FiT Fundamentals: The LABC and Coalition Partners Guide to a Solar Feed-in Tariff Policy for Greater Los Angeles
LABC Solar Feed-in Tariff Coalition:
CLICK HERE to download our second study, Bringing Solar Energy to Los Angeles: An Assessment of the Feasibility and Impacts of an In-basin Solar Feed-in Tariff Program
CLICK HERE to download our first study, Designing an Effective Feed-in Tariff for Greater Los Angeles
What is a solar Feed-in Tariff (FiT)?
Mary Leslie, President, LA Business Council
A solar Feed-in Tariff program allows businesses, public and non-profit organizations, and residents to install solar panels on their roofs and parking lots and sell the power generated back to the local utility. Participants receive a payment back from the utility for each Kilowatt-hour fed back into the power grid. FiT programs can generate a cost-effective source of renewable energy, create local jobs, and bring in revenue for businesses and ratepayers. Successful FiT programs have been put in place around the world. LABC has singled out programs in Germany and Gainesville, Florida as particularly effective models that Los Angeles should look to emulate.
Why did the LABC commission a study to explore the feasibility of a solar Feed-in Tariff (FiT) in Los Angeles?
Brad Cox, Senior Managing Director, Trammell Crow Company and LABC Chairman
Regional utilities will have to quickly switch to greener sources of power in the face of new regulatory requirements and rising fossil fuel costs. Recognizing this need, LABC members sought to identify the most effective options for meeting the region’s renewable energy goals. LABC commissioned JR Deshazo, Director, UCLA Luskin Center for Innovation, and Ryan Matulka to study the potential benefits of a FiT program in Los Angeles. Their first study, Designing an Effective Feed-in Tariff for Greater Los Angles (CLICK HERE to download a PDF of the study), was released at the LABC’s April 6th Sustainability Summit. This study validated an ambitious FiT as one of the smartest investments Los Angeles can make to create a cost-effective, locally generated source of solar energy and grow our green economy.
A second study will be released July 8, 2010 that will focus on the cost and scalability of a FiT in Los Angeles. Below is a quick reference guide on the FiT based on information found in the LABC/UCLA study, as well as links to information on the web.
What should a solar FiT look like in LA?
Cecilia Aguillon, Director, Market Development and Government Relations, Kyocera Solar
The LABC has called for the City of Los Angeles to create the largest FiT program in America, adopting a policy that would generate 600 megawatts of electricity within ten years. This program would meet three percent of the city’s energy needs, create more than 11,000 local green jobs and produce long-term cost-savings for businesses, ratepayers and the LADWP.
An effective program would offer a streamlined application procedure and long-term FiT contracts with adequate incentives to bring in a wide-range of participants, which will be necessary to generate consequential amounts of solar energy, attract clean-tech manufacturers to Los Angeles and create significant numbers of local jobs.
Why would businesses participate in a FiT program?
Ron Gastelum, Vice Chair, Board of Public Policy, LA Area Chamber of Commerce
Cost Saving Opportunities: A solar FiT program will allow a business to offset their rising fuel costs while partnering with public utilities to meet renewable energy goals.
Long-term returns: Over the life of the FiT contract, a well-designed program would allow businesses to recoup the upfront cost of installing solar panels on their property, plus a rate of return of five to eight percent.
Tax credits: Businesses could leverage federal tax credits to cover approximately 40 percent of the costs of installing solar panels on their property.
Access to project financing: A FiT program would facilitate access to project financing for businesses by providing a predictable revenue stream, helping them to overcome what is often one of the biggest challenge facing renewable energy projects.
What is the benefit for Los Angeles?
Councilwoman Jan Perry, Chair, Energy and Environment Committee, City of Los Angeles
Ronald Johnston, PhD, Executive Director, Union Roofing Contractors Association
Ratepayer cost-savings: Future solar installation costs will continue to fall at the same time that fossil fuel costs will rise. Our study finds that ratepayers will save money over the long-term because a solar program will begin to produce energy more cheaply than the utility’s other potential sources of power within five years.
Regulatory climate: California law, AB 32, will require all utilities to meet 20 percent of their power needs with renewable sources by the end of the year, a mandate that will soon increase to 33 percent. A FiT program could be an important component in helping utilities to meet renewable energy goals.
A magnet for clean-tech manufacturing: A FiT program would signal a long-term political commitment to greening Los Angeles and could be used as an incentive to attract clean-tech firms and manufacturers to our region and keep them here. Germany—which is home to the world’s largest solar market despite its relatively marginal sunlight— has used a nationwide FiT program to help generate more than 100,000 jobs and build a robust green economy.
Job creation: A FiT program would create more than 11,000 high-wage private sector jobs to install, maintain, repair, assemble and manufacture solar panels inside the Los Angeles basin.
How could the LADWP pay for a FiT program?
Janet Gagnon, Government Relations Manager, SolarWorld
A well-designed solar FiT would be cost-competitive with existing renewable programs inside the department’s Renewable Portfolio Standard – and could be paid for immediately with funds designated for this portfolio. A well-designed FiT would generate energy at lower cost than fossil fuels within five years.
What are the environmental and community benefits of a solar FiT program in Los Angeles?
Mary Luevano, Director of Policy and Legislative Affairs, Global Green USA
A FiT program would harness our region’s abundant sunshine and thousands of acres of available rooftop space to create a powerful source of locally generated, clean, solar energy, helping the City of Los Angeles to green its power supply, reduce carbon emissions and create 11,000 jobs, while producing savings for ratepayers over the long-term. By increasing the number of solar installations across the region, a FiT would provide residents with a tangible example of how individual residents and businesses can play a part in greening Los Angeles.
Is there support for a FiT in Los Angeles?
Mayor Antonio Villaraigosa, City of Los Angeles
Yes. Mayor Villaraigosa first proposed a FiT for Los Angeles in August 2009, and re-introduced it in early March 2010. Leaders on the City Council, including President Eric Garcetti and Jan Perry, who chairs the Energy and Environment Committee, have expressed their support for this initiative, as has City Controller Wendy Greuel. A wide range of organizations and community stakeholders have endorsed the program. This coalition includes the American Institute of Architects, Los Angeles Chapter (AIA|LA); Building Owners and Managers Association (BOMA) of Greater Los Angeles; California Solar Energy Industries Association (Cal SEIA); Global Green USA; Los Angeles Area Chamber of Commerce; Los Angeles Family Housing; Sierra Club; Union Roofing Contractors Association; and a host of private businesses.
Coalition and National/Local Expert Testimonials
"The time is now for the City of Los Angeles and the LADWP to adopt a Solar Feed-in Tariff policy that allows business and non-profits to finance renewable projects in Los Angeles, control their escalating energy costs, create high-wage clean tech jobs, and comply with renewable energy mandates."
- Mary Leslie, President, Los Angeles Business Council
"As an organization committed to encouraging the creation of a clean energy economy, the Rockefeller Brothers Fund strongly supports the Los Angeles Business Council’s concrete guidelines for a solar Feed-in Tariff (FIT) program, which draws on comprehensive academic research conducted by UCLA. This research shows that a successful program must offer businesses and nonprofits clear FiT contracts at a fair price and guaranteed access to the electrical grid to produce the maximum amount of cost-effective solar energy."
- Michael Northrop, Program Director, Rockefeller Brothers Fund
"Our main goal in Gainesville was to dramatically increase our deployment of solar energy, and to create jobs in the process. We looked at all of the options available to us, and how they had worked in other jurisdictions, and decided that a feed-in-tariff was the most transparent and effective tool. We have been overwhelmed at the success of the program, and have seen a six fold increase in the deployment of solar PV in our city in just over a year. Given this success, I see the FIT as worthy of consideration for any community seriously committed to advancing renewable energy, as so many in California are."
- Pegeen Hanrahan, former Mayor Gainesville, Florida
"Widespread adoption of FITs is the quickest and most efficient way to eventually relieve the federal government of the financial and administrative burden of offering and administering the ITC. In this sense, FITs will save the taxpayer money by over time shifting the financial burden from federal subsidy to traditional utility cost recovery, while at the same time hastening the shift to true grid parity which will save everyone money."
- John Crider, Gainesville Regional Utilities - Strategic Planning
"There is strong evidence that Advanced Feed-in Tariff (FiT) programs that exhibit Transparency, Longevity and Certainty (TLC) can clearly reduce project risk, allow renewable energy developers to obtain a lower cost of capital, and create new jobs. Core elements of successful FiT policies are: guaranteed payments, must take rules, differentiated payments by resource based on generation cost, long term payment tenures, and periodic digression toward grid parity based on changes in industry fundamentals. Such policies have proven effective in ensuring a volume response to support energy and climate targets. Nowhere has this been more apparent than in Germany, which is currently the world’s largest solar market."
- Mark Fulton, Managing Director, Global Head of Climate Change Investment Research, DB Climate Change Advisors
"At this time of record unemployment, it is crucial that our policymakers make strategic decisions today to create good jobs in Los Angeles. Our public and private leaders must act now on an ambitious Solar FiT program because it will spur the growth of high-wage jobs across a range of green industries in the region. It’s time to finally roll up our sleeves and do the hard work of getting people to work in the green- tech sector." —Mike Massey, Executive Vice President of the National Inspection, Testing and Certification Corporation, a Los Angeles-based business that provides training and certification of workers in the skilled plumbing, piping, and air conditioning industries, many of which are employed in the green building sector
"A well-designed FiT would offer real incentives for local businesses to green their operations, achieve significant reductions in operating costs and receive a return on the capital invested in installing solar panels. This is a clear opportunity for collaboration between business and government to meet our renewable goals by capitalizing on our region’s abundant sunshine and thousands of acres of available rooftop space."
- Brad Cox, Senior Managing Director for Trammell Crow Company
"If the correct design guidelines are put in place, ratepayers will save money over the life of a ten-year FiT program as the cost of installing solar panels continues to fall and the price of fossil fuels rises.Moreover, developing the country’s largest Feed-in Tariff would signal a long-term political commitment to greening Los Angeles that could be used as an incentive to attract cleantech firms to our region and keep them here."
- UCLA Professor J.R. DeShazo, Director of the UCLA Luskin Center for Innovation
For more than a decade, the LA Business Council (LABC) has served as a leading voice for sustainability in Los Angeles. LABC has assembled major coalitions to adopt some of Los Angeles’ most important environmental public policy initiatives, including major programs to improve regional energy efficiency and water conservation, the City’s landmark Green Building Ordinance and the Clean-Tech LA Consortium. Most recently, LABC advocacy efforts have been focused on meeting renewable energy goals at the LADWP by adopting a solar Feed-in Tariff program.
Driven by a membership that includes many of the region’s most successful early adopters of sustainable business practices — such Arden Realty and Forest City — LABC actively promotes the development of Los Angeles’ green economy through public-private partnership. The organization educates business about the cost-savings that can result from implementing green business practices through regular publications and educational events such as an Annual Sustainability Summit, an ongoing Sustainability Breakfast lecture series and quarterly energy efficiency and water conservation workshops.
