Feed-in Tariffs for Renewable Energy Production

To implement feed-in tariffs for renewable energy production, Kentucky would set guaranteed rates for specific types in-state renewable energy production. Utilities would then purchase the energy at these rates, counting purchases towards their REPS goal. Initial rates guarantees would be based on cost of production plus a reasonable return for investors. As production costs decrease over time, rates would similarly decline. Utility customers fund the tariffs through a small charge on monthly bills. Feed-in tariffs encourage private investment in renewable energy technologies because payback is assured. Considered a “production-based incentive”, they have successfully grown renewable energy markets in 20 countries and several U.S. states. Feed-in tariffs will enable Kentucky communities and households to produce small-scale, locally-based renewable energy with less financial risk and less up-front money and to create dynamic local jobs.

KySEA recommends that Kentucky:

• Ask the Public Service Commission to establish rules and guaranteed rates (called feed-in tariffs) for specific types of in-state renewable production.
• Set those rates at a level high enough to incentivize private investment in solar, wind, low-impact hydro and low-impact biomass technologies. (The PSC would lower rates over time as technologies mature.)
• Require utilities to purchase in-state renewable energy at those rates with 10-20 year contracts.
• Allow renewable energy produced through Production-based incentives to count toward utilities’ REPS requirements.