Feed-in Tariff Policy: Design, Implementation, and RPS Policy Interactions

Feed-in tariff (FIT) policies are implemented in more than 40 countries around the world and are cited as the primary reason for the success of the German and Spanish renewable energy markets. As a result of that success, FIT policy proposals are starting to gain traction in several U.S. states and municipalities. Experience from Europe is also beginning to demonstrate that properly designed FITsmay be more cost-effective than renewable portfolio standards (RPS), which make use of competitive solicitations. This article explores the design and operation of feed-in tariff policies, including a FIT policy definition, payment-structure options, and payment differentiation. The article also touches on the potential interactions between FIT policies and RPS policies at the state level.