Arizona utility regulators are designing rules that would require power companies to buy electricity from solar developers at prearranged prices. The “feed-in tariff” aims to guarantee profits for solar developers, while encouraging more solar-power generation in Arizona.
Advocates of the tariff say it is needed because solar-power developers need to be fairly certain that they can make money before investing in solar projects. In January, the Corporation Commission solicited input on a FIT from utilities and solar developers. The feed-in tariff, or FIT, would mirror similar rules in Germany, the world’s largest market for solar power.
The commission requires Arizona utilities to get 15 percent of their power from renewable sources like solar by 2025 and has been working with utilities to develop creative financing plans for renewable energy because it is more expensive than traditional power sources.
The tariffs require an electric utility to pay for the electricity and renewable-energy credits from solar facilities at an agreed-upon and sometimes predetermined rate for an extended number of years. California, Hawaii, Vermont, Maine, Oregon and five cities or utility territories in the U.S. use some form of FIT, according to the Corporation Commission’s research.
Like all utility costs, the expense of buying power through a FIT would be passed on to customers. The regulators are suggesting a limit on electricity bought through a FIT to cap the cost to ratepayers. The cost to an average household hasn’t been determined.
Arizona Public Service Co. has proposed two FIT programs using guidelines from the commission. APS proposes to offer a standard energy contract for small solar or other renewable projects, and a FIT for low-income housing, homeowners associations, apartments and non-profits. Those groups usually can’t take advantage of the standard financial incentives for going solar, but they could develop solar with a FIT.
Source: The Arizona Republic
For more information on this proceeding, visit the Arizona ACC eDocket site and search for Docket E-00000j-09-0505