I’ve you’ve spent any appreciable amount time on our website, you likely know that many state governments sponsor incentive programs to help offset the high costs associated with installing a solar PV system. There are cash rebates. There are renewable energy credits (RECs). There are exemptions for property tax, and sales and use tax. There is net metering and time of use (TOU) pricing schedules. Depending on the options available in your state (and city), it can be a little difficult determining how the programs work and how each one will affect the cost of your system. This is why having a solar whiz by your side is indispensable: an installer from your area will know local and state programs like the back of his or her hand, and can tell you exactly what to expect in terms of final costs. Come to think of it, this is part of what we do here at Getsolar: we help customers find competent, accredited solar installers. Anyway, I digress…

Back to my point. For us, typical consumers, it can be a real pain in the butt trying to decipher the ins and outs of the various local, state and federal incentive programs. There is an approach, however, that rejects complexity: the feed-in tarrif. Implemented most agressively by Germany, the feed-in tariff guarantees a fixed, per-kWh price for all the power generated by a solar PV system over the course of its lifetime. It’s a bit like REC contracts in the U.S., where utitlities agree to purchase the juice produced by your renwable energy system. The main difference, however, is that feed-in tariff prices are set by a government entity (not the market) and are considerably higher than the going rate for retail electricity. For example France, which recently expanded their existing feed-in tariff rates, offers up to €0.30 ($0.38) per kWh for residential systems and €0.55($0.70)/kWh for certain kinds of commercial systems. The going retail rate in France, by comparision, is about €0.14 ($0.18)/kWh.

New York State’s Solar Energy Industries Association (SEIA) recently made its case (PDF) for a statewide feed-in tariff. Specifically, the trade group suggested that the New York State Public Service Commission (PSC) should “transform the current incentive structure from a $/watt install cost rebate to a tariff and performance-based payment system knowns as the feed in tariff (FIT).” NY SEIA‘s comments make it the third state association to push for afeed-in tariff in the past year, joining the ranks of Florida SEIA and California SEIA.

Now, it’s fairly well established that feed-in tariffs provide strong incentive to install solar PV systems. Since adopting a feed-in tarrif several years ago, Germany has witnessed the installation of a staggering 3,000 megawatts of PV power. Owners of PV systems benefit from (1) the simplicity and clarity of the incentive program, and (2) the guarantee of a plum price for all the power they produce. Bottom line: if the per-watt price is high enough, consumers will respond by going solar.

The question becomes, Is a feed-in tariff, which involves the government effectively acting as a price setter, the most efficient means of promoting solar energy? Is what’s good for solar trade groups and system owners good for society at large? Any thoughts?