Prices for solar and biogas introduced in the Michigan Renewable Energy Sources Act would be the best in North America.

Patterned after Germany's highly successful Renewable Energy Sources Act, Veteran Michigan Assemblywoman Kathleen Law submitted a bill to the Michigan House of Representatives earlier this week that creates the first comprehensive renewable energy feed-in tariff (FIT) introduced into any U.S. legislature.

The proposed tariffs or payments for solar energy in the Michigan bill are more than 50% greater than the equivalent tariffs in Ontario, currently the highest in North America. Likewise, the proposed tariff for biogas is nearly one-third greater than that in Ontario.

Like the German law which has powered the country to world leadership in wind, solar, and biomass energy—and created nearly one-quarter million new jobs in its booming renewable energy industry—proponents of the bill are hoping the tariff will revive Michigan's flagging economy.

"We are extremely excited that Michigan has joined the ranks of so many progressive states in making the commitment to reduce our carbon footprint," said Subhendu Guha, President of United Solar Ovonic, which is headquartered in Michigan and is a leading manufacturer of thin film solar cells. "Policies like this will create new jobs in Michigan and will help maintain a cleaner environment."

The tariffs proposed in HB 5218 (2007) are equivalent to those in Germany and would be the highest in North America if the bill is made a law.

• Hydro less than 500 kW: $0.10 USD/kWh
• Biogas less than 150 kW: $0.145 USD/kWh
• Geothermal less than 5 MW: $0.19 USD/kWh
• Wind: $0.105 USD/kWh
• Wind energy from small wind turbines: $0.25 USD/kWh
• Rooftop solar less than 30 kW: $0.65 USD/kWh
• Solar façade cladding less than 30 kW: $0.71 USD/kWh

Other legislatures in the U.S. and Canada have considered or are reviewing similar FIT programs. The province of Ontario launched its Standard Offer Program (SOP) in 2006, and a bill for solar energy tariffs was introduced into Hawaii's legislative assembly earlier this year. However, neither are as comprehensive as the FIT proposed by Assemblywoman Law.

While Ontario's SOP is seen as a very important step for FITs in North America, the proposed tariffs for solar energy in the Michigan bill are more than 50% greater than the equivalent tariffs in Ontario. Likewise, the proposed tariff for biogas is nearly one-third greater than that in Ontario. The Michigan proposal also includes tariffs for geothermal energy, a technology not covered by Ontario's SOP.

Renewable tariffs, like those in HB 5218 (2007), encourage homeowners, farmers, and businesses to sell their renewable energy for a profit by allowing them to "feed"

their electricity into the grid. Many people call such tariffs "Advanced Renewable Tariffs," because the price paid per kilowatt-hour of electricity differs by technology.

For example, because solar is more expensive than wind on a cost per watt basis, the tariff for solar energy is much higher than that for wind energy so that homeowners can profitably install solar panels on their roofs across the state.

HB 5218 (2007) is also the first bill to propose wind tariffs differentiated by wind resource intensity, as is used in France. These differentiated tariffs limit potentially excessive profit from commercial wind farms at windy sites while allowing profitable development in less windy areas. This is important in a state like Michigan so farmers in the interior of the state can profitably develop their wind resources.

The bill has been referred to the Committee on Energy and Technology. Before becoming law, the bill must pass both the House and Senate and must be signed by Governor Jennifer Granholm who has made renewable energy a key element of her administration.

In the spring of 2007 Governor Granholm traveled to Germany. After returning she was quoted in the Detroit News as saying, "In Germany they created 170,000 jobs by changing the incentives for the use of wind and solar. We ought to be doing the same thing in Michigan."

Published September 21, 2007

by Paul Gipe

Lansing, Michigan [RenewableEnergyAccess.com]

Editor's note: The HB 5218 provisions document states $0.025/kWh. This is a printing error.

Paul Gipe is a wind industry analyst who has written extensively about wind energy for both the popular and trade press.