However, the few bucks that I am likely to save on my electric bill is probably not enough to encourage me to buy that solar array, especially since I don’t have $20K lying around, and it would be hard to get financing for it, and the tax credit I might get for doing it is really relatively small.  And even though the system will last decades, I may have to upgrade it down the road as technology improves.

So consequently, few homeowners in Maine and most other places in the U.S. are doing it.

Now, what if CMP paid me some sum well above the typical cost of the energy, as an incentive to get me and other people to buy the arrays, get lenders to finance them, and to encourage us to keep them up and operating to their greatest potential? 
For instance, if energy currently costs 12 cents per kilowatt-hour, and CMP pays me 50 cents per kilowatt- hour, I would be far more invested in keeping my system up and running than I would be if I had received a one-time-only tax credit of $3500.  I would also be invested in my own conservation program - that is, the less energy I personally use, the more I can sell to the utility.  So I would be more likely to purchase energy-efficient appliances and lighting, and do the work I would need to do to keep my house as energy-efficient as possible, by insulating and winterizing, and taking simple steps such as turning off lights, using ‘free’ energy by hanging clothes outdoors to dry in warm weather, and paying attention to my phantom load by unplugging appliances that are not in use.

CMP would be paying me a subsidy; that is, they would be paying more than the standard price for the energy I would be producing to encourage development. Subsidies are paid to virtually every energy producer on the planet, including big oil and gas companies, who, with their record profits, don’t need them to find new sources of energy.  According to Paul Kando of the Midcoast Green Collaborative, half of all federal energy subsidies go to fossil fuels, while only 18% go to renewable energy sources, and those are mostly for corn-based ethanol (which also relies on fossil fuels for production).  The remainder goes to nuclear power companies.  Current federal policy, therefore, interferes with the free market by stacking the deck in favor of fossil fuels, and to a lesser extent, nuclear energy.

To offset its own outlay for my solar array, CMP would take a small monthly fee from all users of the grid - estimated to be about $2.  CMP does not lose money in the transaction, I gain money in the transaction, and the whole state wins by using less carbon-intensive energy.

And any homeowner - or business property owner - could get in the game.  Even landlords could be tempted to place the solar arrays (or any other renewable source) on their properties, since they would earn a return on the investment, while tenants would win by paying smaller energy bills.  Banks, assured of a return by contract, would be far more likely to lend for renewable energy hardware.

Sound like a good plan?  It is good, for everybody except big oil, gas, and coal companies.  Which is why Germany and virtually every other European country have been doing this for several years now.  Several states, including California, Michigan, Minnesota, and Maine, are considering their own versions of the European program.

This is called a ‘feed-in tariff’.  Feed-in tariffs level the playing field without increasing government subsidies.  “The benefits of a feed-in tariff law in Maine would go beyond direct economic benefit for renewable energy investors,” said Paul Kando.  “As green producers multiply, utilities benefit from not having to install expensive new central generating capacity.  At the same time, the law will be a catalyst for growing a green energy sector in Maine, as it has in Europe.”

That is, new ‘green collar’ jobs would spring up in Maine.  Since introducing its own feed-in tariff law, Germany experienced growth in all sectors of the renewable energy field.  Photovoltaic solar, for instance, grew six-fold in three years.  In 2006, 241,000 Germans were employed in the renewable energy field, and 124,000 of those jobs were created as a direct result of the German Renewable Energy Resources Act.  The act also resulted in a 45 million ton reduction in carbon dioxide emissions in 2006 alone.

The Maine Renewable Energy Sources Act will create an incentive structure tied to performance by making multiple payments over a long period of time based on actual energy production of a given renewable energy generating system. The rationale behind this renewable energy investment incentive legislation is to provide a temporary pathway for investment until such time as prices decline to the point of cost-effectiveness in the marketplace.

To take into account technological developments and their economic efficiency, the law guarantees that grid operators must compensate producers for green electricity, but it also decreases the rate grid operators must pay under newly executed contracts each year. This structure ensures both that green power producers will have high security in their investments and that the legislation will not prop up inefficient technologies as the market grows and becomes more efficient.

This is similar to the rationale behind the German legislation: the decreasing payments encourage investors to install their equipment as quickly as possible to obtain the highest payment for their power. It also ensures that people install high quality units. Since the green electricity producers receive payments per kilowatt-hour produced, there is great incentive for operators to run their installations efficiently and with as little interruption as possible.

For instance, say I ‘buy in’ at 50 cents per kilowatt-hour for 25 years, which should pay for my system at least once during its expected lifetime.  The next year, the technology has improved ten percent, so that more energy is produced and routed to the grid.  I’m stuck with my less efficient system, but I get 50 cents per kWh. A buyer who gets his array next year gets only 45 cents per kWh for 25 years, but he is more likely to produce enough energy to offset the difference in our subsidies.  People who build the systems have incentives to make them ever more efficient, and, as more people buy them, the price will drop.  Homeowners are still incentivized to buy them, because the price is dropping, and because they will be earning about the same as they have in past years as technology improves and efficiency increases.

This dynamic system creates incentives for both producers of renewable systems, and the consumers who buy them.  It also creates local jobs, in research and development, and manufacturing.  The jobs are local because the workers need to be able to work toward the most efficient solutions for local conditions.  A flat solar array developed in sunny southern California will not be as efficient in Maine, where the sun is lower in the sky for the whole of the year.  A solar array developed with Maine’s more dynamic conditions in mind - perhaps an array that moves slightly throughout the year or day, a curved array to capture early or late light from the horizon, or one that uses a fraction of its generated power to melt snow and ice as it falls on the panels - is far more likely to be developed and tested where every moment of sunlight is crucial.

It is also likely that competition will develop, as ready-made consumers, armed with willing creditors, line up to purchase these systems.  More and more companies will spring up, and the number of jobs increase, as Germany found during its four-year experience with feed-in tariff law so far.

Although we have been discussing solar power, other renewable energy sources, such as small hydro, small wind, small tidal, biomass, and geothermal can all be part of the renewable feed-in tariff solution.  Each will have its specific tariff ... solar will tend to be the highest, because of the high cost to purchase the equipment, initially, but each will provide enough income to offset the cost of the equipment, at the very least.

The proposed Maine feed-in tariff bill, called the Maine Renewable Energy Sources Act, is currently being drafted with help from the Midcoast Green Collaborative.  Hannah Pingree, Democrat from North Haven, is working with the Collaborative, and plans to sponsor the bill when it is complete in the next session.