Feed-in Policies

Feed-in tariffs are a commonly used policy instrument for the promotion of renewable electricity production. The term feed-in tariff can be used either in the context of a minimum guaranteed price per unit of produced electricity as approved by the regulator, to be paid to the producer, or as a premium in addition to market electricity prices. Regulatory measures are usually applied to impose an obligation on electricity utilities to pay the (independent) renewable energy power producer a price as specified by the government.
The level of the tariff is commonly set for a number of years to give investors security on income for a substantial part of the project lifetime. Many different adaptations of the instrument are applied. However, the level of the tariff need not have any direct relation with either cost or price, but can be chosen at a level to motivate investors for green power production.

In certain developing countries like India, this instrument has gained importance since the early 90s and is still being used to promote renewable electricity predominantly from wind, small hydro and biomass.

Further Reading

The World Future Council Global Feed-in Tariffs Project: http://www.worldfuturecouncil.org/arguing_fits.html

Evaluation of different feed-in tariff design options - Best practice paper for the International Feed-in Cooperation by Arne Klein, Anne Held, Mario Ragwitz (Fraunhofer ISI) and Gustav Resch, Thomas Faber (EEG): http://www.worldfuturecouncil.org/fileadmin/user_upload/Miguel/best_practice_paper_final.pdf