By Rachel Johnson
The average cost of electricity for a German household has risen by 66 percent since they established a feed-in-tariff (FiT) system in 2000.
A recent opinion piece in this paper suggested that Michigan should look to Germany as a model for future energy policy. The author, Patrick Timmons, pointed to the boom in renewable generation in Germany — last year 25 percent of Germany’s electricity came from renewable sources, up from 6 percent when the policy was enacted in 2000.
The FiT system has effectively incentivized renewable generation, but at a cost. To understand the cost, we must first consider exactly how a FiT works.
FiTs are a generic description for a policy that pays a price, a “tariff,” for the electricity generated by renewable sources of energy that is “fed” into, or sold to, the grid. The FiT rate is what the person who generated the electricity is paid for the energy they create.
Consumers who generate electricity sell it all onto the grid at the FiT rate, they then buy back their own electric usage at the market rate. The requirement for utilities to buy electricity for as much as twice what they can sell it gets passed on to ratepayers.
Tariffs are not taxes; they are set rates paid for commodities like electricity. Germany’s FiT rate is based on the cost of generation plus a 5 to 7 percent profit.
Some might argue that FiTs are worse than taxes. They are government-mandated fees assessed to ratepayers without regard to income. This makes them very regressive; lower-income families who may already struggle to keep the lights on are most vulnerable to rising electricity costs.
At Cherryland Electric Cooperative, we have an abiding commitment to doing what is best for our members. Often, that means defending their access to affordable and reliable electricity. That’s why we are so excited about our new community solar project.
The community solar concept works exactly like a cooperative. Interested members purchase shares in a community solar array installed at our office in Grawn. For every share purchased, we install an additional solar panel. The infrastructure costs (racking, installation, etc.) are distributed amongst the participating members. In return for their investment, members receive a return based on the output of the array.
Using a model that has served rural America well for 75 years, we can make solar energy available as affordably as possible. Most importantly, this model doesn’t pass additional costs on to Cherryland members who choose not to participate.
Rather than look to Germany for energy benchmarks, I would argue we need look no further than our own backyard. Co-ops are not just products of a proud past. These days, Americans from all walks of life have come to recognize the co-op approach - members working together to achieve price and service benefits - can work for other needs just as effectively as it delivered affordable power to rural Americans 75 years ago.
About the author: Rachel Johnson is the Grassroots Advocate at Cherryland Electric Cooperative and has taught communications at Penn State University, Pepperdine University and Northwestern Michigan College.
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