America is now going for green Energy through strategies abandoned by the European. Is their strategy really a conducive one? Californian investors are asking themselves this question. The price that is actually being paid is five times above the prevailing rate of electricity.
Member of Congress and Ray Pingle from Sierra Club are proposing to overpay electricity in order to assure that investors will be motivated to inject finance in the renewable agenda of energy.
United State is pursuing a European-subsidy approach towards boosting energy supply from solar and wind. However, forcing states to re-distribute taxpayers’ money to utility companies above market price for the sake of the environment can result in being inappropriate.
These feed-tariffs scheme was first promoted in Germany in the 1990s. It has since its inauguration been spread to more than 20 countries as well as other parts of the world. The aim is to augment the capacity of energy produced by alternative sources. The feed-in tariff scheme has nonetheless been proven effective as it reckons German with the largest solar photovoltaic and the second-largest wind power systems in the world.
How much is too much?
However, research by German economists reports that the 59 cent per Kw-hour provided to solar energy in 2009 represents as much as 8 times the prevailing price and four times that of the subsidy given to on-shore wind turbines.
The solar panels do still represent a very diminutive portion of the overall energy supplied to German’s grid. The composition of energy supplied to the Germany’s electricity grid was as follows in 2008.
1. Wind Energy – 6.3%
2. Biomass 3.6 %
3. Water 3.1 %
4. Solar Energy 0.6 %
Solar energy represents the lowest portion of renewable sources of energy yet, its subsidized value accounts for over $12.4 billion. The solar energy does however, account for 7.5 percent of the household electricity price. It should be noted that the price of electricity in Germany is already high at a price 30 cent per Kwh whereas in America the price is at 12 cent per KWh.
Feed-in Tariffs schemes in America
1. Vermont
A feed-in tariff scheme has been developed in Vermont. Providers of solar energy are guaranteed a minimum price of 30 cent per Kwh for duration of 20 years. Nowadays, the average price of electricity at Vermont is 15 cents per Kwh. However, renewable energy can likely cause a rise in residential electricity price; therefore, Vermont is limiting the expansion to 50 megawatts. It will only supply subsidies up to 5 percent of its electricity which of 1,111 Megawatts makes 50 megawatts.
2. Florida
Florida, Gainesville started its first feed-in tariff scheme last year. Here solar energy is guaranteed a minimum price of 32 cents per Kwh for duration of 20 years. Today, the cost of energy in Florida is around 12 cent per Kilowatt-hour. The subsidy is likely going to produce a one percent increase in the electricity bill.
Research has proven that the feed-in tariffs are not the best solutions for the environment. The subsidy is tantamount to paying $100 for a reduction in one ton of carbon dioxide emission. However, for wind power subsidy the one ton of emission is reduced by only $80. However, according to European climate exchange, the price of carbon emission reduction is estimated to be at $20 per ton of carbon dioxide. The feed-in tariffs schemes appear to be erratically high.
The strategy that is being brought forwards is that increasing subsidy for renewable sources of energy will make it extensively competitive sources. Its prices can even become comparable to fossil fuel. The feed-in tariffs decline around 5 percent per year in Germany. However, absurdity amidst the feed-in tariff is that it tends to evade the use of more efficient technology as investors bind to high cost solutions. Decreasing the subsidy on a yearly basis will likely lead to the emergence of more competitive prices.
In German, there is increasing discussion to decrease feed-in-tariffs as solar power technology is at a fall. According to German environment ministers, it is important to let the free market induce renewable energy into pervasive use. Yet, this was met by a prognosis from Reuters that the solar market in German would decrease by 25 percent accounting for less revenue for solar panels manufacturers.
This retaliation is common across Europe. In France, the feed-in tariff is reduced by 24 percent. Previously 78 cents were guaranteed per KWh. Now a sum of 60 cents per KWh is proposed. Yet, the price of electricity in France is only 18 cents per KWh. The subsidy was already representing more than 300% of normal price.
America is engaging in feed-in tariffs to reduce CO2 emission and boost innovation. It has already been seen as a failing strategy in Europe, yet American States insist. The states are now pursuing in their homelands a globally failing strategy in Europe.
Source: Reason
Leave a Reply
You must be logged in to post a comment.