Feed In Tariffs - What are Feed in Tariffs?
Feed In Tarriffs or a Feed in Tariff is an incentive structure brought in by government to encourage the uptake of renewable sources of energy. Feed in tariffs are also known as renewable energy payments, renewable tariffs and FiT’s.
The way feed in tariffs work is by passing legislation that obligate’s electricity utility companies to buy electricity from producers of renewable energy at a premium price, above market rates set by government in the legislation. This renewable electricity bought at a premium price is usually produced by homeowners and businesses who are generating on a small to medium scale.
Having feed in tariffs therefore encourages the introduction of renewable energy products by the mass population, as it brings a steady income after the initial installation. This makes feed in tariffs a sound investment option if somebody wishes to invest in the technology. In these unstable economic times, this view of feed in tariffs being a sound investment is heightened. With bank interest rates low globally and the stock market very volatile, feed in tariffs are seen by many as a safe and sound investment, as well as it being an etchical one.
Feed in tariffs have been adopted in since 1990 Germany with great success. The scheme has increased solar power production in Germany to 200 times Britain’s current capacity, and has increased wind renewable energy production to 10 times Britain’s level, despite Great Britain getting 40% of the whole of Europe’s wind capacity to produce renewable energy. Even though a premium feed in tariff price has to be paid for the renewable energy, this does not really get passed onto consumers, the average monthly bill in Germany has only increased by 1 Euro a month.
Feed in tariffs are currently being lobbied in Britain and are expected to be introduced next year once legislation has been passed. This could revolutionise the renewable energy and microgeneration industry, making renewable energy more accessible to the general public, and feed in tariffs may be viewed as a strong long term investment. If feed in tariffs are introduced, there is an estimated 100,000 jobs that will be created through the industry, including jobs like installers, manufacturing jobs and consultancy jobs.
Britain is currently behind on its renewable energy targets, and this could be the ideal way to catch up and meet its national and international renewable energy targets for wind, solar and hydro renewable energy production.
Feed in tariffs are a fantastic way to encourage investment into renewable technologies, and could help generate a great deal of power in the UK from renewable energy. Even though we see the UK as a dark and overcast place with no sunlight, the absolute potential production capacity for solar PV in the UK is actually higher than the current UK’s electricity demands; meaning Britain could be run purely by solar power alone if it wished. Let’s hope MP’s pass what could be a truly revolutionary step on the road to carbon free energy production.
Tags: feed in tariffs, microgeneration, Renewable Energy, renewable energy investment