The Blog Street Journal

The Feed-in Tariff (FIT) is an incentive made to recompense the production of renewable energy both by households and investors. Power companies are compelled to purchase back, at rates higher than the market, power produced from renewable sources; such as wind, thermal solar, photovoltaic solar, biomass, hydro and geothermal. This tariff is also called Feed-in Law, Solar Premium, Renewable Tariff or Renewable Energy Payments. FIT helps make the production of renewable energy economically viable. Usually governments guarantee the tariff for up to 15, 20 or even 25 years from the date of the setup.

The improvement of sources of renewable energy is considered critical to avoiding climate change. The cost of producing renewable energy is still higher than the cost of producing energy from traditional supplies. FIT tries to offset this difference, thus making more attractive renewable energy installations, asking the utility company to repurchase and reuse the power produced by renewable installations. The difference in cost is spread over all of the customers of the utility company. FIT requires net metering regulation to account for power purchased from the grid and energy sold to the grid.

FIT is considered more effective than quotas levied on power companies, because it meets the morals of people. What follows is a simplified overview of FIT policies by some European countries.