California’s Feed-in-Tariff

What’s the scoop on the California Feed-in-Tariff?

Like Germany and Spain, which saw huge growth in solar power after adding Feed-in-Tariffs (FITs), California now has a similar incentive program. California homeowners with solar panels can be paid by their utility for the extra solar energy they produce, over 10, 15, or 20-year contracts. The FIT is available for any customer of an investor-owned utility (like Southern California Edison, Pacific Gas and Electric, or San Diego Gas and Electric) or any publicly-owned utility with 75,000 or more customers. The state has required utilities to get 20% of their power from renewable energy by 2020, and the FIT program is intended to help them reach that goal.

How much can I be paid?

The rate of payment is based on the ‘market price referent’ (MPR), a price that’s determined periodically by the California Public Utilities Commission. The amount is also based on the year you sign up and the length of your contract. Based on the 2009 MPR, someone signing up for a 20-year contract could earn a base rate of close to 10 cents per kilowatt-hour, which is multiplied by another number depending on the time of day– you’ll earn more during peak electricity periods, as we explain in the next section. The amount you earn will also depend on how much extra energy you produce. Keep in mind that because California law doesn’t allow you to build a solar system that produces more than 100% of your energy needs (based on your past electricity bills) you won’t be producing extra energy unless you make energy efficiency improvements.

What’s the “Time-of-Day” factor?

Your utility will multiply the amount you earn by a number based on the time of day and season. During the middle of the day in summer, when electricity demand is typically the highest, you’ll earn more money. Conveniently, this is also the time when your solar panels will probably be producing the most power.

How is California’s FiT different from ones in Europe?

The price paid in California is much lower than what someone can earn in a place like Germany. In Germany, the current tariff ranges from 25-34 eurocents per kilowatt-hour (about 32-44 cents), and that’s a reduction from earlier rates. The prices in European FIT programs have caused major solar growth there, while few Californians have signed up for the FIT so far.

Can feed-in-tariffs be used along with other incentives?

The FIT can’t be used if you’ve received a rebate from your utility for your solar panels, or if you’re participating in other utility solar incentive programs or the California Solar Initiative. It also can’t be used if you’re receiving a net metering tariff. You can use it along with the federal solar tax credit. Because of the rates on the FIT program, many homeowners are choosing to use other solar incentives instead. Depending on the rates set for the California Solar Surplus Act, that may be a more attractive way to be paid for the energy extra you generate. If you’re interested in learning more about the California FIT, check with your utility company, or sign up and we’ll give you a call.