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An OpEd piece by Chris Mentzel - Dec 2008

How to Really Make Renewable Energy Happen

My recent visit to the InterSolar tradeshow in San Francisco showed me how Germany propelled itself to be a leader in clean energies. Half of the world's installed solar panels and half the world's wind turbines are in my cloud-covered home country. Germany also adds enough renewable energy per year to power all of Hawaii.

Experts and Hawaii's people agree that Hawaii needs more renewable energy installations and needs to get away from oil. That has been true since the 70's but has become more than urgent. Hawaii now sends more than $7 billion every year to Saudi Arabia and other oil countries. This amount is close to all U.S. visitor spending in Hawaii.

Let me put it differently. Hawaii brings in 5 million American tourists, takes their hard earned travel money and hands ALL OF IT to the Saudi's. It wasn't that bad a few years back, but it will get worse in the future.

What Germany lacks in natural energy it makes up in political leadership. By the insistence of a single senator, Hermann Scheer, a law was passed in 1990 and refined in 2000 that now has resulted in 250,000 jobs, 20,000 MW renewable capacity, increased energy security and worldwide recognition.

The German FIT law (feed-in tariff) simply states that the utility has to buy all clean power offered at fixed prices that are stable for the next 20 years. In Germany these prices are well above the cost for coal energy, so the utilities charge each citizen 1 dollar extra a month to make up for the extra cost of clean power. In Hawaii sun and wind are plentiful and a Hawaii FIT law would have little or no extra cost to the consumer. As oil prices go through the roof and the dollar falls, Hawaii's FIT commitment to low-cost renewable energy will help us survive economically.

Thanks to a recently signed agreement between Governor Linda Lingle and Hawaiian Electric, FIT will soon be a reality in Hawaii. By July, the agreement states, the FIT will be designed and in place. But there are still many details to work out and it is not assured that the resulting law will work as well as in Germany.

Most people in Hawaii and the U.S. heard little about it and there are some misperceptions. The German FIT law is not and the power companies still have large profits. It is not a taxpayer subsidy, because not a single tax dollar is spent. It is not a burden on consumers, because for $1 a month German consumers get energy security and enormous future savings. A FIT law will work with Hawaii's smaller grids with just a little modification. And Hawaii is the best place in the world for FIT, because our abundant sunshine and high oil prices mean that we can implement FIT to obtain clean renewable energy at little or no extra cost to consumers.

FIT works, because renewable energy depends entirely on the bankers financing the projects. Nothing is more important to bankers than guaranteed income. Once the prices for wind and solar are clearly set, banks are eager to finance clean energy projects and billions of dollars become available for these low-risk investments. Spain followed the German example last year with a FIT law that was enticing enough to pull in 600 MW of solar installations in one year. 48 countries worldwide, including 19 European countries and South Korea, now have FIT laws.

The renewable energy incentives now used in the US don't work as well. Bickering in Congress almost destroyed the solar industry by not extending federal tax credits. Hawaii State tax credits sound good, but work only for the wealthy. Renewable Portfolio Standard (RPS) quotas, obliging utilities to make 20% of their energy from renewable sources lead to high-cost debacles as importing palm oil from uncertain and un-ecological sources. No country with these kinds of incentives has been able to catch up to Germany's success with the FIT.

We have a unique chance right now. Hawaii, with it's high electricity prices, could create a FIT at little or no additional cost to consumers. While the US is not yet fully committed to clean energy, Hawaii could absorb much of the output of this industry over the next year and quickly build up clean energy capacity. Over the next decades, Hawaii could enjoy stable prices, while the mainland rates will go up by 7-10% a year.

I cannot see who will lose in all of this, except Saudi Arabia. But maybe it's just time that we stop working for them.

Chris Mentzel
Energy Analyst
CleanEnergyMaui.com

For more information see FIT-Hawaii.com.

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