What are Feed-In Tariffs?

  • Feed-in tariffs, also called “renewable energy payments” or REPs, are a policy tool used to promote renewable resources.
  • Feed-in tariffs generally require utilities to sign long-term wholesale contracts with renewable energy generators agreeing to purchase power at rates established by state regulators.
  • The rates are established at the level required to ensure the generators a rate of return adequate to attract investment. Some describe the rates as incorporating the societal benefits of renewable resources in addition to the energy and capacity value of the power. As an example, one proposal would pay wind projects between $.15 and $.23/kWh, small hydro projects between $.12 and $.35/kWh, photovoltaic projects between $.46 and .98/kWh and so-on depending on the need of the project.
  • Some feed-in tariff proposals provide for some generator or tax-payer funding for the costs utilities incur in complying with the feed-in tariff obligations.
  • Feed-in tariffs may also be accompanied by other policies that grant renewable resources priority access to transmission capacity and grant renewable resources priority rights to be dispatched.