Feed-In Tariff Primer
December 5, 2008
Feed-In Tariffs in Less than 250 Words
(Also known as Advanced Renewable Tariffs, Renewable Energy Producer Payments, Renewable Rates, and Standard Offer Contracts[1])
Feed-in tariffs are simply payments per kilowatt-hour for electricity generated by a renewable resource. They are the world’s most successful policy for the rapid development of significant amounts of renewable energy.
Feed-in tariffs are used in Germany, France, and Spain and have driven these countries to world leadership in renewable energy development. In so doing, feed-in tariffs have created hundreds of thousands of new jobs in Europe.
Feed-in tariffs are easily adaptable to North America. There are no intrinsic limits on using them in either the United States or Canada, at either the state, provincial, or federal level.
Feed-in tariffs work because they are more equitable than other policies. They enable everyone–including homeowners, farmers, cooperatives, and businesses large and small–to profit from renewable energy.
Feed-in tariffs comprise a system of payments for each kilowatt-hour of electricity generated. The price that is paid is based on the cost of the electricity produced plus a reasonable profit for the producer. This is much like the way electricity from conventional power plants has been regulated in North America for many decades, and utility regulators are familiar with the concept.
Feed-in tariffs can be implemented alongside existing renewable energy programs, such as net metering and renewable energy standards.
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[1] The term “Standard Offer Contracts” is incorrectly applied. Feed-in tariffs require “standard contracts”, but the “offers” are not standard. The “offers” differ by technology.
