Feed in tariffs

15 July 2009

A feed-in tariff is the name given to legislating a fixed price of purchase for every unit of electricity generated. The price is valid for twenty years and allows an investment to be made with confidence as opposed to the vagaries of fluctuating energy costs. This in turn encourages private investment in low carbon electricity generation that would otherwise have not taken place. The scheme was first introduced in Germany and has since spread across most of Europe. The thinking behind feed in tariffs is that the increased uptake of photovoltaics caused by the artificially inflated price of electricity will mobilise the industry and force prices down for those who install photovoltaics later. It is also likely to spark new investment in photovoltaic technology within this country and create jobs.