As we approach the 3rd anniversary of Ontario’s “Feed-in-Tariff”, we just passed an anniversary that probably isn’t on our minds. Oct. 14th was the anniversary of Hermann Scheer’s death. Scheer was known by many names in the theme of “solar king” or the “sun god”. But in Ontario, we can think of him as the “Father of the Feed-in-Tariff”.
In the year 2000, he was successful in introducing a feed-in-tariff (FIT) in Germany. And now, today there are about 80 FITS in the world; about 15 of them nationwide. The concept of a FIT in Ontario is new, but astonishingly, 75% of all solar PV in the world was developed under FIT programs. And it doesn’t stop with solar. Denmark’s fame in the wind power world was built by local cooperatives dominantly under a FIT framework. 45% of all wind power was built under FITs.
So there’s a snapshot of what FITs have accomplished. It’s a good time to look back on where the concept of a FIT came from.
Scheer’s perspective is that solar energy is “the most important necessity for upholding the natural foundations of life, as well as for new lasting economic and development politics.” He believed that solar energy was not a technical or economic problem but a political one and spent much of his life lobbying governments to adopt clean energy policies.
FITs around the world have seen success and failure, but a well-designed FIT can be described as such. The purpose of a FIT is to bring down the price of a renewable energy source. The creation of long term contracts to sell renewable energy creates certainty for renewable energy generators and investors. That certainty helps an industry to develop that over time brings down the cost of components and labour, in turn reducing the price of a solar installation. As this price drops, the FIT rate that the electricity is sold for can lower accordingly. The lowered FIT rate maintains competition in the marketplace to develop components and install for less.
Eventually the FIT rate will start to stabilize. In Germany today, the FIT rate is LESS than the retail cost of electricity. At first glance, lowered FIT rates can look like a bad sign. But if the FIT system is working, lowered rates are a sign of success. The cost of renewable energy has been reduced through the FIT mechanism, which was the initial goal.
Thank you Hermann Scheer for you perseverance in championing the FIT – or what some call Scheer’s law.
A great video and interview here – well worth watching: