Last month California Gov. Arnold Schwarzenegger signed the feed-in tariff into law on October 12, 2009. This is very different from measures like the Solar Energy Bill which seek merely to replace the use of fossil fuels as a source of energy with cleaner, renewable sources. The Solar Energy Bill and other conservation measures are commendable, but his new statute carries the added benefit of promising to pay the private citizen a premium over the prevailing market price to sell to local utilities the electricity produced by small wind-powered and solar panel devices.
The feed-in tariff promotes the same green agenda as the Solar Energy Bill but has a much broader and more profound economic impact. It encourages the replacement of fossil fuels with non-polluting sources of energy thereby offering the private sector an opportunity for commerce and also offers the adopters of this technology a profit when they sell their surplus electricity into the utility grid. While this may slightly raise the overall price of electricity paid by consumers, it makes the operation of the solar production of electricity by small producers, economically competitive with fossil fuels.
The benefits of the feed-in tariff way exceed the slight premium that the consumer has to pay in the overall cost of electricity. The effects of encouraging new installations of ground based solar arrays and roof mounted solar panels will spread through the economy as manufacturing and installation jobs are created. The greatest effect of the feed-in tariff bill is to provide incentive for people to go into solar production of electricity for themselves and for profit. It gives everyone the opportunity to become his or her own utility, amortize the already subsidized and tax-abated cost of the installation within a few years and then continue to receive a handsome return on the initial investment.
The true cost of using fossil fuels as a power source is often not considered because it is so huge and wide-ranging that it is difficult to calculate accurately. But one thing is for sure: the cost is huge. The feed-in tariff paid to a small producer of electricity by solar generation is actually not a premium at all when compared to the true cost of generating electricity using fossil fuels.
Hopefully other states will soon catch on. Many other counties already including all the members of the European Union possesses effective production incentive programs. Some have been producing clean electricity and generous profits for decades. These programs consistently produce the intended results of freeing us from dependence on fossil fuels, creating new green jobs and promoting commercial activity that benefits the economy as a whole. They also free up government and utility borrowing power as well as allowing infrastructure funds to be allocated for more desirable projects than fossil fuel production facilities. Germany and Denmark have both had incredibly successful and individually profitable production incentive programs encouraging the production of renewable energy using wind and solar generation. check out the online article here.