Florida Utility Kicks Off Solar Feed-in Tariff, a First for the U.S.

Utilities and policymakers have started to warm up to feed-in tariffs for residential and commercial solar systems over the last few years — proposing programs to buy surplus power from customers’ photovoltaic systems as a way to encourage installations. Now there’s something to show for all the buzz: Gainesville Regional Utilities, or GRU, of Florida officially launched yesterday a feed-in tariff program modeled after those in Europe, the first U.S. city to implement such an incentive for clean energy.

GRU has set an initial rate of 32 cents per kilowatt-hour for customers who sign up in the first two years of the program. At the end of next year, the city-owned utility will evaluate the market and set a rate for 2011 (expected to be less than the initial 32 cents). Contracts will guarantee fixed rates for 20 years.

Not everyone can participate — the utility will add just 4 MW per year for the next decade in an effort to keep costs down for ratepayers, who will subsidize the $1.5 million program through their utility bills. According to the Gainesville Sun, the 4-MW-a-year cap will limit increases to between 3 and 5 percent. The Sun reported this weekend that GRU hit its 2009 cap with 35 contracts in just three weeks, and has already lined up customers for 60 percent of the 2010 allowance.

Feed-in tariff momentum is also picking up steam elsewhere in the U.S., and around the globe. Japan’s Ministry of Economy, Trade and Industry, for example, is pushing for a feed-in tariff that would guarantee a rate for surplus electricity from residential solar systems for about a decade.

Michigan utility Consumers Energy wants to test a program somewhat more limited than the one launched in Gainesville: The utility recently proposed to pay residential customers 65 cents per kilowatt-hour and commercial customers 45 cents per kilowatt-hour in 2009, with slightly lower rates next year — higher rates than what GRU has promised for the first two years. But it’s not necessarily a better deal for customers, as Greentech Media explained in a recent post: The proposal includes caps at 150 KW per customer, contracts that run out after 12 years, a $25-a-month participation fee and a total program cap of just 2 MW.

In Los Angeles, Mayor Antonio Villaraigosa set a goal of getting 10 percent of its energy from solar by 2020 in November. To help reach that target he proposed a new feed-in tariff that would allow solar energy providers to sell power directly to the utility, reaping tax incentives valued at up to 60 percent of installation costs. And Oregon Governor Ted Kulongoski proposed a feed-in tariff for solar energy projects modeled after the granddaddy of tariff systems, Germany’s, which encompasses all electricity from renewables.