The industry has struggled to craft a feed-in-tariff (FiT) structure that works for solar generators and utility customers, with mixed success. But now, the California Public Utility Commission might have found an approach that other states can replicate. CPUC’s FiT mechanism recognizes the value proposition of solar energy, and uses market forces to drive economic improvements, especially for distributed solar projects.

Policy makers in the E.U. and the United States are taking different approaches to facilitating smart grid development. While both regions are setting standards that the rest of the world likely will follow, they also face difficult challenges in resolving issues around cost recovery, customer engagement and workforce preparedness.

Despite state efforts to follow the European model of state-mandated feed-in tariffs to promote renewable power, these actions won’t pass Constitutional muster. The Supremacy Clause makes a formidable legal barrier.

The future looks bright for distributed photovoltaics. New technologies and government policies are driving a revolution in PV manufacturing. But a robust national distributed generation system requires a grid that can accept two-way control of electrons.

Perspective

Many of the obstacles and strategic issues that utilities face today are all too familiar. This time they must be solved with a different business model.

In the 1970s, the industry struggled under the burden of a huge capital expenditure program to improve reliability that came on top of spending needed just to keep up with customer demand. Inflation reared its ugly head. Interest rates began to rise.

Perspective

Renewable Energy in the 21st Century:

State involvement in promoting renewable technologies has profound implications for the future of the energy industry.

Election-year posturing seems to have prevented the federal government from reaching consensus on a number of energy issues ranging from standard market design to global warming, MBTE to Kyoto, ANWR to nuclear waste disposal.

A renewed capital investment structure is required for long-term investment in power infrastructure.

The bank markets and the long-term fixed income markets, or institutional investors, have long memories, and their pain is still fresh. Over the last few years, they have had to watch their investments in power infrastructure become distressed, bankrupted, or reorganized.

Technology Corridor

A digital grid to the home, secured via a local fiber-optic network, could position utilities to fix power and telecom together.

Before billions are spent building new transmission lines to ensure reliable electric service, North American electric utilities should evaluate whether the alternatives-controlling demand and fostering distributed generation-might be more cost-effective and broadly beneficial.

Generators struggle to plan for the future as they cope with an unstable present.

When the acting administrator at the Environmental Protection Agency (EPA), Marianne Horinko, signed the EPA's "routine replacement" rule on Aug. 27, 2003, she proclaimed that the new approach to Clean Air Act regulation would "provide … power plants with the regulatory certainty they need."