“The countries that have had success with feed-in tariffs base their prices on the actual costs of renewable energy generation. If the FIT prices aren’t cost based, they’re not likely to attract capital, for the simple reason that investors need to know they’re going to make money,” Couture explains. “This doesn’t need to be returns of 15-20 percent. Markets in Germany and Spain have shown that reliable returns of 5-8 percent are typically adequate to attract large amounts of investment to the renewable energy sector. This is even more likely to hold true in today’s financial markets.”
California recently held hearings at the California Energy Commission to examine different policy options, to try and replicate the success of European policy.
Not just Europe, either. Lewis fears that the average payments will be in the $0.017 per kWh range; not enough to attract solar project development. A similar utility in Gainesville, Florida has built 4 MW of solar through generous FIT payments of $0.32 per kWh. Gainesville’s tiny municipal utility serves 90,000 people, so it is comparable to Sacramento Municipal Utility District, with its 1.4 million customers.
Image from Sacramento Business Coach
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