Part 1 | FITs - Incubating a Clean Energy Future

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Feed-ins "achieve larger deployment at lower costs." Sir Nicholas Stern

For renewable energy projects to rapidly displace our old climate harming energy systems, like oil, coal and natural gas (high in methane), policy has to guide these efforts. Policy not only aids the interest of energy market growth, but it serves and protects the greater interests of climate change mitigation and a sustainable energy future. There is no short term thinking here. Energy policy projects what it can safely plan for the environment, society and energy security in the coming decades.

Around the world more countries are working out new agendas that can effectively direct national clean energy development. India, China and Japan are a few new players in the process of creating and implementing FITs. Looking at the variety of efforts being used around the world, some are modest net metering programs and other countries offer ambitious and well thought out national feed in tariff policies. Today, strong impetuous for creating sustainable energy policy is coming from energy advising bodies like the IEA and IRENA, that are rightfully sounding the alarm on our behalf. We must change our energy practices and shift to renewable forms of energy.


Government feed in tariff policies create a number of instrumental incentives to this end. Directly they guarantee that home owners, small businesses or larger energy projects will get paid for providing renewable energy to the grid. This compensation model is being pledged for at least 20 years by many countries for both solar and wind energy. Agreement for hydro projects in Canada, and recently seen introduced in India, provide lengthy 35 year and higher terms. FITs serve to fertilize the growth of renewable energy, not sustain it indefinitely however. They also give investors and entrepreneurs the confidence to partner and create new business, which also creates jobs.

If we look at the German FIT system, as one of the longest running examples we have, it includes incentives for hydro-power, photovoltaics, on-shore and off-shore wind, geothermal, biomass and landfill/sewage/mine gas. The incentives decrease very gradually over time and there are limits on what is allowed per building mounted solar, for example. Incentives are not a renewable resource and there is a fixed ceiling and floor on the amount of energy FITs will subsidize per operation. Often higher incentives are paid to smaller projects, creating greater incentive for the small business sector. So if you're a big company maximizing your contribution to the grid, you'll be paid less per kWh of generated renewable energy. Germany also reviews and revises it's policy every several years to adapt to their energy landscape and reinforce long-term goals for meeting renewable energy production nationally.

This type of policy regulates what's happening with renewable energy far more than what would be deemed familiar in North America. Our capitalist-consumer mindset shirks at regulatory measures introduced into any non-regulated market, that may initially seem to hamstring our 'right to free enterprise at will'. We think our freedom is being taken away, but we may fail to see the larger picture and our need for such measures in the short term, that can take us to a better place in the longer term for clean sustainable energy. We currently need to incubate renewable energy deployment in every way possible, and using cooperative measures that acknowledge the whole community, the environment and not just business interests will do that.

In part two we will cover more specifically countries by example and the types of FIT programs they are implementing in support of a clean energy future.