SEIA trashes Gainesville Solar Feed-in Tariff

[Munich, Germany]
A funny thing happened at the PV Industry Forum 2009.
Solar Policy Not Invented by the SEIA?
Legal challenges for state Feed-in Tariff policies.

At the PV Industry Forum held last week before Intersolar 2009, Solar Energy Industries Association (SEIA) President & CEO Rhone Resch presented “New and emerging developments in the US solar market” in Session 1: PV Markets.

 

From PV Industry Forum 2009

After his presentation, an attendee asked:

Would you tell me about the utility market in the United States at this moment?

Midway through his description of national solar developments in the evolving US utility market, Mr. Resch homed in on the Gainesville Regional Utilities (GRU) Solar Photovoltaic Feed-in Tariff (FiT) program (please see Feed-in Tariffs: Solar FiT for Gainesville, Florida!).

Mr. Resch said:

You are now seeing Gainesville Florida had the first Feed-in Tariff in the country. It was poorly designed; it will probably give Feed-in Tariffs a bit of a black eye in the US. But at least it was the first.

And so the same way in Germany where you saw a city develop a Feed-in Tariff. We are now having that occur in the United States. Very important policy development, although it is capped at only 4 MW (MegaWatts).

Session Chair Paula Mints said:

Rhone, would you care to expand on your statement about Gainesville? That it is poorly designed?

Mr. Resch said:

Sure, the structure is fine. I think the rigor in reviewing applications was not there. And so many applications were put in place and then accepted by project developers who have never developed projects in the past. Who may have some land, who might be a farmer, but at this point in time there is no infrastructure and no ability to get those project financed.

So until the bigger companies really start to take a role in this particular program and they are in the queue, but what you are going to find is the first tier of projects that have received acceptance probably won’t ever get constructed. So Gainesville after six months is going to have to say “alright fine you guys aren’t going to be able to get it done, let’s go to the second tier” and that’s where you start seeing the SunEdisons and the Conergys and those kinds of companies who will be able to actually build some of these projects.

So I think In the long run it will straighten itself out, but certainly there was minimal rigor in the beginning in evaluating those applications.

Upon inquiry, the SEIA claims they do support state and local FiT policies including the Gainesville program. The SEIA believes lessons can be learned from the submission of applications hitting the GRU 4 MW program cap days before the official program launch (“GRU Achieves First Year Target for Solar Program”).

I contacted the Vote Solar Initiative to get their feedback on the Gainesville FiT. Gwen Rose, Deputy Director of Vote Solar, observed Municipal Utilities (munis) have been the most innovative with solar policy and said:

What Gainesville is doing is quite exciting and is emblematic of what we see happening across the nation — munis all over the place are going forward with ambitious programs.  San Francisco PUC signed a PPA contract for 5 MW of solar at 23.5 cents, and is planning another 40 MW, as well as a rebate program for customer-sited systems.  Long Island Power Authority is doing 50 MW.  Austin Energy has a contract before the city council for 30 MW at 16.5 cents.  LADWP has a 1.3 GW plan for all kinds of solar. It’s all very exciting watching the number of these local developments!

In general, we think a suite of policies are necessary to support solar markets at different stages of development. We also think that having a diversity of incentive programs that target different markets will be more conducive to establishing a long-term stable solar industry (for example, performance-based incentives/rebates plus net metering for retail markets; wholesale markets supported by FiTs, standard offer contracts and competitive bids). Feed-in tariffs, when well-designed, are an important policy tool for setting up sales of wholesale power to a utility.

Despite the unkind Gainesville remarks, I heard from Rhone Resch himself at Intersolar about concerns over the legality of state Feed-in Tariffs, and SEIA efforts to clarify and enable them through legislation as required. Per the SEIA, “provisions in federal jurisdiction may preempt state setting rates, including FiT’s that set higher rates than the acceptable avoided wholesale rates. There are related legal cases pending in California, Hawaii and Iowa.

Below is a Keyes & Fox LLP (a Seattle law firm focused on distributed-generation law) presentation summary of Feed-in Tariff regulatory challenges furnished by the SEIA. Keyes & Fox LLP co-founder and Partner, Jason Keyes, is also an American Solar Energy Society (ASES) Director.

  • The U.S. Constitution grants Congress the power to preempt state regulation of an area of interstate commerce.
  • The Federal Power Act (FPA) grants the Federal Energy Regulatory Commission (FERC) exclusive jurisdiction to regulate wholesale power sales in interstate commerce.
  • The Public Utility Regulatory Policies Act of 1978 (PURPA) grants states a limited role in wholesale power markets by allowing states to set utility avoided cost rates for wholesale power purchased from FERC-designated qualifying facilities (QFs).
  • FERC has issued several decisions stating that states are preempted from setting wholesale power rates that exceed utility avoided cost.
  • It has been claimed in several venues that the FPA, PURPA and these FERC decisions preempt state attempts to establish feed-in tariffs.

There is a Feed-in Tariff session at the PV America conference next week on Monday, June 8, 2009:

11:00 a.m.-12:30 p.m.
Hasselhoff, Lederhosen, and Feed-In Tariffs: If It’s Good for Germany, Can It Work Here?
Room 105AB
Having a fit over FITs? Come and hear the pros and cons.
Moderator: Richard Deutschmann, groSolar
Panelists: James Bradbury, Office of Representative Jay Inslee
Peter DeNapoli, SolarWorld
Wilson Rickerson, Rickerson Energy Strategies

I don’t know the reason for Mr. Resch’s strong remarks about the Gainesville Solar Feed-in Tariff Program in Munich. I don’t think they were a mistake but part of political and policy message to the European dominated audience. I’ll keep my gross speculations to myself for now.

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17 comments

  1. At the least, Mr. Resch’s comments require clarification.

    As I read them, I can only say that I would not want to be associated with an organization whose chief officer makes statements that suggest to any degree that farmers, land owners, and others are not entitled to participate in this new, emerging, and profitable industry; and, to continue on by making a statement regarding the Gainesville program such as, “but at this point in time there is no infrastructure and no ability to get those project[s] financed”.

    I personally don’t believe it to be the case, especially the ability to finance the programs.

    In fact, if Mr. Resch is to be taken at the obvious face value of his words, this event will undoubtedly provide reason for reconsideration by a considerable number of people across the spectrum of the industry as to who supports their shared positive interests in Feed-In Tariffs.

  2. disdaniel says:

    “farmers, land owners, and others are not entitled to participate in this new, emerging, and profitable industry”

    Apparently these “little guys” don’t pay SEIA dues, but SunEdison and Conergy (despite stiffing/suing MEMC) are all paid up.

    My question to Gunther and the lawyerly bullet points is:

    Why is a feed-in-tarrif considered “wholesale pricing”? Presumably that 4MW cap will be split by scores or hundreds of customers. Using 40 customers (for arguements sake–I’m certain the actual number will be higher), each installation would average 100kW. Will FERC think setting prices for 100kW capacity increments (or less) is wholesale pricing?

  3. Going green says:

    hey these are new and trying times for the usa on feed in tairffs
    there new and untried we will get this right but were going craw before we walk on another note there going in and that great
    go green and thank god Gainesville took that frist step

  4. What do you mean they are ‘untried’?

    They are COMPLETE TRIED, PROVEN, AND THEY WORK!
    We have been crawling for 30 years. How much longer to you want to continue to fall behind the rest of the world, only because certain special interests are trying to maintain a financial advantage over you and your neighbors who want to do their part for a cleaner, healthier environment. Again, step back and ask yourself, “Why Are We Doing All This In the First Place?” This is not an issue of mega-corporation profitability. It is a matter of trying to fix the environmental mess we have already created.

  5. Kevin Murphy says:

    I agree with SEIA. I have first hand knowledge that the GRU managed program is one of the worst ever seen. The structure is deplorable but the Chief, Ed Regan, was too busy holding press conferences and basking in the glow of his new title, “Father of the Feed in Tariff” to notice. Few of the systems reserved will ever be built. GRU is a fine example of how NOT to administer a FIT program! The guys who have the majority of the money tied up have never installed a system in their lives, let alone megawatt scale systems. Give me a break! This could have been a success but has been a colossal failure as a result of ego issues with the executives at GRU

  6. Scott Davies says:

    Kevin is correct up to a point. I have been personaly involved with how the FIT went down in Gainesville. The worst part of it is that with the poor system of reviewing applications, over eighty percent of the monies will now be going to California and New York, the ratepayers (mostly residential) who actually pay for the policy are locked out for years to come, the local solar installers have been bypassed for the most part and the biggest chunk of the queque is reserved by a company that has never installed a system ever!
    I would say it is more inexperience with a new policy than ego though that is certainly a factor with all things human and as per GRU. However, do not give up hope for the Gainesville FIT yet. A number of us here are dedicated to “fixing the FIT”. I do hope that the mayor and city commission will recognize the seriousness of what has happened to the FIT “underneath the hype” and GRU will review and correct it’s method of application acceptance as well as some of it’s caps to reflect the greater purpose of helping our community as was originally presented to the city commission and the people of Gainesville.

  7. Todd Rainsberger, PhD says:

    I find it odd (the nicest word that seems applicable) that people are condeming a program before it has had a chance to succeed or fail. As someone involved in the Gainesville FiT, it takes time to line up projects, time to create legal agreements necessary to operate a solar system for 20 years, and time to obtain financing. Financial institutions do not loan millions of dollars easily. GRU has made great efforts to make the process simple, fair, and open.

    Sure pioneers get the arrows, but it’s unfair to condemn a project before it has a chance to prove itself.

  8. Joe Solar says:

    The first FIT program in the US was destined for criticism, problems, and revisions. That is just the American way. It has been problematic, but I do not think the word failure should be associated with it. Bottom line is that in 10 years, Gainesville should have 40 MW of solar. That is a lot for a town of our size. When criticizing GRU, keep in mind what we were asking Gainesville and GRU to do. This is something new to the US and it is a program with so many variables and accounting implications that most of the “little guys” can not make it work. I have been working with this program for over a year and I have tried to convince a lot people to get involved. Financing anything right now is difficult, let alone a new program that lasts 20 years with no track record (for the FiT I mean). I have tried to get financing, but banks are just not lending. I have tried to get people involved, but they waited to see what happened and they missed the boat (reservations are now being taken for 2015), but that is not GRUs fault.

    I agree 100% that the application process could have been handled better, but I highly doubt ego has anything to do with it. I would argue that the Execs that made these decisions were more worried about legal issues and job security rather than ego. They were warned of the outsourcing of installations and mega corps getting involved. But with no one else offering a FiT, of course, the big companies were going to pounce on Gainesville and there is little we can do to stop that. If the FiT becomes statewide or nationwide, many of these applications will be pulled and the locals will again be able to get involved.

    We were at least able to make sure that each installation was done by qualified installers so that the systems perform as expected and at least the program will be a success on that level. I think it is great that Gville is leading the charge on this. Without it, solar would not be happening at the rate it is.

  9. Kevin Murphy says:

    Joe, Todd and Scott- While I respect everything you are expressing regarding “first adopter” syndrome for GRU. The fact is Ed Regan and his staff met with experts who I know personally who advised them to implement revisions BEFORE they started accepting applications prematurely. (If you recall, the majority of the first year’s capacity was reserved prior to the official launch date) Despite having been advised by experts, Ed, in particular, adamantly opposed any revisions as it would, “make it too complicated”. When it was clear no headway would be made with GRU, the same advisers approached every commissioner and the Mayor and guess what? They refused to change anything. The Mayor said, ” We are just going to let it work itself out”. Excuse me, ma’am? That means you expect the local industry to suffer to figure out what you already know, the program is broken.

    There should be no excuses offered for GRU’s lack of performance. They are using ratepayer money to line the pockets of inept investors from NY, Georgia and Florida. Meanwhile, ratepayers who had intended to go solar are left in the dust. Dont make excuses for incompetence. There is plenty of that in this Country already. If we start excusing such behavior ir will only spread like a disease.

    On a final note, besides a lot of hot air, nothing substantial has resulted from this FIT. You have a bunch of wannabes, not established firms, with hypothetical systems reserved. There are no big projects being built right now. Granted some projects are currently tied in with the FIT, but these were jobs that were already going to be built. Let’s not pretend the FIT has done anything for job growth or renewable development in Gainesville.. In one week in California, more solar is installed that has been since Gainesville launched this program 8 months ago.

  10. Tom Jacobs says:

    Kevin,

    You sound like a disgruntled bidder to me. What is your real beef?

  11. Daniel Rudeson says:

    Mr. Murphy,

    Your credibility is highly questionable. I have noticed that you have posted on every website related to the Gainesville feed-in-tariff program. You seem to have some personal vendetta against the municipal utility.

    All one has to do is google Gainesville feed in tariff and Kevin Murphy to see my point.

    D.R.

  12. Jeff says:

    I don’t think we should be questioning Mr. Murphy’s credibility or his motive – the fact is, he is right. Speaking as a subsidizing rate payer, I don’t appreciate the fact that I am paying $.32/kwh for electricity to line the pockets from outside Florida instead of supporting local investors on local projects.

  13. JM Stevens says:

    Well I guess the naysayers have now disappeared, because now over 5 MW have been built in tiny Gainesville, with hundreds of projects. This is an increase of 1200% from before the program was started. And some of the critics disappeared with other people’s money, while those who were capable are too busy to post to silly blogs.

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