Checklist for Developing Your Feed-In Tariff
- Look around the FiT landscape and if you can, find one that created a healthy, sustainable market that did not overburden those who are paying for it;
- Yes, I mean remember the ratepayers;
- Look around again;
- Yes, I mean remember the ratepayers, you do not want to make them mad;
- Look again, this time put aside enthusiasm and study markets that died a sudden, painful and expensive death, particularly those riddled with speculation – come on, you know who you are;
- Decide what you want in your FiT and design accordingly – it is okay to think short term as long as you know you are doing it and why;
- To cap or not to cap – keep in mind the following:
- If the cap it too low and the incentive too high it will be oversubscribed in hours, maybe minutes;
- If the cap is too low and the incentive too low it may last forever with nothing to show for it;
- If the cap is too high and the incentive is too high, well, we all know what happens here;
- If the cap is high and the incentive low, there is just not much going on here and you probably weren’t serious lint he first place;
- If you go cap-less with a low incentive, see letter b;
- If you go cap-less with a generous incentive, see c;
- Consider a cap that is tagged to the desired market size, much like a trigger, that is, when the cap is reached -- that’s all folks!
- Consider triggers instead, where the incentive level automatically reduces – lots of administrative jobs can be created here and the incentive may last longer;
- Consider a new name for your incentive that fits the market – call it a FiT in private and something snazzy in public. Whatever you call it, the point is the economic benefit that encourages the installation of solar (or, some other renewable);
- Make them pay up front to get on the list and make it hurt to leave the list or change the reservation – that way you get real projects taking up space;
- Incentive levels – it is simple, too high will be very expensive to support and likely oversubscribed the minute you release it, too low and no one but the quality-less will come;
- Structure, keep it simple. The requirements, instructions, etc, should be easier to understand than anything you buy unassembled at the store – seriously, when was the last time you enjoyed putting that bike together for a child’s birthday?
- Make sure your market has the transmission and infrastructure to support the incentive BEFORE you announce it;
- Hey, how about developing an incentive to upgrade the global transmission system? Sorry, couldn’t help myself;
- Get input from all stakeholders (including the ratepayers who will likely pay for it) and then take the best and leave the rest;
- Remember that all stakeholders are biased in favor or against something;
- Remember that you are biased in favor or against something;
- Basically, know before you go and have a map to get there. If you need to detour off the map along the way, do it. If you find the map was wrong in the first place, throw it out and make a new one. If you find after you start that the map is too complicated throw it out and make a new one. If you find the map sets itself on fire and burns down all your plans, put it out, sweep up the ashes and make a new one;
- If you find your FiT oversubscribed and fraught with unwieldy rules, step back, take a deep breath and change it;
- If while you are changing it people call you terrible names, change it anyway; and
- The point is, of course, to create a global set of incentives that fit cultures and politics of the regions, countries, provinces or states that they are going to serve, that builds a sustainable market over time, that builds an industry with healthy margins, that encourages business plan and technology innovation, that creates jobs and that moves us all away from conventional energy sources to the brave new world of energy independence.
Posted 31/07/2010 by Paula Mints
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