A feed-in tariff (FIT) is an energy-supply policy focused on supporting the development of new renewable power generation.
Feed-in tariff (FIT) policies are implemented in more than 40 countries around the world and are cited as the primary reason for the success of the German and Spanish renewable energy markets.
As a result of that success, FIT policy proposals are starting to gain traction in several U.S. states and municipalities. A number of states have considered FIT legislation or regulation, including Florida, Hawaii, Illinois, Indiana, Maine, Massachusetts, Michigan, Minnesota, New Jersey, New York, Oregon, Rhode Island, Virginia, Washington and Wisconsin; and a federal FIT proposal has also been developed
Three other municipal utilities have also proposed FIT policies, including Los Angeles, California (Los Angeles 2008); Palm Desert, California; and Santa Monica, California.
Experience from Europe is also beginning to demonstrate that properly designed FITs may be more cost-effective than renewable portfolio standards (RPS), which make use of competitive solicitations.
The FIT contract provides a guarantee of payments in dollars per kilowatt hour ($/kWh) for the full output of the system for a guaranteed period of time (typically 15-20 years). A separate meter is required to track the actual total system output
FIT in the United States
As of early 2009, only a few U.S. jurisdictions have enacted FIT policies. The most notable example is the solar photovoltaic (PV) FIT passed by the municipal utility in Gainesville, Florida in February 2009 (RE World 2009). It is the first and only U.S. FIT policy structured the same way as many successful European FIT policies: It is based on the cost to develop the renewable generation project, plus a stipulated 5%-6% return. California has also created a statewide FIT program, but the payments are based on the utility's avoided cost and not on the actual cost of the RE project (DSIRE 2009a, Rickerson et al. 2008a).
Several U.S. utilities have enacted fixed-price production-based incentive policies that can be considered FITs, including Green Mountain Power (Vermont) (GMP 2008), Eugene Water & Electric Board in Oregon (DSIRE 2009b), WE Energies in Wisconsin (WE Energies 2009), and Madison Gas and Electric in Wisconsin (MG&E 2009). Finally, Washington State passed voluntary FIT legislation, and all but one public utility district now has a FIT policy (Nelson 2008). These FIT programs are structured rather simply, were implemented in the past two or three years, and have enjoyed limited success.
INFO: NREL
www.nrel.gov/docs/fy09osti/45549.pdf