Imposing a priority purchase obligation
Introducing a priority purchase obligation is one of the most important features of a good FIT law. The usual wholesale purchaser of electricity - be it the grid operator, state utility, or electricity transmission or distribution company - should have an obligation to buy and transmit the electricity produced from the eligible renewable energy plants, independently from the short-term demand.
And this should be a priority obligation, so that electricity from renewable energy sources is purchased ahead of electricity from other sources. The consequence of this obligation is that conventional power generation plants must reduce their production. This feature is important to increase investment security, because producers will be assured that each unit produced can be sold.
This obligation is different from, and additional to, ensuring connection to the grid; and should not be confused with "net metering".
For example: an obligation to purchase renewable energy has been enacted in Switzerland and adopted by policy in Pakistan, with priority obligations having been enacted in Germany and in Nicaragua.
Switzerland
English
Energy Law 1998, Article 7a.1 as amended by the Electricity Supply Act 2007, provides that:
In their grid area, grid operators are obliged to purchase and pay for all electricity generated from new plants from solar energy, geothermal, wind energy, hydro energy up to 10 MW, biomass and waste from biomass, in a form suitable for the grid, in so far as these new plants are suitable for the pertinent site. New plants are all plant which have started operations after 1st January 2006 or have been, after that date, substantially amended or renovated.
Deutsch
Energiegesetz von 1998, Artikel 7a.1 geändert durch Stromversorgungsgesetz 2007, lautet:
Netzbetreiber sind verpflichtet, in ihrem Netzgebiet die gesamte Elektrizität, die aus Neuanlagen durch die Nutzung von Sonnenenergie, Geothermie, Windenergie, Wasserkraft bis zu 10 MW, sowie Biomasse und Abfällen aus Biomasse gewonnen wird, in einer für das Netz geeigneten Form abzunehmen und zu vergüten, sofern diese Neuanlagen sich am betreffenden Standort eignen. Als Neuanlagen gelten Anlagen, die nach dem 1. Januar 2006 in Betrieb genommen, erheblich erweitert oder erneuert werden.
Pakistan
Policy for Development of Renewable Energy for Power Generation 2006, section 8.2.1 & 8.2.2 provide that:
8.2.1 Guaranteed Market: Mandatory Purchase of Electricity
It shall be mandatory for the power distribution utilities to buy all the electricity offered to them by RE projects established in accordance with the provisions given in Section 8.2.2.
8.2.2 Grid Connection, Off-take Voltage and Interface
Electricity shall be purchased from RE power producers at a voltage of 220 kV at the outgoing bus bar of the power station if the power station is located within 70 km of an existing 220 kV transmission line, or at 132 kV if it is within 50 km of an existing 132 kV transmission line, or at 11 kV if it is within 5 km of an existing 11 kV transmission line, or at 400V if it is within 1 km of a 400 V distribution feeder. The minimum average power to be supplied in each case would be 1,250 kW/km, 250 kW/km, 100 kW/km, and 20 kW/km, respectively. The producer may also undertake to lay a new transmission line for connection with the main electricity grid. The power purchase tariff determination will be adjusted accordingly for each of these options......
Germany
English
Renewable Energy Sources Act 2004, Article 4(1) provides that:
§ 4 (1) Grid system operators shall immediately and as a priority connect plants generating electricity from renewable energy sources or from mine gas to their systems and guarantee priority purchase and transmission of all electricity from renewable energy sources or from mine gas supplied by such plants.
Deutsch
Gesetz für den Vorrang Erneuerbarer Energien 2004, § 4(1) lautet:
(1) Netzbetreiber sind verpflichtet, Anlagen zur Erzeugung von Strom aus Erneuerbaren Energien oder aus Grubengas unverzüglich vorrangig an ihr Netz anzuschließen und den gesamten aus diesen Anlagen angebotenen Strom aus Erneuerbaren Energien oder aus Grubengas vorrangig abzunehmen und zu übertragen.
Nicaragua
English
Law 532/05 for the Promotion of Electricity Generation from Renewable Sources, Article 12 provides that:
Prioritization of renewable energy in the distributors' contracts. It will be an obligation of the distributors to include within their processes of bidding the contraction of energy and/or electric power from power plants with renewable energy, prioritizing hydro, geothermal, wind, biomass, taking into account the construction time necessary to begin operating each type of these projects for establishing the date of beginning the bidding.
Español
Ley 532/05 para la Promocion de Generacion Electrica con Fuentes Renovables, Artículo 12 establece que:
Priorización de las energias renovables en las contrataciones por las Distribuidoras: Será obligación de las Distribuidoras incluir dentro de sus procesos de licitación la contratación de energia y/o potencia eléctrica proveniente de centrales eléctricas con energia renovable, prioritariamente hidroeléctricas, geotérmicas, eólicas, biomasa, tomando en cuenta los plazos de construcción necesarios para la entrada en operación de cada tipo de estos proyectos para establecer la fecha de inicio de la licitación
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