawatts (19 total installations). The state had only five facilities sized between 2 and 20 megawatts, which accounted for less than two percent of capacity. Smaller-scale projects may be easier to site and could attract a different class of investors unable or unwilling to develop a utility-scale project.

Other windy states have actively developed this mid-range market. Minnesota’s community wind program, launched in 2005, focuses on local ownership and provides front-loaded tariffs for facilities up to 50 megawatts. As of 2011, nearly 400 megawatts of capacity have been deployed under the program. Nebraska followed suit in 2007, but the program has failed to take off. That state, which has the fourth best wind for energy production, ranks just 23rd in total installed capacity.

Los Angeles Kicks Off Its Feed-in Tariff Program

by McDermott Will & Emery | Jan 24, 2013 | Project Development and Finance, Renewables

by Thomas Hefty

After years of studies and pilot programs, Los Angeles Department of Water and Power (LADWP), the United States’ largest municipal utility, unveiled the 100 megawatt FiT Set Pricing Program (FiT 100), which will start on February 1, 2013. Long favored in Europe to encourage renewable, distributed generation, a feed-in tariff or FiT offers generators standard long-term contracts, generally at favorable rates, eliminating the need for contract negotiations with utilities. Feed-in tariffs are being introduced into U.S.’s renewable electrical generation market to fill the void between net-metering programs and utility-scale renewable energy projects. While a range of renewable resources are eligible for the program, solar PV systems are likely to dominate the FiT 100 program.

The FiT 100 allocation will be meted out in five 20 MW allocations, with one allocation made available every six months. The first 20 MW allocation for the will be available from February 1, 2013 until June 28, 2013. LADWP is using a fixed declining tier pricing system, with the Base Price of Energy (BPE) set at $0.17 per kWh for the first 20 MW allocation and declining one cent with each additional 20 MW allocation. The price paid under the FiT Standard Offer Power Purchase Agreement (PPA) is the product of the BPE multiplied by a time-of-delivery (TOD) factor, which ranges from 2.25 for High Season (Jun-Sep), High Peak (M-F 1pm-5pm) to 0.50 for Base (M-F 8pm-10am, all day Sat/Sun). The BPE and TOD factor are fixed throughout the term of the PPA, which is up to 20 years.

To qualify for the FiT 100 program, the facility must be located within LADWP’s service area, have a nameplate capacity of between 30 kW and 3 MW, have a commercial operation date after the PPA effective date, and the facility cannot consume more than 10 percent of its energy generation. All energy produced from the FiT Facility, as well as capacity rights and environmental attributes, must be sold to LADWP, and LADWP’s off-take obligation is capped at 115 percent of the facility’s monthly production profile as submitted by the FiT applicant. Neither the PPA seller nor the owner of the FiT facility site can apply for or participate in any net metering program or receive any ratepayer-funded incentives. In addition, to qualify for the program at least one member of the development team must have successfully developed and constructed at least one similar project using the same technology. Additional terms and guidelines are available at LADWP’s website.

There are two general development models for FiT facilities: 1) property owners or long-term tenants with rights to the roof, parking field, or other underutilized real estate asset develop and own the FiT facilities (self developed model); or 2) independent power producers lease that underutilized asset from the real estate asset holder and develop the FiT facility (rent-a-roof model). The rent-a-roof model has proven to be the more popular choice in Europe. While rooftops are not the only location for solar photovoltaic FiT facilities, they [...]

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International Trade Actions Complicate Global Market for Renewable Energy Businesses, Particularly in the Solar Sector

by McDermott Will & Emery | Dec 4, 2012 | EU Developments, Power Markets

by David J. Levine and Pamela D. Walther

As a result of several recent actions, developers of solar energy projects may face increased costs. Two cases pending before the World Trade Organization challenge domestic content requirements of solar sector feed-in-tariff programs, and China, the European Union and the United States have initiated actions under domestic trade remedy laws that could result in additional duties at the border on imports of solar industry goods alleged or found to be subsidized or unfairly priced in countervailing duty and anti-dumping actions.

To read the full article, click here.

European Solar Markets: There is Life after Feed-in Tariffs

by McDermott Will & Emery | Jun 27, 2012 | EU Developments, Project Development and Finance, Renewables

by Michael Ruoff, Carsten Steinhauer and Anna Vesco

The aim of the European solar energy incentive programs has always been to bring solar technology to the point where photovoltaic (PV)-generated electricity becomes competitive with the retail rate of grid power, a situation known as "grid parity". In most of Europe, grid parity is expected to be reached by 2017, but is already nearly a reality in certain southern European countries with high levels of sunshine and high electricity prices. The recent cuts to incentives in many European markets are both a cause and an effect of this near-parity, and as such are not necessarily bad news. Achieving competitive cost structures for solar power plants is expected to eliminate the market distortion resulting from subsidies, which until now were the driving force of the European PV market.

To read the full article, please click here.

Changes to Feed-In Tariffs for Solar Photovoltaic Technology in the United Kingdom

by McDermott Will & Emery | Apr 19, 2012 | EU Developments, Renewables

by David Birchall and Caroline Lindsey

The UK feed-in tariff (FIT) scheme was introduced in the United Kingdom in April 2010, under the Energy Act 2008, to encourage households and businesses to operate small scale (less than 5MW) low carbon electricity generation facilities. Under the scheme, eligible generators can receive a fixed generation tariff for each kWh of electricity generated and consumed on-site and an additional export tariff for each kWh of electricity that is exported to the grid, for a maximum of 25 years from the date an installation becomes eligible under the scheme. FIT payments are paid to generators by suppliers and funded by electricity consumers.

Of the eligible technologies (biogas, hydro, micro-CHP and solar photovoltaic (PV)), solar PV has to date been by far the most popular technology.

To read the full article, click here.

Italian Register for Large PV Plants Closed for 2012

by McDermott Will & Emery | Jan 26, 2012 | EU Developments, Project Development and Finance, Renewables

by Carsten Steinhauer

On January 20, 2012, Gestore dei Servizi Energetici (GSE), the publicly-owned company that promotes renewable energy sources in Italy, announced that the budget for the second half of 2012 for large solar photovoltaic (PV) plants has already been used up by excessive demand in 2011. Consequently, there will be no registration procedure for the second half of 2012, and large PV solar plants that have not been registered previously with the GSE will only be eligible for the 2013 feed-in tariff.

The Fourth Italian Feed-In Tariffs system (the so called “Fourth Conto Energia”) established the following budgets for large solar PV plants between June 2011 and December 2012:

1/06/2011 – 31/12/2011 1st Half 2012 2nd Half 2012

TOTAL

Feed-in Premium Budget 300M 150M 130M 580M Indicative Cumulative Nominal Power 1.200MW 770MW 720MW 2.690MW

In order to ensure the fair distribution of the budgets for 2011–2012, the Fourth Conto Energia introduced a procedure of registration, and subsequent ranking by the GSE of the registered plants for each of the three periods, based on certain priority criteria.

The Fourth Conto Energia affirmed that the budget for the second half of 2012 will be reduced by the excess amount awarded to large PV plants that began operating between June 1 and August, 31, 2011, or registered with the GSE between September 2011 and December 2011. Accordingly, the budget for the second half of 2012 has been reduced to zero, and the GSE will not start the procedure for new registrations.

As a consequence of this development, PV projects that are defined as “large PV plants” that have not obtained a favorable ranking in one of the GSE registers in 2011, or in the first half of 2012, will now only be eligible for the 2013 feed-in tariff. In fact, the GSE has clarified that those PV plants that started operations in 2012 without being ranked in a GSE register will be deemed to have started operations on January 1, 2013, and will therefore obtain the 2013 feed-in tariff for the 20 years starting January 1, 2013.

Unlike the 2012 feed-in premium, the 2013 feed-in tariff will already include the price for the sale of electricity. For, instance, the all-inclusive feed-in tariff for PV plants with nominal peak power above 1 MW will be as follows:

PV Plants Installed on Buildings

Other PV Plants

1000<P<5000 kWp

0.227 /kWh

0.205 /kWh

P>5000 kWp

0.218 /kWh

0.199 /kWh

“Small PV plants” (i.e. <1000 kWp on rooftops / ground mounted <200 kWp using net-metering system / placed on buildings or areas owned by the public sector) are not subject to the budget restrictions and will be eligible for the incentive.