Feed Laws

Debunking Myths about Feed-in Tariffs

November 2, 2009
Michael T. Eckhart

Michael Eckhart, ACORE, on the RWI "study" of German FITs


The government in Germany has changed from the coalition that created the Feed-In Tariffs to a conservative coalition that opposed the FIT at the time, and favors a return to nuclear power and coal-fired power generation. Naturally, then, they are beginning to spread an argument against the FIT – actually, because it has been so successful at creating a surge of renewable energy development and thereby negating the need for coal and nuclear. So, they figure, if they are to justify coal and nuclear, they must first discredit the FIT.

But they cannot escape the facts of the matter. Sources in Germany tell us that the FIT has added 3% to the total electricity rates being paid in Germany. This is true. But it has created so much new business in Germany that it has created even more money in new tax revenues from the wind, solar and biomass energy businesses. So it is a “net plus” to the country. It more than pays for itself!

In fact, the wind, solar and biomass industry in Germany now employs some 280,000 people. It is given credit for saving the reunification of East and West Germany, by employing so many people in East Germany and creating such exports.

The U.S.-based Institute for Energy Research and the German think tank, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, are both well-respected right-wing institutions, and we can expect them to promote their point of view. They will do so.

We need to respect our opponents, not try to win by saying they are lying. This is like major league baseball. The other side is pitching hard, trying to win. But we will win if we adhere to the facts and present our case just as persuasively. I think we in renewable energy have more home run opportunities, while they are bunting and hitting singles because they actually do not have the facts to support their arguments – they are selling the same story they did in the 1970s, and they lost then. They will not win now, not with the same old tired stories. The fact is - we have the better story of the day.

For example, ACORE recently completed a renewable energy plan for the State of Kansas. The state has a 10 GW peak load. Did we prose a 20% RPS? No, we proposed a 200% RPS, that is, producing some 20 GW of wind, solar and biomass energy and exporting the clean energy into the Southwest Power Pool and into the Southeastern region. The analysis showed that, if implemented from 2010 to 2030, Kansas would receive $23 billion in economic activity, including $7 billion of payroll to 12,000 new employees in the state. I said, we are not against coal-fired power, indeed, if coal can beat those numbers, then the state should go that way. But if coal cannot deliver $23 billion of business, and $7 billion of payroll to 12,000 new jobs, then I say the state should go with renewables.

Germany made the same calculation back in 2002-2003 when the FIT was being developed and refined by Hermann Scheer, Hans Joseph Fell, and others in Germany’s government. I worked with them at the time, teeing up the idea that the FIT could be like PURPA, except they could use the same argument that nuclear power used – to get rates based on “revenue requirements” that provided full cost recovery and a return on equity. Hey, why can’t renewable energy get the same deal that nuclear power got? Well, that’s all a Feed-In Tariff is – a rate based on full cost recovery and a return on equity, fair and square. Our friends in German won the argument, not because they were better politicians, but because they had the better argument. They had the facts. They had a better proposal for their country. And, then, they delivered on it.

We can do the same. We have the same argument. We have the same proposal. And if we press our case and not yield to competitive presentations, we will win the day, too.

We really do have a better proposal for our country.

On a recent trip to China, I sat next to a nice engineering-looking guy from Arkansas, so I struck up a conversation, being an engineer from the Midwest myself. He was a utility engineer, traveling to Tianjin, to inspect the new coal-fired boiler being built there for Arkansas Power & Light. Imagine, a new coal-fired power plant for America, being fabricated in China! So don’t give those folks any breathing room – they do not offer business and jobs for the United States – we do!

Then, I had a conversation recently with some friends in the nuclear power business and asked where the nuclear power plants would come from if we DID begin to build them. The answer was amazing. The super-pure stainless steel will come from Germany, and it would be fabricated into steam-supply-systems in China, and the overall contractor would probably be Mitsubishi from Japan, and the construction contract would probably go to a firm in Korea that would send workers to the U.S. Well, I said, what’s in it for the U.S.? They laughingly said: “the spent fuel.”

So, my friends, we do not have to be against coal and nuclear to be for renewable energy. Just present our case because it is in fact the best case. We can build megawatts on 12-month notice. It is clean and responsive to climate change. We employ local labor and can source equipment (increasingly) from the U.S. We are a good deal for climate, the environment, domestic energy supply, local wealth creation, and new business and jobs.

Our opposition will promote a story against renewable energy and the policies that make us successful. But, I believe that, if we press forward with the facts about renewable energy, and how the Feed-In Tariff has worked successfully to give Germany those jobs, well, the story speaks for itself. If any of our states want those jobs, they might try the Feed-In Tariff. Some states will try it. Those that wait, well, they risk getting nothing. I think more states will try it. We will win this if we keep after it.

Thanks to all who are working on this.

Best regards,

Michael T. Eckhart, President
American Council On Renewable Energy (ACORE)
Tel: 202-393-0001, x7581

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