On the CoverFeed-in tari ff (FIT) policies can apply to several renewable energy technologies and their applications including (top to bottom) solar photovoltaics (

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NOTICEThis report was prepared as an account of work sponsored by an agency of the United States government. Neither the United States government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States government or any agency thereof. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States government or any agency thereof. • Mike Niver, SolarCity Executive SummaryTo stimulate investment in renewable energy generation projects, the federal government developed a series of support structures that reduce taxes for eligible investors-the investment tax credit, the production tax credit, and accelerated depreciation. The nature of these tax incentives often requires an outside investor and a complex financial arrangement to allocate risk and reward among the parties. These financial arrangements are generally categorized as "advanced financial structures." Among renewable energy technologies, advanced financial structures were first widely deployed by the wind industry and are now being explored by the solar industry to support significant scale up in project development.1 This report describes four of the most prevalent financial structures used by the renewable sector and evaluates the impact of financial structure on energy costs for utility-scale solar projects that use photovoltaic and concentrating solar power technologies.A critical aspect of the analysis is the input assumptions, including the cost to install each technology, the costs and terms of financial capital relevant to the technology and financial structure assessed, and the operating costs of each technology. To determine reasonable inputs, the authors conducted a series of interviews with industry experts, reviewed several sources in the current literature, and relied on the default values from the System Advisor Model that was employed in this analysis, which were, in turn, guided by the industry expertise of its developers.The analysis determined that financial structures that include project-level debt generally yield a lower levelized cost of energy (LCOE) compared to those that rely purely on equity capital, although in practice raising debt at the project level can be difficult, particularly for developers without sizable balance sheets and a strong history of development experience. Other insights from the analysis include:• Debt associated with the loan guarantee program can reduce LCOE by approximately 20%, and possibly more, depending on the quantity of debt the project is allowed to take on.•...

ERCOT Executive SummaryState renewable portfolio standard (RPS) policies require utilities and load-serving entities (LSEs) to procure renewable energy generation. Utility procurement options may be a function of state policy and regulatory preferences, and in some cases, may be dictated by legislative authority. Utilities and LSEs commonly use competitive solicitations or bilateral contracting to procure renewable energy supply to meet RPS mandates. However, policymakers and regulators in several states are beginning to explore the use of alternatives, namely feed-in tariffs (FITs) and auctions to procure renewable energy supply. A FIT is a procurement mechanism that offers guaranteed grid access and guaranteed energy payment over a long-term contract to all developers within a set of eligible technologies, project sizes, and locations. FIT contract prices are typically set administratively based on location-specific cost criteria. Renewable energy auctions and competitive solicitation are bidding processes, in which developers submit project proposals. The difference between auctions and solicitations is that solicitations include a number of non-price criteria, while auctions select bids based on price alone (although potential bidders must meet a set of criteria in order to submit a bid).As compliance obligations expand, there may be an increasing emphasis on the effectiveness and efficiency of different procurement mechanisms and their best applications. This report does not make recommendations about what approaches (or combinations of approaches) LSEs and states should adopt to procure renewable energy. Rather, it evaluates each approach while assessing a number of important tradeoffs that affect how risks are assigned between developers, utilities, and utility customers.This report evaluates four procurement strategies (competitive solicitations, bilateral contracting, FITs, and auctions) against four main criteria: (1) pricing; (2) complexity and efficiency of the procurement process; (3) impacts on developers' access to markets; and (4) ability to complement utility decision-making processes. These criteria were chosen because they take into account the perspective of each group of stakeholders: ratepayers, regulators, utilities, investors, and developers. The primary conclusions of the report are summarized below. PricingCompetitive solicitations and auctions select for cost-effective projects. A policymaker seeking to promote least-cost generation may want to consider using one of those options. Additionally, in competitive wholesale electricity markets with regional transmission organizations, bilateral contracts may result in cost competitive contracts. However the bilateral contracting approach does not always result in the lowest cost contracts because there may not be other projects to compare against. FITs set prices paid administratively, and consequently may not result in least-cost projects. It can be challenging to design FITs that adjust to market realities and keep prices accurate over ti...