Feed-in Tariff Law Under Review by Public Utilities Commission

July 23, 2009 at 11:18 pm Leave a comment

Maui Weekly, June 11, 2009
by Sohpie Cocke

Imagine Maui 10 years from now completely energy independent. Instead of relying on overseas oil to power our cars, homes and businesses, wind turbines, solar panels, and sugarcane would provide us with all the energy we need. And it would be cheap!

This is the vision of Chris Mentzel, founder of Clean Energy Maui, who has been advocating for a comprehensive energy policy that would sever Hawai‘i from its dependence on oil.

“It takes a whole new thinking and disengagement from the old energy sector,” said Mentzel, who argues that small, incremental steps to prod Hawai‘i’s energy companies into embracing renewable energy sources won’t work.

A native of Germany who has spent the past 18 years in Hawai‘i, Mentzel is in a unique position to speak about innovation. Germany has been at the forefront of developing an economic model that supports renewable energy. A cornerstone of the government’s policy is a law called a Feed-in Tariff (FIT), and it is this law, now under review by Hawai‘i’s Public Utilities Commission, that Mentzel hopes will be implemented here in Hawai‘i in September.

The FIT law has two main components: It would pay a fixed amount per kilowatt of renewable energy under a 20-year contract, high enough to maintain profitability, and it would guarantee the energy project a connection to the electric grid.

Passed in Germany in 2000, FIT has been instrumental in the country’s switch to 18 percent renewable energy, and the percentage is expected to jump to 45 percent by 2030. Not only that, the legislation has created 300,000 jobs.

What FIT aims to do is provide space for entrepreneurs in the renewable energy sector to put their projects into practice.

“You have to allow companies to enter the market profitably,” said Mentzel. “That is the brilliance of FIT. It grows an industry out of nowhere.”

FIT has now been implemented in 38 countries, was recently passed in Maine, and is under review in Vermont.

Environmentalists and energy policy experts have long argued that it is not the lack of viable alternative energy ideas that has prevented the United States from switching to new energy sources, but rather the monopoly that large fossil fuel companies have held over the energy sector. Oil and coal companies make huge profits, and their lobbyists in Washington have fought hard to prevent competition from alternative energy companies.

According to Joe Hommel, who worked for years in anti-trust law and utilities regulation on the mainland, a major myth is that alternative energy must be subsidized because it’s too expensive, whereas oil is cheap.

“The thing I’m appalled by is when I read that sun, wind, and alternative energies need to be subsidized,” said Hommel at a recent South Maui Sustainability meeting, a grassroots advocacy organization convened by Mentzel for like-minded residents. Hommel argues that the cost of oil is actually much greater than the cost of renewable energy sources. The low price of a barrel of oil does not take into account all of the external costs of oil dependence, including federal subsidies, military expenditures to protect our oil interests overseas and the immense environmental costs associated with pollution and global warming.

“If we knew what oil really costs, there would be plenty of revolution in this industry,” said Hommel.

According to a recent study by the Rocky Mountain Institute, a nonprofit energy policy organization, the external costs of oil add an additional $39 to $174 per barrel, increasing oil costs by 50 to 250 percent. The institute considers this a conservative estimate.

As a limited resource, the cost of oil will continue to rise. The Association for the Stuoly of Peak Oil and Gas, a global organization of scientists, predicts oil production to enter a terminal decline as early as next year.

Despite concerns about the rising costs of oil and its depletion, neither the United States or Hawai‘i have managed a switch to alternative energy. According to Hawai‘i’s Department of Business, Economic Development, and Tourism, the state still relies on imported oil for 90 percent of its energy needs.

Mentzel and local supporters hope that the FIT law will change this.

“Hawai‘i is a real mecca for scientists and a lot of visionaries that come up with products and better ways of doing things,” said Frank Vaiuso, a marine biologist from California, who also attended Mentzel’s meeting.

Hawai‘i is an ideal location for many scientists and energy experts to experiment with renewable energy projects. It is geographically contained, has an abundance of sun, wind, and water, and is not controlled by the major, transnational energy companies.

“I see Maui as a model for how the rest of the world can be green,” said Vaiuso.

The effects of fossil fuel dependence and global warming are posing a growing threat to the Hawaiian Islands. Scientists predict that rises in the ocean level will erode our beaches and the warming ocean temperature will continue to destroy the delicate equilibrium of the surrounding coral reefs. If current trends continue, it is expected that two-thirds of the Northwestern Hawaiian Islands, encompassing a 1,200-mile archipelago, will be submerged by 2100, threatening the survival of the rare monk seal, green sea turtles, and bird species, such as the Laysan finch, only found in this natural preserve.

“Two or three years from now things could be very dire,” said Vaiuso. “We have to make some big decisions now.”

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Entry filed under: Renewable Energy.

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