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A Feed-in Tariff (FiT, FiL, Feed-in Law or solar premium[1]) is an incentive structure to encourage the adoption of renewable energy through government legislation. Renewable energy is Energy generated from Natural resources mdashsuch as Sunlight, Wind, Rain, tides and geothermal Legislation (or " Statutory law " is law which has been promulgated (or " Enacted quot by a Legislature or other Governing The regional or national electricity utilities are obligated to buy renewable electricity (electricity generated from renewable sources such as solar photovoltaics, wind power, biomass, and geothermal power) at above market rates set by the government [2]

The higher price helps overcome the cost disadvantages of renewable energy sources. An electric utility is a company (often a Public utility) that engages in the generation, transmission, and distribution of electricity for sale Renewable energy is Energy generated from Natural resources mdashsuch as Sunlight, Wind, Rain, tides and geothermal Photovoltaics ( PV) is the field of technology and research related to the application of Solar cells for Energy by converting Sunlight directly Wind Power is the conversion of wind energy into a useful form such as electricity using Wind turbines At the end of 2007 worldwide capacity of wind-powered generators was Biomass refers to living and recently dead Biological material that can be used as fuel or for industrial production Geothermal power (from the Greek roots geo, meaning earth and therme, meaning heat is energy generated by heat stored in the earth or the collection The rate may differ among various forms of power generation.

Contents

History

This type of program was first implemented in the USA in 1978, but it is the German model, that begun in 1990 ("Stromeinspeisungsgesetz")[3] and refined in the year 2000 ("Erneuerbare-Energien-Gesetz") when it became a Federally managed program that has proven to be the world’s most effective practice for boosting adoption of renewable energy technologies. See also PV financial incentives, Feed-in tariff Feed-in electricity tariffs have been introduced in Germany to encourage the use of new energy technologies Feed-In Tariffs (REFIT) have been associated with a large growth in wind power in Spain, Germany and Denmark. Wind Power is the conversion of wind energy into a useful form such as electricity using Wind turbines At the end of 2007 worldwide capacity of wind-powered generators was Spain () or the Kingdom of Spain (Reino de España is a country located mostly in southwestern Europe on the Iberian Peninsula. Germany, officially the Federal Republic of Germany ( ˈbʊndəsʁepuˌbliːk ˈdɔʏtʃlant is a Country in Central Europe. The Kingdom of Denmark ( ˈd̥ænmɑɡ̊ (archaic ˈd̥anmɑːɡ̊ commonly known as Denmark, is a country in the Scandinavian region of northern Europe These countries now boast the supply of 9%, 5% and 20% of their electricity respectively. These systems involve fixed payments that are guaranteed in the long term; 20 years in the cases of Spain and Germany.

Principle

In the effort to combat climate change, the increased deployment of renewable energy sources is regarded by many as critical. Global warming is the increase in the average measured temperature of the One major obstacle to this adoption is the retail price of electricity generated from renewable sources, which is typically more expensive than the retail price of electricity generated from fossil fuels. Price in Economics and Business is the result of an exchange and from that trade we assign a numerical Monetary value to a good, Fossil fuels or mineral fuels are fossil source Fuels that is Hydrocarbons found within the top layer of the Earth’s crust. A FiT is a revenue neutral way of making the installation of renewable energy more appealing. The electricity that is generated is bought by the utility at above market prices. For example, if the retail price of electricity is 10¢/kWh then the rate for green power might be 40¢/kWh. Green energy is a term used to describe sources of energy that are considered to be Environmentally friendly and non- polluting. The difference is spread over all of the customers of the utility. For example, if $100,000 worth of green power is bought in a year by a utility that has 1,000,000 customers, then each of those customers will have 10c added on to their bill annually.

Thus, a small annual increase in the price of electricity per customer can result in a large incentive for people to install renewable energy systems. In Economics, an incentive is any factor (financial or non-financial that provides a motive for a particular course of action or counts as a reason for preferring one choice This is the essence of a FiT: it is a mechanism to instigate a change in the way power is produced, gradually shifting from present polluting means to non-greenhouse methods.

Policy Alternatives to Feed-in Tariffs

Schemes such as quota incentive structures (renewable energy standards or renewable portfolio standards) and subsidies create limited protected markets for renewable energy. A Renewable Portfolio Standard (RPS is a regulatory policy that requires the increased production of Renewable energy sources such as Wind, Solar In Economics, a subsidy (also known as a subvention is a form of financial assistance paid to a business or economic sector The supply of renewable energy is achieved by obliging suppliers to deliver to consumers a portion of their electricity from renewable energy sources. In order to do this they collect green electricity certificates. Renewable Energy Certificates ( RECs) also known as Green tags, Renewable Energy Credits, or Tradable Renewable Certificates ( TRC s Hence a market is created in green electricity certificates which, according to the theory, generates downward pressure on the prices paid to renewable energy developers. Price in Economics and Business is the result of an exchange and from that trade we assign a numerical Monetary value to a good, This is based on the theory of perfect competition where there is a multiplicity of buyers and sellers in a market where no single buyer or seller has a big enough market share to have a significant influence on prices. In Neoclassical economics and Microeconomics, perfect competition describes a market in which no buyer or seller has Market power. Although, in practice, markets are very rarely perfectly competitive, the assumption is still that a relatively competitive market will produce a more efficient use of resources compared to a system where prices are set by Government fiat. [4]

The fundamental problem with the quota scheme is that there is no long-term certainty. In economic models the long-run time frame assumes no fixed Factors of production. When a quota is set either for a period of time or for a quantity of power, once that goal is reached then there is nothing to keep the green power producers from becoming uneconomic in the face of power produced from coal fired power stations and hence collapsing as businesses. For other uses see Time (disambiguation Time is a component of a measuring system used to sequence events to compare the durations of Quantity is a kind of property which exists as magnitude or multitude Renewable energy is Energy generated from Natural resources mdashsuch as Sunlight, Wind, Rain, tides and geothermal A fossil fuel power plant burns Fossil fuels such as Coal, Natural gas or Petroleum (oil to produce Electricity. This inevitability with the quota method means that there is reluctance on behalf of investors to get involved in the first place. Those that do get involved are short-term speculators rather than long-term entrepreneurs and so instability is inherent in this system. In Economics, the concept of the short-run refers to the decision-making time frame of a firm in which at least one Factor of production is fixed Speculation, in a financial context is making an investment that increases the overall risk in a portfolio

It has been argued that FiT is the most effective way to promote the uptake off renewable energy yet devised. After investment subsidies it is the most widespread means of promoting renewable energy uptake in Europe. [5]

Green certificates

Activists such as Paul Gipe[6] have argued that green certificate schemes disadvantage local ownership. A Green Certificate also known as Renewable Energy Certificates (RECs is a tradable commodity proving that certain electricity is generated using renewable energy

Netmetering

See also: V2G

The introduction of FIT is usually preceded by legislation for net metering and dropping the requirement of a separate powerline. Vehicle-to-grid (V2G describes a system in which power can be sold to the electrical power grid by an electric-drive motor vehicle that is connected to the grid when it is not Legislation (or " Statutory law " is law which has been promulgated (or " Enacted quot by a Legislature or other Governing Net metering is an Electricity policy for Consumers who own generally small Renewable energy facilities such as wind or Solar power

Feed-in Tariff by territory

Further information: PV financial incentives

Feed-in tariff laws were in place in 46 jurisdictions across the world by 2007. The political purpose of PV financial incentives is to grow the Photovoltaics industry even where the cost of PV is significantly above grid parity to allow it to achieve the [7]

Germany

Erneuerbare-Energien-Gesetz (EEG) law, first introduced in 1990.

Spain

Spanish feed-in legislation (Real Decreto 661/2007)

United States

Further information: Renewable energy in the United States

California

The California Public Utility Commission (CPUC) has approved a feed-in tariff on January 31, 2008 which is effective immediately. Renewable energy accounted for more than 10 percent of the domestically-produced energy used in the United States in the first half of 2008 [8]

Australia

At May 2008, feed-in laws had been passed in South Australia and limited provisions in Victoria. Proposals were before Parliaments in Queensland and the ACT.

Main article: Feed-in tariffs in Australia

South Australia

Electricity (Feed-in Scheme - Residential Solar Systems) Amendment Bill 2007 inserted provisions into the Electricity Act 1996. See also PV financial incentives, Feed-in tariff Feed-in tariffs generally refers to the rates at which a small scale producer of electricity (such as Applies only to solar PV. Net export payment method (i. e. gross production – household load = net export) limits the incentive provided.

Australian Capital Territory

Electricity Feed-in (Renewable Energy Premium) Bill 2008 is under consideration by the Legislative Assembly.

See also

References

  1. ^ Solar Premium
  2. ^ [1]. Automatic meter reading, or AMR, is the technology of automatically collecting data from Water meter or Energy metering devices (water gas electric and Distributed generation, also called on-site generation, dispersed generation, embedded generation, decentralized generation, decentralized See also PV financial incentives, Feed-in tariff Feed-in electricity tariffs have been introduced in Germany to encourage the use of new energy technologies Net metering is an Electricity policy for Consumers who own generally small Renewable energy facilities such as wind or Solar power The political purpose of PV financial incentives is to grow the Photovoltaics industry even where the cost of PV is significantly above grid parity to allow it to achieve the Renewable energy commercialization involves the diffusion of three generations of technologies dating back more than 100 years A Smart meter generally refers to a type of advanced meter (usually an Electrical meter) that identifies consumption in more detail than a conventional meter and optionally Utility Submetering is the implementation of a system that allows a Landlord, property management firm Condominium association Homeowners association, A virtual power plant is a cluster of Distributed generation installations (such as MicroCHP, wind-turbines, Small hydro, back-up gensets etc
  3. ^ World Future Council Feed-in Tariffs
  4. ^ David Toke (05 February 2006). "Renewable financial support systems and cost-effectiveness". Journal of Cleaner Production 15 (3): 280–287. doi:10.1016/j.jclepro.2006.02.005. A digital object identifier ( DOI) is a permanent identifier given to an Electronic document.  
  5. ^ Energy Policy, 2006 An integrated assessment of the feed-in tariff system in Spain, Pablo del Rıo and Miguel A. Gualb,
  6. ^ Wind Works Feed Laws
  7. ^ REN 21 (2007) Renewables 2007: Global Status Report at p. 43
  8. ^ CPUC Press Release

External links

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