The Feed-in-Tariff encourages renewable energy. In Part 3 of the series 'Understanding your BELCO bill,' this article explores what the tariff means for BELCO customers that produce solar energy.
Solar systems have several advantages. As a renewable energy source, solar helps to reduce our carbon footprint as it represents an environmentally safe source of energy. Solar can increase a home’s value and by generating solar energy it helps to reduce monthly electricity bills. The economic and sustainable benefits have more people thinking about “going solar.”
Globally, to meet clean energy goals, incentives are provided to enhance the investment of renewable energy. One incentive adopted is the Feed-in-tariff. A Feed-in-tariff (FIT) is a financial policy created to provide a payment to those who install and generate renewable energy sources such as wind and solar.
In Bermuda those who benefit from the FIT are primarily owners of solar PV generators, known as distributed generators (DGs). When solar PV systems produce more energy than what a home uses, the excess energy cannot be stored, however it is not lost. The surplus energy goes back into the electricity grid for compensation. This compensation is known as the Feed in Tariff.
By law, the maximum value of the FIT is the actual cost of generation that the TD&R Licensee avoids by purchasing power from generation, plus an estimated economic benefit.
The total compensation for the energy appears as a credit on their electricity bill for energy exported to the grid. The compensation received would be equivalent to BELCO’s avoided cost or what it would cost BELCO to produce the same quantity of electricity.
The current rate for the FIT in Bermuda is at US$0.2265/kWh. Through Section 14 of the EA, the RA has the function to “monitor and regulate the electricity sector,” this means monitoring and adjusting tariffs such as the Feed-in-Tariff.
The RA has chosen to review the current FIT methodology used to ensure distributed generation is fairly compensated in line with international best practice.
Renewable energy generation is valuable for Bermuda’s Integrated Resource Plan and to move to a future stepping away from high-carbon electricity generation and into cleaner energy resources. By feeding the grid with renewable power, it is a way to foster cleaner energy solutions and promotes the implementation of other innovative electricity technologies.
The public is invited to comment on the methodology that Bermuda and any considerations to future method implementations, see the public consultation here.