what happened to the michigan feed-in tariff?

By Mark | October 24, 2008

In Ann Arbor this evening, at TechKnow Forum 2008: Recharging Michigan, during a panel on the future of our state, Stanley “Skip” Pruss, Gov. Jennifer Granholm’s special advisor on renewable energy and the environment, brought up Germany. He held them up as an example of what can happen when a government seriously embraces alternative energy. Germany, as you may know, currently leads the world with regard to alternative energy research and production. In fact, according to Pruss, more people are now employed in the alternative energy sector in Germany than in the automotive industry.

John Denniston, partner in the venture capital firm Kleiner Perkins Caufield & Byers, offered the reason why. According to Denniston, it was all due to the feed-in tariff, which, by guaranteeing a profit to anyone who could produce electricity that could be sold back into the grid, set off an incredibly alternative energy boom.

The following clip comes from a July 2007 issue of the UK’s Guradian newspaper:

…The secret of German success is the “feed-in tariff” (FIT). Anyone generating electricity from solar PV, wind or hydro gets a guaranteed payment of four times the market rate – currently about 35p pence a unit – for 20 years.

This reduces the payback time on such technologies to less than 10 years and offers a return on investment of 8-9%. The cost is spread by generating companies among all users and has added about one cent/kwh to the average bill, or an extra

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4 Comments

skyler

Posted October 24, 2008 at 9:39 am | Permalink

This was part of the energy package that just passed – from the state release:

“The package also includes an income tax credit to offset a portion of ratepayers’ investments in renewable energy for Michigan and a “net metering” law that allows customers to sell renewable electricity they produce at their homes or businesses to their utility companies.”

Don’t know the exact details, but it looks like we have something in place now to accomodate this sort of thing.
egpenet

Posted October 24, 2008 at 3:31 pm | Permalink

That’s one idea.

Gerald Ford proposed a tax on oil that only kicked in when the price of oil hit or went below the threshhold wheree oil is TOO CHEAP to invest any more dollars in alternative fuels … like natural gas, batteries, etc.

Not too far down the road, Boone Pickens sees oil way up to $1000 … which is why he thinks the money will pour in for alternative developments like his wind turbines, etc.

Who knows. Once we deleverage all of the world’s bad debts … a couple years or so … we may very well be at that point as our easily-available resources become dear and the competition heats up for those resources.

Also, keep in mind that it wasn’t Reagan or any US government that destroyed what was left of the Soviet Union, and which also kept things quiet in the Middle East … it was $10-#30 a barrel oil. Can’t sell oil … can’t cause trouble. Tempting thought. We may be heading into a quiet interlude here as inflation and oil bottom out. Hmmm.
egpenet

Posted October 24, 2008 at 3:32 pm | Permalink

The point that oil becomes cheaper than research and investment for alternatives is $65-$70 per barrel. We hit that point earlier today. Hmmm.
mark

Posted October 25, 2008 at 1:13 pm | Permalink

I just received an email from a fellow with knowledge of the situation. He tells me that the bill will be re-introduced next year and that there are several groups supporting it.