“Legislation that governs the energy system mandates that higher rates be paid for power supplied by deploying emerging technologies. This guaranteed rate allows for the development of the project. As the technology becomes more viable, the incentive rates are lowered until over time that particular technology becomes commercially competitive."
FITs have had a tremendous impact on growing renewable energy production throughout Europe, but in Germany especially. The German Renewable Energy Sources Act introduced in 2004 mandated such a system. High electricity rates coupled with guaranteed purchase agreements have contributed to the explosion of micro-scale wind and solar energy in Germany. According to the report:
“Appropriate feed-in tariffs can be a powerful stimulus to the industry. Of all the different measures used to encourage development, tariffs have been the most successful at developing renewables markets and domestic industries, and achieving the associated social, economic, environmental, and security benefits."
Presently, the only hope for a FIT-type policy mechanism is in the Michigan state legislature, where such a bill has been proposed. As it currently stands, legislatures in the U.S. have clearly favored renewables portfolio standards (RPS) as the policy mechanism of choice. I believe the RPS is a step in the right direction, but the exclusions for municipalities and electric co-ops make it so that a goal of 15-20% renewable energy only applies to about 60% of the electricity purchasing public. But these mandatory quotas are creating a stable arena for large-scale utilities to continue to dominate energy production and transmission.
For more on feed-in tariffs and renewable energy policy in Canada, the U.S., and Europe, visit Paul Gipe's Wind-Works page.
Photo Credit: Paul Gipe