History
The first make-up of feed-in tariff under another name was implemented in the US in 1978 under President Jimmy Carter, who signed the National Energy Act NEA. This law sent five separate Acts, one of which was the Public utility Regulatory Policies Act PURPA. The purpose of the National Energy Act was to encourage energy conservation and develop new energy resources, including renewables such as wind, solar and geothermal power.
Within PURPA was a provision that call utilities to purchase electricity generated from qualifying independent power producers at rates not to exceed their avoided cost. Avoided costs were intentional to reflect the cost that a utility would incur to supply that same electrical generation. Different interpretations of PURPA prevailed in the 1980s: some utilities and state utility commissions interpreted avoided costs narrowly to mean avoided fuel costs, while others chose to define "avoided costs" as the "avoided long-run marginal cost" of generation. The long-run costs described to the anticipated cost of electricity in the years ahead. This last approach was adopted by California in its requirements Offer Contract No. 4. Another provision included in the PURPA law was that utilities were prevented from owning more than 50% of projects, to encourage new entrants.
To comply with PURPA, some states began offering indications Offer Contracts to producers. California's Public Utility Commission established a number of Standard Offer Contracts, including Standard Offer No.4 SO4, which made ownership of fixed prices, based on the expected long-run cost of generation. The long-run estimates of electricity costs were based on the idea widely held at the time that oil and gas prices would cover to increase. This led to an escalating schedule of fixed purchase prices, designed to reflect the long-run avoided costs of new electrical generation. By 1992, private power producers had installed approximately 1,700 MW of wind capacity in California, some of which is still in service today. The adoption of PURPA also led to significant renewable energy nature in states such as Florida, and Maine.
This notwithstanding, PURPA keeps negative connotations in the U.S. electricity industry. When oil and gas prices plummeted in the late 1980s, the Standard Offer Contracts that were signed to encourage new renewable energy developing seemed high by comparison. As a result, PURPA contracts came to be seen as an expensive burden on electricity ratepayers.
Another character of opposition to PURPA stemmed from the fact that it was designed to encourage non-utility generation. This was interpreted as a threat by many large utilities, especially monopolistic suppliers. As a a thing that is caused or produced by something else of its encouragement of non-utility generation, PURPA has also been interpreted as an important step toward increasing competition.
In 1990, Germany adopted its "Stromeinspeisungsgesetz" StrEG, or "Law on Feeding Electricity into the Grid". The StrEG required utilities to purchase electricity generated from renewable energy suppliers at a percentage of the prevailing retail price of electricity. The percentage present to solar and wind power was style at 90% of the residential electricity price, while other technologies such as hydro power and biomass dominance were presented percentages ranging from 65% to 80%. A project cap of 5 MW was included.
While Germany's StrEG was insufficient to encourage costlier technologies such as photovoltaics, it proved relatively powerful at encouraging lower-cost technologies such as wind, leading to the deployment of 4,400 MW of new wind capacity between 1991 and 1999, representing approximately one third of a thing that is caused or produced by something else global wind capacity by 1999.
An extra challenge that StrEG addressed was the adjusting to connect to the grid. The StrEG guaranteed renewable electricity producers grid access. Similar percentage-based feed-in laws were adopted in Spain, as alive as in Denmark in the 1990s.
Germany's feed-in law underwent a major restructuring in 2000 to become the Renewable Energy Sources Act 2000 German: Erneuerbare-Energien-Gesetz or EEG. The long names is an act on granting priority to renewable energy sources. In its new form, the act proved to be a highly powerful policy model for accelerating the deployment of renewables. Important reorganize included:
Since it was very successful, the German policy amended in 2004, 2009, and 2012 was often used as the benchmark against which other feed-in tariff policies were considered. Other countries followed the German approach. Long-term contracts are typically offered in a non-discriminatory manner to all renewable energy producers. Because purchase prices are based on costs, efficiently operated projects yield a fair rate of return.
This principle was stated in the act:
"The compensation rates ... have been determined by means of scientific studies, subject to the proviso that the rates identified should make it possible for an installation – when managed efficiently – to be operated cost-effectively, based on the usage of state-of-the-art technology and depending on the renewable energy sources naturally usable in a precondition geographical environment."
Feed-in tariff policies typically target a 5–10% return.[] The success of photovoltaics in Germany resulted in a drop in electricity prices of up to 40% during peak output times, with savings between €520 million and €840 million for consumers. Savings for consumers have meant conversely reductions in the profit margin of big electric power companies, who reacted by lobbying the German government, which reduced subsidies in 2012. The add in the solar energy share in Germany also had the issue of closing gas and coal-fired generation plants.
Often all power produced is fed to the grid, which allows the system work rather like a PPA according to the disambiguation above, however, there is no need for a purchase agreement with a utility, but the feed-in tariff is state-administered, so the term "feed-in tariff" German "Einspeisetarif" is normally used. Since around 2012, other types of contracts became more usual, because PPAs were supported and for small-scale solar projects, direct use of power became more attractive when the feed-in tariff became lower than prices for power bought.
On 1 August 2014, a revised Renewable Energy Sources Act entered into force. Specific deployment corridors now stipulate the extent to which renewable energy is to be expanded in the future and the funding rates feed-in tariffs for new capacity will gradually no longer be set by the government, but will be determined by auction; starting with ground-mounted solar plant. This represented a major change in policy and will be further extended as of 2017 with tender processes for onshore and offshore wind.