Criticism of feed-in tariffs often actually about solar

Recently, Craig Morris discussed an article that misrepresented feed-in tariffs (FITs). He also spoke with the two people quoted in the article, one of whom felt misrepresented – while the other was a prominent German spokesperson for renewables. He found that people describing policies are actually often talking about the technology effects, which the policies in question do not change.


I met US-based German energy consultant Dirk Morbitzer in late 2012 at the premiere of the German documentary “Leben mit der Energiewende,” which – despite its title – is mainly about solar, not about the energy transition. And it paints a bleak picture for the solar sector if Germany reduces its FIT support. Morbitzer appears in it starting here as a neutral financial consultant from the US. He tells the German audience that solar is making wholesale power cheaper.

How different he sounds in US media. Morbitzer is quoted as an opponent of FITs not only in this recent article, but also in one published last summer. When I asked him last August whether he stood by the statement made in that article that feed-in tariffs are “not suitable for the US” and “net-metering is the best approach” there, he gave an explanation about solar as a technology, not about policy: “In hot, sunny areas, solar power production coincides with demand for air conditioning. Therefore, net-metering is producing some of the highest output when the sun is shining, thereby limiting the need for grid buildups.” Replace “net-metering” in that sentence with “solar,” and the statement makes sense.

Neither FITs nor net-metering shift the time of solar power production, so I asked Morbitzer to clarify the issue. “There is a tendency to overbuild with FITs [meaning that homeowners have solar arrays larger than needed to meet only their own demand], and that might result in additional costs for grid buildup.” Yet, when a power meter runs backwards under net-metering, solar power is also exported to the grid. What Morbitzer actually argues is that the best thing about net-metering for PV is that it keeps homeowners from building too much solar.

While Morbitzer cannot be accused of being a political activist, the second person quoted in the report from last year is Craig Lewis, a campaigner for FITs at the Clean Coalition, who said: “The article definitely misrepresents my position on FITs” (which, he says, is summed up well in this article). The Clean Coalition, he adds, sees a role for both net-metering and FITs because of the “tax implications of wholesale energy sales that most individuals are not prepared to face.” (Note: the tax issues are similar in Germany, but the Germans have never complained.)

But Lewis also conflates policy with technology when he says that “utilities are aggressively attacking net-metering programs because of the load reduction that comes along with the policy.” Again, we are talking here about the impact of solar, which remains the same whether funded by means of net-metering or FITs. US utilities attack net-metering because it is the main policy to promote solar. If the US had blanket FITs, they would attack that policy. What they actually oppose is photovoltaics.

What about Morbitzer’s main recommendation as a market analyst? “Industry should work with what they have in each country.” In other words, he addresses companies, and he wants businesspeople to stop talking about policy and get on with making money so he can do some consulting.

My recommendation? Those who want us to stop talking about policy and get on with business should set a good example and stop talking about it themselves. These folks simply distort policies too much in their descriptions, as I will illustrate further in a subsequent post.

Craig Morris (@PPchef) is the lead author of German Energy Transition. He directs Petite Planète and writes every workday for Renewables International.

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Craig Morris

Craig Morris (@PPchef) is the lead author of Global Energy Transition. He is co-author of Energy Democracy, the first history of Germany’s Energiewende, and is currently Senior Fellow at the IASS.

3 Comments

  1. Robert Youngberg says

    Craig,
    Again an excellent article. Great examples of the ‘red herring’ approach in debate – a seemingly plausible, though ultimately irrelevant, diversionary tactic. 🙂 Another example was at Monday’s Colorado Public Utilities hearing on the net-metering credit for solar (currently 10.5 cents/KWh, proposed 4.6 cents/KWh) where the discussion was focused on net-metering – how it reduces the IOU’s revenue, and changing net-metering from a ‘credit’ to a ‘subsidy’. Very little discussion on what is the real value of solar PV to the environment, the economy, energy futures, health, and what the customer base is willing to pay. You may recall that the customers of the IOUs in Colorado pay a surcharge of 2% to support the 30% RPS goal by 2020. By accelerating the schedule this goal was met in 2013 mostly through wind and various credits and multipliers. The funds (approximately $65 Million per year) were mostly used to support solar PV and were allocated over the first few years of the program. These funds are now obligated to current solar program participants and now the utility would like value solar only on an ‘avoided cost’ basis.
    Cheers!
    Robert

  2. What tax issues? What does the wholesale price have to do with that? Does is make a difference whether the tax is paid for the electricity or the EEG surcharge part of the rate the consumer has to pay in the end?

    I would think the electricity tax would just be paid on the actual electricity sold, and the VAT in addition to that, whereas the EEG surcharge gets only the VAT added to it, right? Wouldn’t that make the rate including taxes cheaper, if the wholesale electricity price drops and the EEG surcharge rises to make up the difference?

  3. Craig Morris says

    Vivi, you become a business in Germany when you get FITs for your solar roof. In the US, you have to pay income tax on proceeds.

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