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Here are some questions I recently received regarding feed-in tariffs. You can download a flyer of this post here.

QUESTION: Who measures the kWh produced and pays out the appropriate feed in tariff amounts earned to the multiplicity of green producers? Who collects the money from other utility customers which are redistributed via feed-in tariff payments? Finally, is there any regulatory oversight?

MS: I believe the prevailing practice in Europe is to task the utilities with reading the meters and making tariff payments. Utilities are, after all, the ones signing the 20-year power purchase agreements at the tariff rate. Utilities are also responsible for billing and collecting the monthly charges that fund the tariff payments. Paying generators for kilowatt-hours and adding surcharges to bills are things that utilities do in their normal course of business anyway, so the regulatory oversight of these activities under a feed-in law isn’t really an added burden.

I can think of several ways to improve on the European tariff model. First, the funding to cover tariff payments should not be collected using throughput-based surcharges on utility bills unless it can be done in a way that isn’t economically regressive. Given the widespread economic benefits that result from the tariff, there may be a good case for collecting the revenues for it via the tax base rather than the rate base.

Second, the tariff rate offered should be based on the locational strategic value of the generator to the grid. If it’s downstream of a bottleneck such that it frees up needed capacity and delays or obviates a line upgrade, it’s worth more. At the end of a long feeder that sags under load, or in a place that needs VAR support, it’s worth a lot more. The Electric Power Research Institute has software models and reports showing how to assess the value of strategically placed resources.

Finally, the tariff should be used to meet other objectives, rather than just being a tool to promote renewable energy. This can be done by setting qualifying standards for the tariff program. For instance, the tariff language could require that each generator be owned within the community where it is located, which would increase local retention of energy dollars. As another example, biomass generators could be required to have an independent certification showing that the wood was sustainably harvested. The possibilities are endless.

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The amount of money leaking out of communities to pay for natural gas is rising as the price of natural gas rises. Even little Santa Fe County, New Mexico, with about 42,000 residential gas accounts, now loses more than $40 million annually as residents purchase the non-local heating fuel. Numbers from the analysis done by Local Energy are shown below, and a flyer for distributing the data can be downloaded here. I'll work on getting commercial numbers too.

Question: What can communities do to begin getting their heating needs met locally?

Many commercial facilities -- especially schools and large commercial buildings -- already have hydronic heating systems, with the water in most cases heated using propane or natural gas. Every large facility building with hydronic heating should install a Thermal Access Port™ in the facility’s boiler-return pipe to enable energy from an outside source to be injected into the building. A revenue-grade BTU meter must be installed across the heat exchanger to track the energy delivered to the facility. Local Energy installed such a system at the Santa Fe Community College, and successfully tested the system. Installation of the port cost less than $12,000, including engineering, parts, and subcontract labor. See Figures 1 and 2.

Figure 1. Installation of a Thermal Access Port™

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Every day, an enormous amount of energy arrives at the earth from the sun. Energy from the sun builds balanced and resilient ecosystems, enabling millions of species to coexist and evolve.

Every day, a tiny amount of energy is pulled out of the earth. Energy from oil, gas, and coal is used to build systems so destructive that millions of species are now threatened.

Is there something in the nature of these energy sources that accounts for the different results? Can we identify any characteristics of the sun’s energy that contribute to its propensity to build robust living systems, or find characteristics of hydrocarbon fuels that tend to build imperiled ones?

This website examines the parallels between energy infrastructures and social structures, and looks at the ways energy policies shape society. Centrally controlled energy systems are essential for maintaining centrally controlled political power, and those with a hand on the switch control the power. Although this is often acknowledged, the reduction of it is rarely uttered: if we want power to reside with the people, we must literally put the people in charge of the power. Democratic energy policies are essential if we are to have democratic governance.

Throughout the world, communities are empowering themselves by building energy systems that are owned and managed by the local community. Entire regions are becoming more secure not through military or political means, but by building community-based energy systems fueled by locally available resources.

There are no fuzzy green solutions to the energy predicament we are in, and we need to get beyond the point of talking about minor course corrections. Instead, the energy discussion needs to be reframed around building communities that can once again live in harmony within the larger community of life on the planet. This is the challenge of our times.

I hope you enjoy the site, and I look forward to hearing from you!

   - Mark Sardella