Energy Efficiency Feed-in-Tariff: Key Policy & Design Considerations
In this presentation, Chris Neme and Richard Cowart explore the potential for an energy efficiency Feed-in-Tariff (EE FiT) to unlock the market potential for energy efficiency. An EE FiT is the obverse of an energy efficiency obligation. Instead of establishing the quantity of energy savings desired and letting the market determine the price of meeting them, they establish a price that will be paid for energy savings and let the market determine the quantity of savings that will be delivered. Although no jurisdiction has adopted an efficiency FiT as its fundamental policy construct for generating energy savings, extensive experience with related concepts in the US and Europe – “standard offer” efficiency programmes, capacity markets, and tradable white certificates – offers valuable insight into issues a grid operator would have to address when creating market mechanisms for efficiency resources and how markets react to offers of fixed price payments per unit of energy sav¬ings. Presented at the European Council for an Energy-Efficient Economy’s 2013 Summer Study, Mr. Neme and Mr. Cowart assess the pros and cons of efficiency FiTs, as well as explore critically important design considerations.