Feed-In Tariffs Continue to Prove Their Usefulness, But Still Get Cut

Feed-in Tariffs (FiTs), which pay a guaranteed high rate for renewable energy for 15-20 years (depending on the program) are responsible for nearly two-thirds of the world’s wind power and 90% of the world’s solar.


Last year, utility Northern Indiana Public Service Co. initiated a pilot renewable energy feed-in-tariff (FiT), and like all the others, it’s resulted in resounding success.  

The utility pays nearly triple the retail electricity rate for small installations under 10 kilowatts ($0.30 per KWh) and more than double for large ones between 10 kW to 2 MW ($0.26) for 15 years. The average retail rate is $0.11 per kWh.

In fact, they’re getting close to reaching their 3-year cap of 30 MW in the first year.  

The FiT applies to customers who connect solar, wind, small hydro (up to 1 MW) or biomass (up to 5 MW) to the grid.


As we wait for news of Japan’s new FiT, homeowners and small businesses sold 2150 gigawatt hours to utilities last year, up 50% from 2010, reports Reuters.  

Japan’s 10 regional utilities spent $1.2 billion (0.24% of sales) for surplus solar energy under the FiT.   

The country is expected to launch a full scale Fit in July, which covers all renewable energies – solar, wind, small hydro, biomass and geothermal – but it will cap solar at 10 kilowatts.

The goal is to boost renewable generation by more than 30 gigawatts (GW) over the next decade – the equivalent of 12% of Japan’s total generation capacity before the nuclear meltdown.  


Germany’s landmark FiT, which resulted in the world’s biggest market for renewable energy, which now supplies 20% of the country’s electricity, will be reduced once again.

It’s supposed to be reduced as prices come down and subsidies are no longer needed. The discussion is whether to reduce the tariff by establishing a cap or by gradually reducing the amount paid each month during the year.

A draft bill includes a cap of 1 gigawatt a year (GW) through 2020. Last year, 7.6 GW were installed.

Germany’s solar industry, which grew to lead the world thanks to the FiT, have been struggling with Chinese competition. They say subsidy cuts would further threaten them. The country also plans to vastly increase renewable energy sources to replace nuclear energy when its plants close by 2022.

It’s true that Germany has the highest power prices in the EU($0.24 per kWh), but that cost is paid by utility rate payers.

But a majority of rate payers (61%) are willing to pay that price to get more renewable energy, according to a survey commissioned by the German Association of Municipal Utilities.

54% of respondents even say they’d have no problem with a wind turbine nearby.  

United Kingdom 

The UK is rushing to reduce its FiT payments, which ballooned too quickly because of their popularity.

Last year, the country installed about 3% of the world’s total solar systems (it now has 230,000 systems), according to the European Photovoltaic Industry Association. The program was launched in April, 2010.

Although the British government lost its case in court last week to cut them ahead of the official consultation period, it looks like they’ll be cut March 3.  

At this point, systems under 4 kW will see their FiT payments go down 52%.  

Since FiT’s are always wildly successful, one wonders why governments always seem to be taken aback by the huge response … and then, eventually cut back, which ends
up being more disruptive.

Meanwhile, UK initiated a new FiT in December, the first in the world to compensate for solar heat. 

Malaysia’s Renewable Energy FiT became law in December and
almost the entire solar allocation through 2014 was applied for within the first 24 hours! The program is paid for by a 1% levy on utility bills.

Thailand, Taiwan, the Philippines and Uganda are among the countries that have similar policies. 

Should California go with a FiT? Read more: 

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