What is the feed-in tariff (FIT) and how does it work?
They put a legal obligation on utility companies to buy electricity from renewable energy producers at a premium rate, usually over a guaranteed period, making the installation of renewable energy systems a worthwhile and secure investment for the producer. The extra cost is shared among all energy users, thereby reducing it to a barely noticeable level. FITs have been empirically proven to generate the fastest, lowest-cost deployment of renewable energy, and with this as a priority for climate protection and security of energy supply, not to mention job creation and competitiveness, FITs are the best vehicle for delivering these benefits. The FIT system means that the pay-back time for PV is no longer several decades but several years instead. In countries such as Germany and Spain the demand for renewable energy systems has risen dramatically and the installation costs are coming down fast. This financing model has now been taken up widely around the world, as the table below shows:
