Most citizens agree that renewable energy is a good thing.
Regular publicity and renewable energy products in big-box retailers have many people believing its time has come. But based on per kilowatt-hour cost, conventional energy is still less expensive than renewable energy in most jurisdictions.
It can be argued we are not paying the full cost of conventional energy.
To some extent, carbon trading programs and carbon taxes are designed to account for more of the environmental costs of using conventional energy, but such programs are not universal in their application.
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It can also be argued that conventional energy has received much assistance over the years – be it subsidies to the development of nuclear energy to funding for carbon capture pilot programs for coal power generation, or tax holidays or reduced royalty regimes for oil and gas exploration.
So what should be done to encourage the development of renewable energy? There are many good examples around the world.
In the developing world, there are small scale lending programs, such as those provided by the Grameen Bank, which provides loans so that individuals can buy a small solar system to provide energy for charging cellular phones with the usage fees being used to repay the loans.
Contrast that with the California program developed under Republican governor Arnold Schwarzenegger: One Million Roofs.
This program is intended to add 3,000 megawatts of “clean energy” by 2018, thereby reducing greenhouse gas emissions equivalent to removing one millions cars from the road.
The program includes requirements for new subdivisions to have a certain percentage of homes equipped with renewable energy systems and provides grants for individual residents who wish to equip their existing homes.
A second Schwarzenegger bill will require electrical utility companies to buy solar generated power at a fixed rate for the next 20 years.
Many other states in the U.S. have created their own systems for encouraging the development of renewable energy sources. New Jersey provides a rebate of 75 cents per watt for solar electric systems and anywhere from 15 cents per watt to $4 per watt (depending on system size) based on capacity of the system and 15 cents to $3.20 per kw/h based on actual production.
Europe has favoured feed-in tariffs (FITs), which pay a fixed amount (much higher than conventional market prices) for production fed to the power grid.
Several countries have had dramatic increases in solar installations resulting from FIT programs. Several years ago, Germany distorted the world market with its incentives so much that demand outstripped supply. Later Spain and Italy developed similar programs.
In the United States, incentives have taken many forms. There are grants, rebates and tax credits. Americans can deduct mortgage costs at income tax time that include energy producing infrastructure they have added to their homes.
Here in Canada there have been different incentives created. Through the federal program Eco-Energy for Renewable Heat there have been grants provided for solar thermal systems.
The grants have been matched one-for-one in Saskatchewan under its SHIFT program and in B.C. for First Nations communities. This system is based on installed capacity of solar heating systems, including solar air and solar pool and hot water systems. The same Eco-Energy program has fit in with provincial programs to assist homeowners with the installation of solar hot water systems to assist with the heating of domestic hot water.
British Columbia and Prince Edward Island have sales tax exemptions for renewable energy systems.
About half of provinces have net metering programs that allow surplus home-generated energy to be sold back into the grid.
While not a strong incentive, at least having energy produced and energy used on par with each other means there is no disincentive, as was the case before net-metering was developed.
Saskatchewan has a generous rebate program of 35 percent of capital cost for grid-tied, net-metering wind and solar systems.
Farm stewardship programs assist with renewable energy systems for watering livestock although the primary purpose for this was to assist with the conservation of riparian areas.
Ontario has taken more of a European tactic with their aggressive renewable energy program using feed-in tariffs. They have committed to eliminating their coal-fired power generators and will replace all that power with renewable energy sources.
The Ontario program is paying up to 80 cents per kw/h for roof-mounted solar generated power (64.5 cents for ground-mounted PV), 13.5 cents per kw/h from wind, and from 13 cents to 16 cents for biogas, biomass, hydro and landfill gas.
The interest and uptake is considerable. Ontario is insisting on a minimum level of energy production and increasing the requirement for the amount of equipment sourced from Ontario-based firms. This is encouraging strong development of solar and wind equipment manufacturing in Ontario.
Renewable energy is creating an industry. Germany, with a population of 82 million, has more than a quarter million people employed in renewable energy production. Canada’s fledgling industry has no figures available, but it is estimated that it numbers a few thousand.
So should renewable energy production be encouraged by the use of grants or other assistance and how should they be structured?
The only jurisdictions where renewables have taken off have been jurisdictions where there has been some type of public involvement and financial incentives. Rebates can be useful but there is really no requirement for the system to be maintained. Once the
rebate has been paid, it is possible for the system to be sold. The feed-in tariff program means that a power producer is paid for power only if it is delivered to the grid. That seems like a better expenditure of public funds.
Electrical power production through solar energy is most often the focus of incentive programs, but solar thermal (heating) deserves much more attention. Every one uses hot water and solar heating can serve building spaces as well.
Some of Canada’s grants expire at the end of March 2011 and it will be interesting to see what happens with the deficit-strapped governments when it is time for the new budgets.
Will Oddie is a renewable energy, sustainable building consultant with a lifetime interest in energy conservation. To contact Oddie, send e-mail to energyfield@producer.com.
