Democratizing the Electric Grid: Innovative Financing for Local Renewable Energy

Summarized by Kevin Zeese

This is a summary of a session from the economic democracy and earth democracy tracks of the Democracy Convention held in Madison, Wisconsin on August 26, 2011.  The session focused primarily on the experience in Germany, which is referenced in this summary but this review focuses more on the plans for a new energy financing program in Oregon. The biographies and contact information of the speakers is at the end of the summary.

Oregon is becoming the leader in creating a broad-based, distributed energy program with the enactment of a five year feed-in tariff (FIT) program to fund solar energy. This is an adaption of the German FIT program as well as similar programs established in 63 countries. FITs are responsible for approximately 75% of global solar energy and 45% of global wind deployment.

FIT is a tariff on the rate-payer’s bill that allows the customer to borrow money to put in solar, wind or other renewables.  The cost of the implementation of the renewable energy is re-paid by the payment for production of the energy.  This usually means the installation of small roof top energy systems which results in the producer being paid a fee per kilowatt produced to pay off the money borrowed from the utility.  Unlike a tax credit for solar installation, a FIT does not come out of state or federal budgets. And, in times of economic austerity it avoids the problem of budget cuts to energy programs.

FIT programs pay for energy generated from clean, renewable energy sources and feeding that energy into the existing electric grid.  FIT programs specify how much the customer, who generates the energy, is paid for their electricity and over how long of a time period.  Oregon is looking at paying 80 cents per kilowatt, compared to California which pays 17 to 20 cents per kilowatt. The FIT is an enforceable contract that attracts private investment.

FIT programs have led to major increases in renewable energy production around the world.  In Ontario, Canada, the first FIT program in North America, where FIT was put in place under the Green Energy and Green Economy Act of 2009, the program is projected to create 72,000 jobs and generate 3,000 megawatts of electricity from solar energy. Ontario pays 84 cents per kilowatt hour for roof top solar. The program will phase out all coal plants by 2014.

Germany, which adopted FIT early in this century, has demonstrated that FITs can be used as a powerful tool to drive renewable energy deployment, create jobs, meet energy security needs and reduce carbon emissions. Jobs in renewable energy have increased from 160,000 in 2004 to 367,000 in 2010. Germany produces 54% of all solar power capacity worldwide due in large part to its FIT program.  The cost of German solar has decreased 50% in five years. Moving to solar has not adversely affected the German GDP, in fact quite the opposite – there has been a dramatic decline in production of greenhouse gases that is the mirror image of the increase in the GDP.  FIT in Germany is one reason why the country will be able to close all 17 of its expensive and environmentally challenging nuclear energy plants by 2022.

Old energy sources are not renewable and are running out. As a result more expensive and environmentally damaging forms of acquisition are being used, e.g. for natural gas fracking is being used which risks water supplies, for coal mountain top renewal is becoming more common and for oil, tar sands are seen as the future source.  More and more are realizing that as it gets harder to acquire traditional energy sources, renewable energy is needed and are recognizing that renewables produce unlimited potential energy.

Large energy corporations are trying to profit from solar energy by building massive solar installations in the desert.  This is damaging to the environment where the energy is produced. It also requires expensive additions to the electric grid to bring energy to where it will be used.  Transmission also results in the loss of energy as it is brought from the desert to population centers.

FIT will encourage a decentralized approach to energy production; spur local producers in what is known as distributed energy production.  This will challenge the monopoly of large public utilities that currently have a grip on energy policy.

There are many advantages to distributed energy production:

-          Distributed energy takes advantage of existing infrastructure. The roof tops of homes, businesses, government buildings, schools and houses of worship all become part of the solution to the energy and climate crisis – and do so without any cost to them or the government.

-          Producing energy in a distributed way means energy is produced close to the energy users.  This reduces energy losses from transmission of energy over long distances. It also avoids the cost and environmental damage of new transmission lines or large electric utilities.

-          The utility companies benefit because it is less costly for them to pay for distributed energy production than build new power sources, especially extremely expensive sources like nuclear power.

-          Small scale energy projects financed with local community capital creates jobs in communities at all income levels in research, manufacturing, production and installation thereby distributing the economic benefits widely.

-          Distributed energy keeps energy dollars in the community rather than sending them to distant coal and oil companies or nuclear facilities thereby allowing recirculation of dollars in the community rather than funneling energy dollars to the wealthiest who own big energy producing companies.

-          Distributed energy reduces the influence of big energy monopolies, creates a local green economy and moves sustainability forward.

Oregonians for Renewable Energy Policy, which worked to pass the FIT law, is now working with schools, libraries, public institutions, places of worship as well as educating the public to tell them about the FIT program, and assisting them in installing roof top solar arrays.

FIT programs have proven they increase green jobs, drive down cost of energy over time with an economy of scale, simplify financing of installation of renewables and shift power from big energy companies to people. The people who benefit from FIT will be you and your neighbors rather than big global energy investors.

More information:
Oregonians for Renewable Energy,

World Future Council,

Wind-Works, www.wind-works/FeedLaws

Henrich Boll Foundation,

Nancy Price is the Co-Chair, Alliance for Democracy and Western Coordination, Defending Water for Life Campaign; member Executive Committee of Move to Amend. Her contact is

Laus Linsenmeier is the Executive Director of the Heinrich Boell Foundation (HBF) Northamerica. He is Economist with special expertise in Environment/Energy, Transatlantic Relations, Foreign and Security Policy, Development. HBF is a think tank, close to the German Green Party, based in Berlin/Germany with 29 offices worldwide. Prior to his actual position Klaus Linsenmeier served a director of the international division of the foundation in Berlin. Contact:

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