What are Feed-in Tariffs?

By Paul Gipe

October 6, 2010

Feed-in tariffs are PURPA[1] on steroids.

A feed-in tariff

  • Allows renewable energy generators to interconnect with the grid, and
  • Specifies the amount that they are paid for their electricity,
  • And specifies how long they will be paid.

Feed-in tariffs are used extensively in Europe, with those in Germany, France, and Spain being the most well known. These countries use a sophisticated system of tariffs, sometimes called Advanced Renewable Tariffs, that pays a different price per kilowatt-hour for different technologies, projects of different size, different applications, and different resource intensities.

Feed-in tariffs are simply payments per kilowatt-hour for electricity generated by a renewable resource. In North America this simple idea is known by many different names: Electricity Feed Laws, Feed-in Laws, Feed-in Tariffs (FITs), Advanced Renewable Tariffs (ARTs), Renewable Tariffs, Renewable Energy Payments, and more recently CLEAN (for Clean Local Energy Accessible Now) contracts. Regardless of the name, they are the world’s most successful policy mechanism for stimulating the rapid development of renewable energy.

Feed-in tariffs are also the most egalitarian method for determining where, when, and how much renewable generating capacity will be installed. Renewable Tariffs enable homeowners, farmers, cooperatives, and First Nations (Native North Americans) to participate on an equal footing with large commercial developers of renewable energy.

Electricity Feed Laws permit the interconnection of renewable sources of electricity with the electric-utility network and at the same time specify how much the renewable generator is paid for their electricity and over how long a period.

Electricity Feed Laws are widely used in Europe, most notably in Germany, France, and Spain.

Advanced Renewable Tariffs (ARTs) are the modern version of Electricity Feed Laws. ARTs differ from simpler feed-in tariffs in several important ways. Most importantly, ARTs are differentiated by technology, application, project size, or resource intensity. There is one price for wind energy, another price for solar, and so on. Tariffs within each technology can also be differentiated by project size or, in the case of wind and solar energy, by the productivity of the resource. Tariffs for new projects are also subject to periodic review to determine if the tariffs are sufficiently robust to meet the targets desired in the time allotted.

[1] The Public Utility Regulatory Policies Act of 1978 for the first time permitted renewable energy generators to co