Feed in tariff: Difference between revisions
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<onlyinclude>The aim of a '''feed-in tariff (FIT)''' is to encourage the use of [[renewable energy|renewable]] technology for the generation of [[electricity]]. To encourage this behavior, governments guarantee electricity generation firms a '''long-term contract''' with a '''fixed price''' for each [[kilowatt hour]].</onlyinclude><ref>H. Roby. (2013). ''A Supplementary Dictionary of Renewable Energy and Sustainability.'' [Online], Available: http://www.oxfordreference.com/view/10.1093/acref/9780199654581.001.0001/acref-9780199654581-e-98?rskey=UNXLhD&result=1 [May. 29, 2016].</ref> | |||
<onlyinclude>The aim of a '''feed-in tariff (FIT)''' is to encourage the use of [[renewable energy|renewable]] technology for the generation of [[electricity]]. To encourage this behavior, governments guarantee electricity generation firms a long-term contract with a fixed price for each [[kilowatt hour]].</onlyinclude><ref>H. Roby. (2013). ''A Supplementary Dictionary of Renewable Energy and Sustainability.'' [Online], Available: http://www.oxfordreference.com/view/10.1093/acref/9780199654581.001.0001/acref-9780199654581-e-98?rskey=UNXLhD&result=1 [May. 29, 2016] | |||
Having a long term contract with a guaranteed price (specifically a price that is higher than the average price per [[kWh]]) means that the firm using renewable technologies can operate with ''less vulnerability to changes in the [[market]]''. By guaranteeing a certain price, the policy promotes and accelerates investment in renewable technologies because the '''FIT''' agreement makes it more profitable. A stable [[price]] coupled with a digression scheme (meaning the guaranteed price is reduced over time) reduces the risk to [[investor]]s and prevents the overpayment for electricity as renewable technology progresses and becomes more efficient.<ref>C. Mitchell. ''The Political Economy of Sustainable Energy.'' London: Palgrave MacMillian, 2008, pp.182.</ref>[[File:Feed-in Tariff- Wind+Solar.jpg|500px|thumb|Figure 1. A wind and solar farm.<ref>Pixabay [Online], Available: https://pixabay.com/en/solarpark-wind-park-renewable-energy-1288842/.</ref>|center]]A FIT also has the goal of lowering the cost of renewable energy in the long run as more and more firms are encouraged to [[generate electricity]] using renewable methods. One way to do this is to focus on a number of different technologies such as [[wind power |wind]], [[solar power |solar]], [[ hydroelectricity]] and [[Geothermal electricity |geothermal]].<ref>M. Mendonca, D. Jacobs and B. Sovacool. ''Powering the Green Economy: The Feed-in Tariff Handbook.'' London: Earthscan, 2010, pp. 16.</ref> By diversifying the number of generation methods, the FIT can compensate for [[Dispatchable source of electricity |dispatchability]] issues. For example, the wind does not blow all the time so there is an [[intermittent electricity|intermittent flow of electricity]] from [[wind farm]]s (see Figure 1). Having other firms produce electricity through different methods and technologies such as hydroelectric or solar can make up for a shortage in electricity supplied from wind farms. The stability gained from varying the ways in which electricity is generated stabilizes market prices and protects consumers from both sharp price increases and shortfalls in the [[supply]] of electricity while reducing [[emissions]] produced from electricity generation. | |||
== For Further Reading == | |||
* [[Market]] | |||
* [[Price]] | |||
* [[Dispatchable source of electricity]] | |||
* [[Intermittent electricity]] | |||
* Or explore a [[Special:Random|random page]] | |||
==References== | ==References== | ||
{{reflist}} | {{reflist}} | ||
[[Category: Uploaded]] | |||
Revision as of 17:57, 25 June 2026
The aim of a feed-in tariff (FIT) is to encourage the use of renewable technology for the generation of electricity. To encourage this behavior, governments guarantee electricity generation firms a long-term contract with a fixed price for each kilowatt hour.[1]
Having a long term contract with a guaranteed price (specifically a price that is higher than the average price per kWh) means that the firm using renewable technologies can operate with less vulnerability to changes in the market. By guaranteeing a certain price, the policy promotes and accelerates investment in renewable technologies because the FIT agreement makes it more profitable. A stable price coupled with a digression scheme (meaning the guaranteed price is reduced over time) reduces the risk to investors and prevents the overpayment for electricity as renewable technology progresses and becomes more efficient.[2]
A FIT also has the goal of lowering the cost of renewable energy in the long run as more and more firms are encouraged to generate electricity using renewable methods. One way to do this is to focus on a number of different technologies such as wind, solar, hydroelectricity and geothermal.[4] By diversifying the number of generation methods, the FIT can compensate for dispatchability issues. For example, the wind does not blow all the time so there is an intermittent flow of electricity from wind farms (see Figure 1). Having other firms produce electricity through different methods and technologies such as hydroelectric or solar can make up for a shortage in electricity supplied from wind farms. The stability gained from varying the ways in which electricity is generated stabilizes market prices and protects consumers from both sharp price increases and shortfalls in the supply of electricity while reducing emissions produced from electricity generation.
For Further Reading
References
- ↑ H. Roby. (2013). A Supplementary Dictionary of Renewable Energy and Sustainability. [Online], Available: http://www.oxfordreference.com/view/10.1093/acref/9780199654581.001.0001/acref-9780199654581-e-98?rskey=UNXLhD&result=1 [May. 29, 2016].
- ↑ C. Mitchell. The Political Economy of Sustainable Energy. London: Palgrave MacMillian, 2008, pp.182.
- ↑ Pixabay [Online], Available: https://pixabay.com/en/solarpark-wind-park-renewable-energy-1288842/.
- ↑ M. Mendonca, D. Jacobs and B. Sovacool. Powering the Green Economy: The Feed-in Tariff Handbook. London: Earthscan, 2010, pp. 16.