Difference between revisions of "Feed-in Tariffs (FIT)"
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| − | Feed-in tariffs (FIT) are fixed rates paid power plants / electricity producers for feeding electricity into the grid, whereas power purchasing agreements (PPA) are bilateral contracts between the producer and the grid / system operator. FITs are typically used to incentivize the production of electricity on the basis of renewable energy (RE-FIT). FIT set a price, other incentive schemes set a quantity (quota regulation), markets react accordingly (...). | + | Feed-in tariffs (FIT) are fixed rates paid power plants / electricity producers for feeding electricity into the grid, whereas power purchasing agreements (PPA) are bilateral contracts between the producer and the grid / system operator. FITs are typically used to incentivize the production of electricity on the basis of renewable energy (RE-FIT). FIT set a price, other incentive schemes set a quantity (quota regulation), markets react accordingly (...). |
= Design options = | = Design options = | ||
| + | The following design options exist: | ||
| + | *'''Purchase obligation''' | ||
| + | *'''Stepped tariff''' | ||
| + | *'''Tariff digression''' | ||
| + | *'''Premium option''' | ||
| + | *'''Equal burden sharing''' | ||
| + | *'''Forecast obligation''' | ||
= Experiences = | = Experiences = | ||
| − | == Germany == | + | == Germany == |
Germany started supporting renewable energies in 1991 with the first legally binding act that enabled producers to feed their renewable energies into the grid. In 2001 the first version of the now called Renewable Energy Sources Act (EEG) entered into force and was designed to provide an adapted tariff to the different renewable energy systems in dependence to their status of technology development and prices for production of power and to ensure compliance with sustainability criteria. The latest version of this act entered into force in January 2009. It is the most important instrument and driving force in the expansion of renewable energies in the electricity sector because it provides investment securities. | Germany started supporting renewable energies in 1991 with the first legally binding act that enabled producers to feed their renewable energies into the grid. In 2001 the first version of the now called Renewable Energy Sources Act (EEG) entered into force and was designed to provide an adapted tariff to the different renewable energy systems in dependence to their status of technology development and prices for production of power and to ensure compliance with sustainability criteria. The latest version of this act entered into force in January 2009. It is the most important instrument and driving force in the expansion of renewable energies in the electricity sector because it provides investment securities. | ||
| − | '''How does the Renewable Energy Sources Act (EEG) work?<br>'''Basically, the EEG obligates that all generators of electricity are guaranteed access to the integrated electrical grid to a fixed price on base of a feed-in tariff scheme for the time span of 20 years beginning at the point of installation. <br>The exact amount of the feed-in tariff depends on the starting date of feeding in and drops by a fixed percentage each year. This encourages technological improvements and cost decreases (degression rate). The prices furthermore vary with the amount of energy generated by the producer and the type of renewable energy source. (Landfill gas, sewage treatment plant gas, mine gas, biomass, geothermal, energy from solar radiation (solar photovoltaic, solar thermal), hydropower and wind power). | + | '''How does the Renewable Energy Sources Act (EEG) work?<br>'''Basically, the EEG obligates that all generators of electricity are guaranteed access to the integrated electrical grid to a fixed price on base of a feed-in tariff scheme for the time span of 20 years beginning at the point of installation. <br>The exact amount of the feed-in tariff depends on the starting date of feeding in and drops by a fixed percentage each year. This encourages technological improvements and cost decreases (degression rate). The prices furthermore vary with the amount of energy generated by the producer and the type of renewable energy source. (Landfill gas, sewage treatment plant gas, mine gas, biomass, geothermal, energy from solar radiation (solar photovoltaic, solar thermal), hydropower and wind power). |
The additional costs that arise are distributed equally among all energy utilities in Germany (off-budget incentive scheme). They in turn pass the costs down to the end consumer, according to their demand on electricity (cross subsidisation). | The additional costs that arise are distributed equally among all energy utilities in Germany (off-budget incentive scheme). They in turn pass the costs down to the end consumer, according to their demand on electricity (cross subsidisation). | ||
| Line 19: | Line 26: | ||
Therefore, the EEG it is especially favouring small producers in decentralised (grid connected) areas to invest into renewable energies. The individual support for every single source of renewable energies furthermore encourages the decentralized approach. | Therefore, the EEG it is especially favouring small producers in decentralised (grid connected) areas to invest into renewable energies. The individual support for every single source of renewable energies furthermore encourages the decentralized approach. | ||
| − | Expansion of renewable energies in the power generation sector: Since the beginning of the support, wind power has developed strongly and hydropower has been maintained at a high level. A similar boom occurred in the use of biomass, photovoltaic and geothermal energy. | + | Expansion of renewable energies in the power generation sector: Since the beginning of the support, wind power has developed strongly and hydropower has been maintained at a high level. A similar boom occurred in the use of biomass, photovoltaic and geothermal energy. |
| + | <br> | ||
| + | == Brazil == | ||
| − | == Brazil == | + | <span class="long_text" id="result_box"><span title="" style="background-color: #fff" xc="FITs are politically unworkable. |
| + | " wc="FITs sind politisch nicht umsetzbar." closure_uid_tbyno7="33">1. FITs are politically not feasible in Brazil. | ||
| + | </span><span title="" style="background-color: #fff" xc="2nd " wc="2." closure_uid_tbyno7="34">2. Due to high retail electricity rates it is expected that </span><span title="" style="background-color: #fff" xc="All estimates show that grid parity is expected in Brazil because of high retail electricity rates in 5-7 years. | ||
| + | " wc="Alle Abschätzungen zeigen, dass Grid Parity in Brasilien aufgrund der hohen Strom-Endkundentarife in 5-7 Jahren zu erwarten ist." closure_uid_tbyno7="35">grid parity will be attained 5-7 years. | ||
| + | </span><span title="" xc="3rd " wc="3." closure_uid_tbyno7="36">3. The regulator is repsonsible for tariff adjustments.</span><span title="" style="background-color: #fff" xc="For this to prejudge the following conditions must be clear that regulates the regulator, not the politics. | ||
| + | " wc="Damit dies greift, müssen die Anschlussbedingungen klar sein, die regelt die Regulierungsbehörde, also nicht die Politik." closure_uid_tbyno7="37"> | ||
| + | </span></span> | ||
= Feed-in tariff funds = | = Feed-in tariff funds = | ||
| + | |||
| + | '''Overview of proposed feed-in tariff funds''' | ||
| + | |||
| + | {| cellspacing="1" cellpadding="1" width="100%" border="1" | ||
| + | |- | ||
| + | | '''Name of organization''' | ||
| + | | '''Capitalization / Source of funds''' | ||
| + | | '''Governance Structure''' | ||
| + | | '''Target / Services provided''' | ||
| + | | '''Annotation''' | ||
| + | |- | ||
| + | | Deutsche Bank - Global Energy Transfer Feed-in tariffs for Developing Countries (GET FiT) | ||
| + | | carbon credits, ODA, private capital | ||
| + | | global | ||
| + | | renewable energy and off-grid premium (incremental costs); policy advise; project preparation | ||
| + | | | ||
| + | GET FiT is proposed by Deutsche Bank Climate Change Advisors. Stage: Greenpaper (study), available on [http://www.dbcca.com/research http://www.dbcca.com/research] | ||
| + | |||
| + | |- | ||
| + | | | ||
| + | | | ||
| + | | | ||
| + | | | ||
| + | | | ||
| + | |} | ||
| + | |||
| + | |||
| + | |||
| + | = Further Reading = | ||
| + | |||
| + | *Arne Klein, Benjamin Pfluger, Anne Held, Mario Ragwitz (Fraunhofer ISI), Gustav Resch, Thomas Faber (EEG); Evaluation of different feed-in tariff design options – Best practice paper for the International Feed-In Cooperation; A research project funded by the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU); 2nd edition, Karlsruhe, October 2008 | ||
| + | *John Besant-Jones, Bernard Tenenbaum, Prasad Tallapragada (ESMAP / World Bank); Regulatory Review of Power Purchase Agreements: A Proposed Benchmarking Methodology; Washington DC, October 2008 | ||
| + | *DB Climate Change Advisors; Greenpaper GET FiT Program - Global Energy Transfer Feed-in Tariffs for Developing Countries; London April 2010 | ||
[[Category:Financing,_promotion_schemes_and_subsidies]] | [[Category:Financing,_promotion_schemes_and_subsidies]] | ||
Revision as of 09:11, 28 July 2010
Feed-in tariffs (FIT) are fixed rates paid power plants / electricity producers for feeding electricity into the grid, whereas power purchasing agreements (PPA) are bilateral contracts between the producer and the grid / system operator. FITs are typically used to incentivize the production of electricity on the basis of renewable energy (RE-FIT). FIT set a price, other incentive schemes set a quantity (quota regulation), markets react accordingly (...).
Design options
The following design options exist:
- Purchase obligation
- Stepped tariff
- Tariff digression
- Premium option
- Equal burden sharing
- Forecast obligation
Experiences
Germany
Germany started supporting renewable energies in 1991 with the first legally binding act that enabled producers to feed their renewable energies into the grid. In 2001 the first version of the now called Renewable Energy Sources Act (EEG) entered into force and was designed to provide an adapted tariff to the different renewable energy systems in dependence to their status of technology development and prices for production of power and to ensure compliance with sustainability criteria. The latest version of this act entered into force in January 2009. It is the most important instrument and driving force in the expansion of renewable energies in the electricity sector because it provides investment securities.
How does the Renewable Energy Sources Act (EEG) work?
Basically, the EEG obligates that all generators of electricity are guaranteed access to the integrated electrical grid to a fixed price on base of a feed-in tariff scheme for the time span of 20 years beginning at the point of installation.
The exact amount of the feed-in tariff depends on the starting date of feeding in and drops by a fixed percentage each year. This encourages technological improvements and cost decreases (degression rate). The prices furthermore vary with the amount of energy generated by the producer and the type of renewable energy source. (Landfill gas, sewage treatment plant gas, mine gas, biomass, geothermal, energy from solar radiation (solar photovoltaic, solar thermal), hydropower and wind power).
The additional costs that arise are distributed equally among all energy utilities in Germany (off-budget incentive scheme). They in turn pass the costs down to the end consumer, according to their demand on electricity (cross subsidisation).
Therefore, the fixed prices are intended to level costs for energy derived from renewable energy sources with energy from traditional resources.
The fixed-tariffs give further more security to providers of electricity and stimulate investments into the sector. It creates an equal level “playing field” for renewable energy technologies that also enables small and medium sized producers to participate in the energy market and to develop new and innovative solutions.
Therefore, the EEG it is especially favouring small producers in decentralised (grid connected) areas to invest into renewable energies. The individual support for every single source of renewable energies furthermore encourages the decentralized approach.
Expansion of renewable energies in the power generation sector: Since the beginning of the support, wind power has developed strongly and hydropower has been maintained at a high level. A similar boom occurred in the use of biomass, photovoltaic and geothermal energy.
Brazil
1. FITs are politically not feasible in Brazil. 2. Due to high retail electricity rates it is expected that grid parity will be attained 5-7 years. 3. The regulator is repsonsible for tariff adjustments.
Feed-in tariff funds
Overview of proposed feed-in tariff funds
| Name of organization | Capitalization / Source of funds | Governance Structure | Target / Services provided | Annotation |
| Deutsche Bank - Global Energy Transfer Feed-in tariffs for Developing Countries (GET FiT) | carbon credits, ODA, private capital | global | renewable energy and off-grid premium (incremental costs); policy advise; project preparation |
GET FiT is proposed by Deutsche Bank Climate Change Advisors. Stage: Greenpaper (study), available on http://www.dbcca.com/research |
Further Reading
- Arne Klein, Benjamin Pfluger, Anne Held, Mario Ragwitz (Fraunhofer ISI), Gustav Resch, Thomas Faber (EEG); Evaluation of different feed-in tariff design options – Best practice paper for the International Feed-In Cooperation; A research project funded by the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU); 2nd edition, Karlsruhe, October 2008
- John Besant-Jones, Bernard Tenenbaum, Prasad Tallapragada (ESMAP / World Bank); Regulatory Review of Power Purchase Agreements: A Proposed Benchmarking Methodology; Washington DC, October 2008
- DB Climate Change Advisors; Greenpaper GET FiT Program - Global Energy Transfer Feed-in Tariffs for Developing Countries; London April 2010
