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Los Angeles Kicks Off Its Feed-in Tariff Program

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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Changes to the Feed-In Tariff Scheme for Non-Solar Photovoltaic Technologies in the UK

 by David Birchall and Caroline Lindsey

In April, we reported on changes to the feed-in tariff scheme for solar photovoltaic (PV) technology in the United Kingdom  Those changes were the outcome of Phase 1 of the Department of Energy and Climate Change’s (DECC) comprehensive review of the feed-in tariff scheme launched in February 2011 (the FIT Scheme).  In addition to solar PV technology, the FIT Scheme is available to hydro, wind, anaerobic digestion (AD) and micro-CHP technology.

The DECC then consulted on Phase 2B of its comprehensive review, which focused on feed-in tariffs for non-PV technologies and wider scheme administration issues (the Consultation). On July 20, 2012, the DECC published its response to the Consultation (the Response) and has confirmed that a number of changes will be made to the FIT Scheme. The changes will be introduced by way of amendments to the Standard Conditions of Electricity Supply Licences.  Most of the changes are expected to come into effect on December 1, 2012.

The key changes to the FIT Scheme to note are as follows.

1.  The generation tariffs for non-PV technologies will be reduced with effect from December 1, 2012, except that:

  • a new generation tariff will be introduced for hydro installations with a    capacity of between 100 and 500 kilowatts; and
  • the generation tariff for micro-CHP installations will be increased to 12.5p/kWh.

A full list of the generation tariffs to apply from December 1, 2012 is available at page 8 of the Response.  We note that the generation tariff for the largest capacity band of each technology is linked to the equivalent level of support available to that technology under the Renewables Obligation.  Consequently, the DECC has indicated that the tariffs applying to those bands will be amended to reflect the outcome of the DECC’s Renewables Obligation banding review.  The DECC announced the outcome of its current review on July 25, 2012, but is yet to confirm the corresponding amendments that will be made to those tariffs. 

2.  A preliminary accreditation process will be available to solar PV and wind installations with a capacity of more than 50 kilowatts, as well as all AD and hydro installations.  The criteria for preliminary accreditation will be similar to, but narrower than, the criteria to obtain preliminary accreditation as a renewable generator under the Renewables Obligation.  Among other things, installations for which a grid connection is required will need to produce evidence of a firm grid connection offer to receive preliminary accreditation.  Installations that receive preliminary accreditation will also benefit from a fixed tariff for a prescribed period.  

3.  A tariff degression mechanism will be introduced, under which generation tariffs for all non-PV technologies, with limited exceptions, will be decreased annually from April 1, 2014.  The baseline degression rate will start at 5 percent, and will be adjusted annually according to the level of deployment of the relevant technology.  As a result, the degression rate could be as [...]

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

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.

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

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.

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