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The Feed in Tariff

The Feed in Tariff is a popular program in European countries and varies from place to place.  The basics of the Tariff require private companies to buy electricity from people who are generating it with renewable energy technology. The companies pay out right to the customer at a set price per unit of energy or simply buy power from the customer at an inflated price then charge the customer the normal rate if the customer needs to take power from the grid. 

Example you someone buys power at a rate of 10 cents/KWH they normally use 100 KWH per day so that $10.00 per day. Now if they are producing their own power they have covered their cost and pay nothing to the utility company however the utility company will pay them 5 cents/KWH for the energy they produced even though the customer used that energy.

The other Example is that the customer generates power gets to use what they need and then any extra that is put into the grid is purchased at a higher rate than what the electricity company charges when the customer needs to draw power back off the grid.  So instead of a flat rate per unit of energy produced electric company will buy any excess energy at a rate of, lets just say 15 cents/KWH and when and if the customer needs power back they only charge there normal going rate of 10 cents/KWH.

Either way is really the same.  The utility company ends up paying the private citizen for simply generating power from renewable energy sources.

Except in the 1st example you could produce energy all day long use exactly the amount that was produced and the electric company would still have to pay a certain amount for the energy being produced,

In the 2nd Example the utility company would only pay if there was actually energy being supplied to the grid.

Although not federally imposed by the government the U.S. has started seeing companies or states adopting these plans to a limited extent.

You might be wondering why a company would impose this type of tariff on itself.  They would do this in response to people wanting to see renewable energy being used and the company would rather pay you to setup a solar array or wind turbine on your property instead of having them installing renewable energy systems that they may not have space for or it would just be to much of an initial investment.  So this is just another vehicle for meeting the growing demand for clean energy.  This may be in response to your states renewable portfolio standard. In some cases in response to legislation passed by the town itself.  So if any of these interests you I would say try to get involved with you local government and see if you can get some incentives enacted.  For a while Gainvile Florida had a Feed in Tariff imposed that was quiet aggressive.  I believe they had the electric company buying back power 2 or 3 times what they were selling if for.

For more information on this http://www.icleiusa.org/blog/follow-gainesvilles-footsteps-on-feed-in-tariffs

 

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