Pages

February 15, 2008

Feed in Tariffs- support for renewable power


Some call Feed in Tariffs justified to make up for unpaid externalities from other energy sources like coal and natural gas but the incremental Feed in tariff payment is support. Even Ren21 of France calls it support. Feed in tariffs are paying a subsidy for 20 years on renewable capacity that is installed. 5.3 billion Euro is an older estimate from 2001 and the amount has gone up since then with a bigger program in Spain and other places. I like wind and solar power, but I think it is wrong to say that wind and solar are not getting enough support relative to nuclear power.

Feed in Tariff's at wikipedia

Feed in tariff is an incentive structure that boosts the adoption of renewable energy through government legislation. The regional or national electricity utilities are obligated to buy renewable electricity (electricity generated from renewable sources such as solar photovoltaics, wind power, biomass, and geothermal power) at above market rates.


Feed in tariff presentation

Not just Germany but Spain and Denmark have big feed in tariff systems. Many other European countries and Canada also have feed in tariff systems (they are just smaller programs than the German one)

Estimated impact on end use electricity prices (according to european commmission)
Between 4% and 5% for Germany and Spain
Around 15% for Denmark

Back in 2001: The Netherlands (more than EUR 1.5 billion), the UK (circa EUR 1.5 billion) and Germany (circa EUR 1.8 billion) provided substantial off -budget support to electricity consumption. The Feed in tariff support has gone up since then.

European Environment Agency figures in 2004 gave indicative estimates of total energy subsidies in the EU-15 for 2001: solid fuel (coal) EUR 13.0, oil & gas EUR 8.7, nuclear EUR 2.2, renewables EUR 5.3 billion.

Ren21 in France (pro-renewables) calls Feed in Tariffs support.
The European Environment Agency estimated at least $0.8 billion in on-budget support and $6 billion in offbudget support for renewable energy in Europe in 2001. A large share of the off-budget support was due to feed-in tariffs, with purchase obligations and competitive tendering representing other forms of off-budget support



UPDATE:
Calculating the difference between the Feed in Tariff and the market price to get the level of support.
40 billion kwh X 3 cents Euro (8 cents for wind less 5 cent market price) per kwh. Euro 1.2 billion.
That is only Germany and not the Spain and Denmark subsidies. Spain and Denmark combined have about the same wind as Germany. So that would double up differential only subsidy. 2.4 billion. Still have over a dozen other European countries like France and UK but those programs are smaller.

The solar PV tax credit is about 8 to twenty times the market rate. So subtracting out that part of the subsidy is not that different.

About 2 billion kwh for solar in Germany at 30 cents per kwh or a 25 cent premium. Some figures I have seen for the solar feed in tariff are 71 cents/kwh. 400 million more including the solar part. Double that for the rest of Europe or triple to get to the world figure.

So 2.4 billion for wind (europe only) and 800 million for solar europe only for the differential above market price for $3.2 billion Europe only feed in tariff estimate. About 30 other countries have feed in tariffs for renewables. US, Canada, Japan and other countries also have subsidies.

Most utilities in the USA charge 2-32 cent/kwh added charges for wind.
Figure from the American wind energy association

Plus there is the 1.5 cent per kwh production tax credit

Wind production incentives

Also, I don't agree with the subtract carbon emissions from that total. The carbon emissions should be counted separately as an externality or subsidy for coal, oil and natural gas. Otherwise it would be an adjustment for nuclear.

Some estimates for Solar have fairly high greenhouse gas emissions although still better than coal and natural gas

The Solar PV incentives swamp the market price figure.

So solar and wind should be supported, but it is not true that they are not getting enough support. Coal and oil are the things that should be penalized and shifted away from and it will take support for every other energy source to make that happen in a timely way.

0 comments: