Feed-in tariff
A policy that guarantees renewable generators a fixed price per kWh exported, usually for 15 to 20 years, independent of market prices.
A feed-in tariff (FiT) obliges grid operators to buy renewable electricity at a regulated price for a set period, typically 15 to 25 years. Tariffs are differentiated by technology, size and resource quality so that each category earns a target return.
Germany's Renewable Energy Sources Act (EEG, 2000) made FiTs the most widely copied renewable policy, adopted in more than 50 countries. Early rooftop PV tariffs were about 0.50 to 0.57 EUR/kWh (2004 to 2008), dropping to under 0.10 EUR/kWh by 2016 through automatic "degression" linked to deployment. The scheme drove Germany's installed PV from 0.1 GW in 2000 to about 40 GW by 2015, contributing to global learning that cut module prices dramatically (see learning rate).
Costs were recovered through a surcharge on consumer bills; the German EEG levy peaked at 6.88 ct/kWh in 2017 and was abolished in July 2022, with support moved to the federal budget. Spain and the Czech Republic made retroactive cuts after costs exceeded expectations around 2010 to 2013, leading to international arbitration claims.
Since the mid-2010s, EU state-aid guidelines have required large projects to compete in auctions for sliding feed-in premiums or CfDs, keeping FiTs mainly for small installations. Japan, China and the UK have similarly shifted from FiTs to auctions or market-based schemes.
Related terms
All terms →- Contract for Difference (CfD)
A support scheme or contract in which a generator receives the difference between a fixed strike price and a market reference price, paying back when prices exceed it.
- Net metering
A billing arrangement in which electricity exported by a small generator, usually rooftop solar, offsets imports at the retail rate over a billing period.
- PPA (Power Purchase Agreement)
A long-term contract under which a buyer agrees to purchase electricity from a specific generator at a set price or price formula.
- Learning rate (Swanson's law)
The percentage cost reduction of a technology for every doubling of cumulative production; for solar modules, Swanson’s law puts it near 20%.
- Grid parity
The point at which electricity from a new source, usually solar or wind, costs the same as or less than power bought from the grid.
- LCOE (Levelized Cost of Electricity)
The constant price per MWh that recovers all lifetime costs of a power plant, discounted to present value, divided by its discounted lifetime output.