Incentives for each energy source based on current production costs

A very important proposal that would require utilities to buy power from small-scale renewable energy producers was suggested according to the New York Times by two Democrats in the U.S. House:

Reps. Jay Inslee of Washington and Bill Delahunt of Massachusetts are preparing a bill that would require utilities to purchase small-scale renewable energy from developers at rates equal to the cost of production plus a premium. The so-called feed-in tariffs proposal would set European-style guarantees for investors that many credit for a recent boom in solar energy in Germany.

 “We have some brilliant Americans with brilliant business plans with brilliant technologies, but they don’t have financing,” Inslee said at a briefing last week on Capitol Hill. “The charm of the feed-in tariff is solid, take-it-to-the-bank security and confidence for the investing community.”

Proponents say feed-in tariffs can be more effective than renewable-energy standards, such as the one included in the House climate bill by Democrats Henry Waxman of California and Ed Markey of Massachusetts, because they offer staggered rate incentives for each energy source based on current production costs. The initial rate that utilities would pay for solar energy, for example, would be higher than payments for less-expensive wind energy.

Backers of the bill also point to the model in Germany, where, after passing its own Renewable Energy Sources Act in 2000, Germany was able to become the world’s largest market for photovoltaic systems and wind energy and more than doubled its supply of renewable energy between 2000 and 2007.