What is the Feed in Tariff Program?

The impact of climate change has resulted in many governments coming up with programs to counter the negative impact. To do this, there has been an effort to move towards using renewable energy sources. A Feed-In Tariff (FiT) is an incentive program to promote the implementation of renewable energy by way of government legislation. The regional or national utility or power companies are mandated to purchase electricity generated from renewable sources, such as wind power, solar power, hydropoweretc, at rates set by the government. The set government rates are higher than market rates to off-set the cost disadvantages of using renewable energy sources. The rates that are established will vary among governments.

The Feed in Tariff system has been established in states in Countries across the world, including the United States and Canada. These countries have different variations of the FiT program. A form of FiT was first established in the US in 1978 by former President Jimmy Carter. He signed the National Energy Act (NEA) and the Public Utilities Regulatory Policy Act (PURPA). The goal was to encourage energy conservation and the development of national energy resources, including renewable energy. The province of Ontario, Canada, introduced a feed-in tariff in 2006, and ratified it in 2009, which proposed to boost payments for roof-top solar power from 42/kWh to 80/kWh. In April, 2009, eleven US State legislatures began considering implementing a FiT as an accompaniment to their renewable electricity mandates. Feed-In Tariffs have been linked with an increased development of solar power in Germany and Spain as well as wind power in Denmark.

Many experts say that the FiT program makes adopting renewal energy more financially attractive. The higher market price that is purchased by companies will be recouped by spreading it across all customer bills and it does not increase the bills by that much, usually by about 10 cents. The more customers a company has, the less money is added to customer’s bills. The goal is to have a gradual transition from non renewable energy resources to renewable energy resources.

In Ontario, Canada, the government hopes to eliminate coal-fired electricity by the end of 2014, increase the development of renewable energy technologies, and create new green industries and jobs. The FIT Program was made possible by the Green Energy and Green Economy Act, 2009 which was passed into law on May 14, 2009. The Ontario Power Authority is responsible for implementing the program. It offers stable prices under long-term contracts for energy generated from renewable sources, including: biomass, biogas, landfill gas, on-shore and off-shore wind, solar photovoltaic (PV), and hydropower. It is the largest climate-change initiative in North America.

The benefits of renewable energy include: clean sources of energy are being utilized and this decreases the negative impact on the environment, renewable energy will deplete so we will create an environmentally sustained future for our children, create jobs that will give a boost to the economy, less dependency on oil from unfriendly countries, and help ensure there is no oil crisis like there was in the 1970s. In the future, many more governments are expected to implement a FiT program.

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Originally posted 2009-11-04 00:48:35.

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