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Feed-in Tariffs Best for Spurring Investment in Renewable Energy, Says SEMI

By Paul Gipe

Originally published on his blog at wind-works.org.

The world’s semiconductor manufacturers have now waded in with another of a cavalcade of recent reports on why feed-in tariffs are best for spurring investment and innovation in renewable energy.

The reports, papers, and briefing notes on the role of feed-in tariffs are starting to pile up. If reason alone won’t prevail in the North American policy debate maybe the sheer weight of reports will.

The latest is SEMI’s white paper Advancing a Sustainable Solar Future: Policy Principles and Recommended Best Practices for Solar Feed-in Tariffs.

SEMI (Semiconductor Equipment and Materials International) is the trade association representing the semiconductor industry. They’re not exactly bit players on the world stage of industrial development.

The association’s release by its PV Group announcing the report summarizes its contents succinctly.

“The White Paper shows that feed-in tariffs are the single best policy approach to spur growth of the PV industry. The continued spread of national feed-in tariffs that are stable, transparent, and substantial will fuel the rapid PV market growth the world requires and support new investment in the emerging solar economy.”

To reassure reviewers that SEMI was serious about its views on feed-in tariffs, the report opens with a specific statement that the trade group’s board of directors authorized the report.

As any good business report should, the white paper clearly states SEMI’s position. SEMI “supports the development of feed-in tariffs as the most effective means to ensure sustained growth for the PV industry and rapidly realize the benefits of large-scale solar energy deployment.”

Lest they be labeled cranks on the far margins of energy policy, SEMI was quick to note the “proliferation of feed-in tariffs” globally and that SEMI was “pleased to join other industry organizations that support feed-in tariffs, such as the International Solar Energy Society (ISES), the European Photovoltaic Industries Association, Solar Alliance, and many others.”

The heart of SEMI’s report are simple clear explanations of key design features of successful feed-in tariff policies that policy makers can emulate. These “best practices” include.

  • tariffs differentiated by technology,
  • tariffs based on the cost of generation,
  • equitable rules on interconnection and the sale of generation,
  • fixed-price tariffs with long-term contracts, and
  • predictable degression of the tariffs over time.

The latter is particularly important for solar PV, the most expensive of the new renewable technology being developed today.

In North America, only Ontario, Vermont, and possibly Washington State come close to SEMI’s best practices requirements. Neither California’s so-called feed-in tariff nor the “voluntary” tariffs in the upper Midwest would qualify.

In addition to the best design practices, the report also summarizes the tariffs for solar PV worldwide. While most in the trade are aware of the solar PV tariffs in Germany, France, and Spain, many do not know that the former east block offer far more aggressive tariffs than typically found across North America outside Vermont and Ontario. Here’s a sample of tariffs from the former east block converted to US dollars with the contract terms.

  • Bulgaria: $0.62/kWh, 25 years
  • Croatia: $0.68/kWh, 12 years
  • Czech Republic: $0.74/kWh, 20 years
  • Slovakia: $0.41/kWh, 12 years
  • Slovenia: $0.61/kWh, 15 years

Even more surprising is what some sunny European countries pay. These are countries that don’t get the same press attention as Spain.

  • Italy: $0.71/kWh, 20 years
  • Portugal: $0.62/kWh, 15 years

It should be reassuring to Ontarians that SEMI’s research confirms that the Ontario Power Authority’s tariff for rooftop systems less than 10 kW, $0.76 USD/kWh, while higher than anywhere else in North America, is substantially less than that being paid in sunny Italy and Portugal for an equivalent yield.

To reiterate their findings for both the media and policy makers, Dan Martin of SEMI’s PV Group emphasized in their release that “There is now broad consensus among both the renewable energy policy-making and the financial communities that feed-in tariffs are one of the most powerful solar energy policy tools available.”

Policy endorsements don’t get much stronger than that.

The question now becomes how long will we have to wait before the wind and geothermal industries issue similar unequivocal conclusions.

-End-


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