December 5, 2008
Advanced Renewable Tariffs (ARTs) are a system of Feed-in Tariffs (FITs) differentiated by technology, size, application, and sometimes resource intensity. There is one price or tariff for wind energy, another price for solar, and so on. Tariffs within each technology are also differentiated by project size or, in the case of wind energy, by the productivity of the resource.
Renewable tariffs are the world’s most successful policy mechanism for stimulating the rapid development of renewable energy. They are also transparent, comprehensible, and equitable: the door is open to everyone, from farmers to homeowners, from small to large businesses, from independent power producers to cooperatives. Everyone can participate.
Because electricity feed-in tariffs permit the interconnection of renewable sources of electricity with the electric-utility network and specify how much the renewable generator is paid for its electricity the policy is sometimes described as “PURPA on steroids” in North America.[1]
Currently 18 countries in Europe use some form of feed-in tariff, including Germany, France, Spain, and Switzerland.
In Advanced Renewable Tariffs, the individual tariffs are determined by the cost of generating the electricity plus a reasonable profit for the producer. The market then functions to determine how much, where, and by whom renewables will be developed.
Tariffs for new projects are also subject to periodic review to determine if the program is sufficiently robust to produce the growth in renewable energy desired.
[1] In 1978 PURPA, the Public Utility Regulatory Policies Act, permitted interconnection of renewable energy generators with the grid in the USA but didn’t specify the price, only the means for calculating the price.
