From the Greenhouse: ‘Feed-in Tariff’

From the Greenhouse: ‘Feed-in Tariff’
Franz Weinschenk

By: Franz Wienschenk

If you live in the Central Valley and plan to buy a solar system, on average, the array that will be on your roof will pay for approximately 80% of your monthly electric bill. Once the technicians finish installing the photovoltaic panels and wire in the converter and everything is up and running, you will become part of what the pros call our “Net Metering” system. That’s the system used here in the Valley and indeed in most—but not quite all—of California.

Here is how it works: When you first buy your system, you qualify for a state rebate and a federal tax credit. But there are some restrictions, such as the power your solar system produces can only serve all or a portion of the onsite electricity needs of your property. You will receive financial credit only to offset your electricity bill—never cash for the power generated by your system.

The “Net Metering” system only allows you sufficient solar panel capacity to meet the needs of your property—never more. Indeed, your utility (e.g., PG&E) will never pay for any power generated above the amount stipulated, which is based on how much your property consumes. In other words, around these parts, you, the owner, will never get actual cash—only credit—for the electricity your system produces.

In contrast, in many parts of Europe, Japan and perhaps even Sacramento (which is part of the Sacramento Municipal Utility District [SMUD], a publicly owned utility), a new system is emerging. It is called “Feed-in Tariff” or “Clean Energy Cash Back.” This system is increasingly popular in Europe where it is helping expand Europe’s production of photovoltaic power by leaps and bounds.

Spain, which is now the world’s largest solar generator, produces 44% of all the photovoltaic power in the world. Germany—which, by the way, does not get all that much sunshine—comes in second with 26%. Meanwhile, we here in the United States, where we get all kinds of sunshine, especially in places like the Valley, produce only 9% of the world’s production.

Although there are minute differences in “Feed-in Tariff” systems in different countries, the idea is that under these systems when homeowners, business proprietors or farmers purchase clean energy systems—either solar or wind—that produce more than they need, they are able to sell their surplus to their utility company at a price set by the utility commission of the involved country. The price paid for a unit of customer-produced energy is generally higher than what the utility pays for its power—power that is often generated by power plants that use fossil fuel—but the difference is factored into the electricity bills of all the customers of that utility company. Thus, everybody shares in the cost of providing locally produced clean energy, and everybody helps to reduce their country’s dependence on foreign oil as well as their country’s carbon footprint.

As stated, there are variations in the “Feed-in Tariff” systems among countries. Some countries have caps on how much individuals can produce; some lower the price paid to suppliers as the years go by. In Germany, once you get into the grid, the price per kilowatt cannot be changed for 20 years. In this way, investors can figure out how long it will take to pay off their initial investment and what kind of profit they can expect to make after that.

There is no question that if we had a system like that here, it would help us to rapidly expand our country’s production of clean energy. All kinds of people would invest in clean, renewable energy because their property might actually earn them a few bucks every month.

No one is suggesting that folks would be allowed to flood their neighborhoods with unsightly solar arrays. Nothing of the kind. Every community has the right to regulate its neighborhoods so that they do not become unsightly. But even with that limitation, especially here in the Valley, there are millions of rooftops either on homes or backyard sheds and garages that could easily accommodate solar panel arrays that are hardly noticeable. There are also many office and farm buildings, storage and work areas, not to mention parking garages, which have large flat roof areas that could easily accommodate multiple solar panels without anyone noticing them.

Of course, were “Feed-in Tariff” laws ever proposed for California, chances are utility companies would object and vigorously fight their passage. But the benefits of such programs certainly outweigh the disadvantages:

  • Our country would produce cleaner renewable energy, thus decreasing our dependence on foreign oil.
  • The production of electricity by local investors cannot be outsourced.
  • The money earned by millions of domestic power producers would significantly improve our economy because every dollar earned over here is a dollar less going overseas.
  • The production of so much clean, renewable energy would reduce our current high rate of greenhouse gas emissions.

“Feed-in Tariff”—A way to earn some money while going green.


  • Community Alliance

    The Community Alliance is a monthly newspaper that has been published in Fresno, California, since 1996. The purpose of the newspaper is to help build a progressive movement for social and economic justice.

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