SMUD has introduced a Feed-in Tariff to pay producers for renewable energy beginning in 2010. The Sacramento Municipal Utility District is the nation’s sixth largest publicly owned utility, with 1.4 million customers in Northern California.
California already does offer a little known Feed-in Tariff or FIT, but the rates are somewhat anemic; paying between $0.08 and $0.19 cents a kWh. The costs to “feed in” are so undefined, it has few takers, totaling only 14 MW, according to a new NREL analysis of FIT policy design. Of developers and residents who adopt solar; 97% opt for the California Solar Initiative rebate which pays a known amount upfront for estimated production.
When I did solar estimates, and needed to find the PG&E cost to connect a FIT customer to the grid, I was told that not only could it could cost anywhere from $1,000 to $40,000 to connect to the grid, but that PG&E could not come closer than that wild guess before installation. Only after their guys come out to physically “feed you in” would they be able to name a price. As you can imagine, this much uncertainty hampers FIT sales.
The SMUD FIT differs from California’s in several ways.
The program caps are higher, both per project and overall and the pay is better and more forms of renewable energy are eligible.
SMUD’s 20 year contract beginning in 2009 would earn off peak rates from $0.082 per kWh up to $0.29 per kWh during peak; higher than California’s 20 year FIT cap at $0.19 for peak production.
California’s peak need is afternoons between 1PM to 6 PM, when everyone in the inland area needs to turn on air conditioners. As a result, solar power would likely be the winning technology, but the SMUD FIT will pay for any form of renewable energy – – even fossil fueled Combined Heat & Power.
Fossil-fuel fired CHP projects might seem an unlikely choice for renewable energy earnings, but the “Combined” aspect of Combined Heat & Power is essentially renewable. The excess steam heat given off when steam is made to turn turbines is the renewable resource. (But biomass would be preferable to fossil fuels as the fuel though!)
CA AB32 includes incentives to encourage the installation of 4000 MW on CHP units. By piggybacking CHP onto natural gas fired power you reduce its carbon emissions per kWh produced by essentially getting double the output from one ugly input. This cuts the carbon in half.
But a Feed-in Tariff that pays for CHP production certainly makes for an unusual way to green the grid!
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