A Guide to Feed-In Tariffs
The feed-in tariff is designed to provide financial compensation to anyone installing a renewable energy system on their property. It is intended as an added incentive to utilize this alternative energy equipment and can substantially lower the cost of a renewable energy system over time by providing an additional financial incentive for its installation and use.
The way the basic feed in tariff scheme works is that a property owner is paid for the amount of energy their system produces from a renewable energy source. Typically all systems qualify for this feed-in tariff and the rate varies based on the type of system used. Most systems qualify for the feed-in tariff for 20 years except for solar power systems, which enjoy a 25-year inclusion. Additionally, this feed-in tariff provides for a second payment for any power generated beyond whatever power is consumed by property where the system is installed.
The feed-in tariff has been a wildly popular incentive for homeowners and businesses considering an alternative power system. Unlike the more common rebate or tax incentive, the feed-in tariff provides a continuing benefit for years after the solar installation. This allows the owner of a property to enjoy the free energy the system produces while installed at the facility as well as being compensated for every bit of power they generate. By providing funding for the amount of power produced, the feed-in tariff allows the initial investment for one of these alternative energy solutions to be repaid in a much shorter time and helps make these systems feasible for almost any location.
Feed In Tariffs Scheme
An added bonus to the basic feed-in tariff is the export tariff that is paid for any excess power that a system produces. Most alternative energy solutions are designed to generate just enough power for the building they are installed on and don’t generate extra power. Because of this export tariff, many homes and businesses are now installing larger systems that produce an excess of power that allows them to be compensated for the surplus.
This power is fed back into the power grid and enables the local power utility to sell it to other customers in the area. By using this locally generated green power, the utility can reduce the amount of energy they need to generate to service this need. They also are able to avoid the high cost of sending this power over long distances from the point of generation to their remote customers. All of this helps to reduce both the cost of power to their accounts as well as the environmental impact of generating this power with older equipment.