Fukushima, feed-in tariffs and the enduring importance of European PV markets - solar interview with energy policy expert Paul Gipe

Paul Gipe
Paul Gipe

Paul Gipe is an expert on wind energy and energy policy, and is among the foremost advocates for European-style feed-in tariff policies in the United States. He has written extensively about renewable energy for both the popular and trade press, including regular updates on global developments of feed-in tariff policies for his site Wind-Works.org.

His most recent book, Wind Energy Basics: A Guide to Home- and Community-scale Wind Energy Systems, was published by Chelsea Green in May, 2009.

In 2004, Mr. Gipe served as the acting executive director of the Ontario Sustainable Energy Association where he created, managed, and implemented a provincial campaign for Advanced Renewable Tariffs. The campaign sought to adapt electricity feed laws to the North American market and was instrumental in placing the European concept on the political agenda in Canada and the United States.

Mr. Gipe first publicly called for a feed law in the US in his campaign for the board of directors of the American Wind Energy Association in 1998.

 

Solar Server: How do you feel the disaster at the Fukushima 1 nuclear power plant is affecting renewable energy policy globally, and particularly national government appetites for feed-in tariffs?

Paul Gipe: Well, I think the most interesting development is in Germany, and I think that we will see if the coalition government will come out with new policies to increase the installation of wind energy in Germany. I think that is one very positive development, elsewhere, particularly in the United States, we still have our head in the sand, and continue business as usual.

 

Solar Server: In terms of the feed-in tariff policies which have been passed or modified over the last year, which ones do you see as the most promising, and why?

Paul Gipe: I continue to find the German program the model for the rest of the world to follow, in part because they have been able handle the explosive growth of solar PV. And have been able to accept that growth and regulate that growth in a responsible manner by a dialing down of the tariff in interim steps and in creating a growth corridor that they use to increase the degression to reduce the growth rate - the most responsible means of regulating the potentially explosive growth of solar PV.

The next most sophisticated program is in Ontario, Canada, modeled of course after the European programs.

And a very interesting development is that in Uganda. Uganda has a feed-in tariff policy that could be useful to states in the United States. It's not often that the United States looks to deepest, darkest Africa for a model program, but it might be wise for us to do so.

 

Solar Server: This brings up an interesting question. If Germany has figured out how to deploy an effective program, why have other nations not more closely followed the German example, or is it more complicated than that?

Paul Gipe: They way I address whether a political jurisdiction wants to use feed-in tariffs, I begin with a fundamental question: Do you really want renewable energy?

A very simple question, but it cuts to the heart of the matter. If you just want token amounts of renewable energy, or if you just want to give a few contracts to your friends, in the form of corporate favoritism, then you don't want to use a feed-in tariff policy, which opens the door to rapid growth of renewable energy, and opens the door to participation by all comers, from the smallest entrepreneur to the world's largest companies.

So it goes back to the basic question, do you really want renewable energy? And if you do, how much do you want, how fast do you want it?

Again, if you just want token amounts, if you just want to be able to stand up at the next election cycle and say 'look how green I am', then you probably don't want to use feed-in tariffs, because they are policies that are used to meet aggressive targets.

 

Solar Server: Do you have an outlook for Italy's feed-in tariff, in terms of what you expect there in the coming year?

Paul Gipe: Well, I think that Italy in particular, the discussion around the feed-in tariff, I would expect to be extremely fluid, particularly after the reactor accident at Fukushima. The Berlusconi government, similar to other governments, had bought into this nuclear renaissance, even though there had been a plebiscite in Italy closing the reactors that they had.

Now, as a consequence to Fukushima, Berlusconi's government has wisely said, 'we're going to step back and review our program'. I would say there is a lot of pressure on Italy not to cut back dramatically on its solar program.

If Italy wanted to balance the explosive growth of PV with wind energy, then they need to expand the feed-in tariff policy to include other technologies, such as wind, and biogas and geothermal. Italy has a very significant geothermal resource that could be substantially expanded.

 

Solar Server: Can you contrast for our readers the effectiveness of feed-in tariff policies and renewable portfolio standard (RPS) policies, also can you explain the technical reasons why feed-in tariffs are particularly effective, briefly?

Paul Gipe: Let's break that up into two parts. First, what is the difference between feed-in tariff policies and RPS policies? I argue that feed-in tariff policies are what you do when you have aggressive targets and you have the political commitment to meet those targets. RPS is what you do when you don't have either of those. RPS is what you do when you don't have aggressive targets, and what you do when you have little political support for meeting those targets.

And you can look at the United States as a perfect example of that. Targets are not aggressive and they will not be met by a large margin, with the exception of Texas. And the reason that Texas has grown so dramatically has little to do with the RPS, and more to do with the market situation in Texas.

Now, what is the difference between an RPS and a feed-in tariff? First of all, a feed-in tariff policy when done right, such as in Germany or Ontario, opens the market to all players, from a homeowner wanting to put solar panels on the roof, to electricity producers wanting to build power plants. Whereas an RPS gives the authority for meeting society's renewable targets to the electric utilities, like giving the fox the hen house.

In the case of the feed-in tariff, responsibility for meeting the target is in the hands of the legislature, those that we have elected to represent us, and that is where responsibility should lie. The feed-in tariff is a mechanism for developing renewable energy.

If the RPS is simply a target, then a feed-in tariff can be used as the mechanism for meeting that target; however in the American market RPS has a much broader meaning than a target.

And this is a common problem for North Americans. Those who advocate for renewable energy say we need an RPS. No, we don't. We need a target. And, we need the political will to meet that target.

The technical definition of a renewable portfolio standard is much broader. It gives a target and the means for reaching that target. All the authority of determining who gets the contracts are left to the electric utility.

And the electric utility usually chooses to award those contracts based on a call for tender. The call for tenders, or bidding system, are notoriously ineffective, fraught with problems, the most important of which, it is a closed business community. Only certain corporations can participate.

For those people who want renewable energy, they want the target and the political will to reach that target. If that is the case, then you want a feed-in tariff as the mechanism for meeting the target.

Because for renewable energy to be acceptable for the community, and to the consumers who will have to pay for it, everyone must know that they can participate in the renewable energy revolution.

With an RPS, where the utilities award the contract, the public cannot participate, the people cannot participate. only with a feed-in tariff can we open up the renewable energy market to all players who want to participate. And it is only through that kind of policy that we can get the broad political support to see the massive development of renewable energy that we need.

 

Solar Server: Multiple research analysts including IMS research have stated that there were in be a relative decline in 2011 in the big European solar markets and a relative increase in the U.S. market solar market.

Paul Gipe:  First of all, I don't follow and I don't recommend that anyone else follows market analysts. They have been wrong about predicting this massive growth in the PV market in the United States for at least five years.

Second, the key term here is relative growth. So let's say Europe builds 10,000 MW of PV. Let's not cover wind, because your comment is only on PV, not on renewable energy. So let's say Europe installed maybe 10,000 MW last year, North America installed what,  900? 250 of that was in California.

So let's say that the European market decreases to 8,000 MW and the U.S. market increases from 900 MW, to 1,000 MW - a relative decrease, and a relative increase. So where is the market - it is still in Europe.

 

Solar Server: Industry analysts are saying that they see a big U.S. project pipeline.

Paul Gipe: That is right, we do have a big project pipeline.

 

Solar Server: Some analysts are saying that the U.S. solar market could double again to 2 GW.

Paul Gipe: That's still less than Germany. A few months ago, I wrote an article about analyzing one of our state agencies' position. And they accepted at face value this idea that the European solar photovoltaic market was going to disappear and that the United States was the growth market of the future, without any substantiation.

This is a belief in the United States, in part, I believe, because we are so embarrassed by the success of Europe. Remember, the United States was born out of a revolt against Europe, and we have always felt a little inferior to Europe. And we also have a tendency, as Americans, to be critical of anything that wasn't invented here.

Most Americans have forgotten, or weren't even born then, that the feed-in tariff was invented in California in the early 1980's.

Now we abandoned the concept, because we abandoned renewable energy in the 1980's. However, the Europeans are willing to accept a good idea and modify it to suit their needs. And they have done so. And now the rest of the world is doing the same.

And eventually, as Winston Churchill said, 'the Americans will do the right thing - after they have exhausted every other possibility'.

 

Conducted by Christian Roselund on April 8th, 2011