Feed-in-Tarriff (FIT)

In February, 2012, the Sierra Club Atlantic Chapter Energy Committee published a white paper on Renewable Energy and Green Jobs Policy for the Sierra Club Atlantic Chapter Energy Committee: CLEAN-FIT programs: Clean Local Energy Accessible Now – Feed in Tariff (FIT).  Feed-in-Tariff is the more commonly used name for the system. 

Feed-In Tariff programs are an efficient method of maximizing both job creation and rapid renewable energy deployment.

The programs provide a stable investment climate that makes financing projects less complicated, less expensive, more attractive, and more available to individuals, small businesses and communities. For those reasons, FIT programs have a strong track record at creating demand for renewable energy projects and speeding the transition to renewable energy and away from polluting sources of energy.

Feed-in-tariffs, or CLEAN Contracts, provide a mechanism where producers of renewable energy (solar, wind, etc.) are fairly compensated for clean energy sold to utility companies.  Long term contracts (usually 20 years) with a set rate of return guarantees payments to the renewable energy companies.  This allows banks and investors to confidently invest in the industry and insures its rapid development. Rates paid on renewable energy contracts are reviewed annually so that new contracts are adjusted to the market conditions. The cost of clean energy declines over time as the renewable companies grow in scale.  Energy price spikes which occur in systems solely dependent on fossil fuels are controlled. 

The renewables also reduce carbon dioxide and greenhouse gas emissions substantially. The entire renewable system has helped reduce dependence on foreign energy.

Feed-in-tariffs have produced numerous good paying jobs in the renewable energy field, which cannot be transferred overseas. The policy has led to the development of an industry which supplies fifteen to twenty present of energy in the European countries. FIT programs exist in more than 90 jurisdictions.

The YouTube video “Renewable Energy Development in New York State” is the May 2010 presentation of the former Chair of Ontario’s Department of Energy George Smitherman to the New York State Senate on the Canadian legislation, and how New York State could benefit from a similar law.  View a video of his presentation “Renewable Energy Development in New York State.”

While feed-in-tariffs have been slow in growing in the US, they do exist in the LIPA pilot project, Vermont, Rhode Island, Gainesville, Florida, Los Angeles, California, and in modified form in California State. 

FITs and Distributive Energy Systems

Feed-in-tariffs have led to the democratization of Germany’s energy market.  Besides individual ownership, some 80,000 small scale incentives are members of energy cooperatives.  

Because feed-in-tariffs generally pay differing electricity rates depending on the size of the renewable energy installation, the FIT has become an effective means of developing distributive, locally owned energy systems.  In 2010, Germany’s FIT had created a system where 40% of their renewables owned by industries and another 11% by farmers. See more here.