3.10 Tariff and Market Issues

3.10.5 Feed-in Tariffs Concepts

Feed-in tariffs have been developed primarily as an incentive to accelerate investment in renewable energy technologies. It achieves this by offering long-term contracts to renewable energy producers, typically based on the cost of generation of each technology. Feed-in tariffs typically include three key provisions:

Under a feed-in tariff, eligible renewable electricity generators, including homeowners, business owners, farmers and private investors, are paid a cost-based price for the renewable electricity they supply to the grid. This enables diverse technologies (wind, solar, biogas, etc.) to be developed and provides investors a reasonable return. As a result, the tariff may differ by technology, location (e.g. rooftop or ground-mounted for solar PV projects), size (residential or commercial scale) and region. The tariffs typically offer a guaranteed purchase agreement for long (15–25 year) periods and are often designed to decline over time to track and encourage technological change.