On May 29, the Climate & Energy Program in partnership with the Heinrich Böll Foundation hosted a luncheon for staffers, business representatives, and European and U.S. climate policy experts on Capitol Hill to discuss the "feed-in tariff." The feed-in tariff is a policy to promote renewable electricity that has been credited with driving the deployment of renewable electricity in Europe and is being considered by several U.S. states and in Congress. The event featured Maja Wessels, vice president of Government Affairs at First Solar and John Ferrell, research associate from the New Rules Project at the Institute for Local Self-Reliance. Arne Jungjohann from Heinrich Böll moderated the discussion.
Farrell started off the discussion by providing a "feed-in tariffs 101" and explaining why it is an effective policy to promote the production and use of renewable electricity. Feed-in tariffs vary in their details but have three defining advantages: they are simple, providing an easy-to-understand regulatory structure and encouraging firms to increase their margins by producing electricity more efficiently; they democratize ownership of renewable energy production by making it attractive for any group of people to invest in renewable energy generation; and they provide certainty to investors that electricity generated will be purchased at a set price, thereby ensuring a predictability and lowering the cost of capital. Wessels described the success of First Solar, an American solar energy technology company and how it became the second largest and most cost efficient manufacturer of solar photovoltaic modules worldwide. First Solar was unable to find a solar market in the United States due to the stop-and-go nature of renewable initiatives and the lack of market certainty. In contrast, it was able to thrive in Germany because the feed-in tariff policy ensured a stable market and access to the electricity grid for renewable energy. She hoped that the cost of solar energy would fall until the need for the feed-in tariff disappeared.
Several guests were interested in whether the feed-in tariff would be compatible with or completely replace a Renewable Energy Standard, a policy that has been supported by leaders in Congress and several leading businesses. Also discussed were the politics of the feed-in tariff: given its simplicity, why hasn't it thrived in the United States to date. Finally, questions were raised on how the policy was affected by the financial crisis and whether the renewable energy sector actually generated new jobs. Wessels explained that, like with everything else, financing for the feed-in tariff had been affected by the financial crisis, but since the feed-in tariff is financed by ratepayers and not utilities or the government, the renewable sector remained robust in Germany. She also suggested that the growth of renewable electricity in Germany has led to a net increase in jobs, with little public complaint about any displacement of jobs from traditional electricity generating. She noted that the utility sector originally objected to its lost relative share of the market but is increasingly becoming active in installing new renewable generating capacity in order to compete. Finally, she stressed that, as a major exporting country, Germany recognized the market potential for renewable energy technology and has been working to be at the forefront of that field.