By establishing a set price, feed-in tariff (FiT) policies reduce the need for multiple incentives and complex financing through tax liabilities currently used to supplement renewable portfolio standard (RPS) targets in the U.S., according to a white paper from Greener Dawn Climate. The report also indicates that FiT policies may be a less expensive way to renewable energy development compared to other policies including renewable energy certificates (RECs) based on evidence from Europe.
FiTs provide financial incentive to renewable energy producers by offering guaranteed interconnection to the electricity grid and long-term contracts at premium fixed prices, said Greener Dawn Climate. Other benefits include support for state initiatives including economic development, job creation, greenhouse gas reduction and energy diversification, while helping to drive the development of new technologies, according to the white paper.
The white paper addresses the opportunities and challenges that face FiT implementation, provides best practices, and answers key questions regarding the applicability of FiT policies in the U.S.
According to the paper, the five best FiT practices fall under the categories of program duration, program capacity, guaranteed standard access to the grid, setting an effective payment rate and payment differentiation by tech, size, and location.
The paper also examines the impact of current FiT policies adopted or proposed by local and state governments including Gainesville, Fla., the state of Vermont, and three separate initiatives in California.