Before you start drafting...

... you need to consider whether your country or region is suitable for a FIT law.

We think there are three key questions that will help to determine the suitability of a country or region for a FIT law. Answering 'yes' to these will help to ensure smooth and effective progress in enacting a FIT law.

Does your country or region have an appropriate electricity grid?

FIT laws support grid-connected electricity generation from renewable energy sources. FIT laws don't work for off-grid electricity production, where other support instruments are more appropriate, such as direct investment incentives, micro-credits and tax and investment incentives.

Obviously, the more extensive the grid, the better. This will mean more power plants get connected. But more importantly, is there grid access in the areas with the best resource conditions?

In answering this question, it might be necessary to consider drafting a new, or amending a current, national grid extension plan. This could be done in conjunction with an analysis of resource availability.

National grid extension plan

Preparation of these plans is normally managed by the independent grid operator. If the grid is not independently managed, or the grid operator is reluctant to carry out such a plan, another independent and qualified body can be appointed for this task. These plans can also be worked out in cooperation with international organizations active in the field of renewable energy deployment, e.g. the World Bank or the Asian Development Bank.

For large scale renewable electricity projects, bottlenecks in the transmission and distribution system network have to be identified to guarantee grid stability. Insufficient grid capacity is often the major constraint for renewable energy projects.

Do you know your country or region's resource availability?

Renewable energies are domestic resources. Around the world, electricity production from renewable energy sources is possible but the resource availability varies largely for each single technology. For instance, there might be very good wind conditions in some areas but no good sites for geothermal electricity generation. Every support programme should therefore start with an understanding of the national or regional resource availability. It might be necessary to carry out a tailor-made analysis.

Resource availability also tends to impact on the FIT tariff (or price). As a general rule, lower tariffs (or prices) apply in areas with relatively good geographic conditions. Slightly higher prices might be necessary under sub-optimal conditions.

International and national programmes might have begun working out the resource availability in different countries and regions.  

Resource availability resources

The United Nations Environment Programme (UNEP) maintains a database and website with solar and wind resource maps and data for a number of countries and regions, known as The Solar and Wind Energy Resource Assessment (SWERA). Small hydro power assessments are also being developed. Currently funded by NASA, its mission is to provide high quality information in suitable formats, along with the tools needed to apply these data in ways that facilitate renewable energy policies and investments:

In the U.S., the Department of Energy's Wind and Hydropower Technologies Program maintains a State wind resource map and other information:

Is there likely to be sufficient political support?

Passing laws needs political support. This support might already exist, or, if not, will need to be built.

Don't be deterred if political support needs to be built. There are many reasons to introduce a FIT law, and the beauty of a FIT law is its democratic nature: it can benefit everybody, from individual households through to large companies, whether urban or rural, whether commercial or not-for-profit. And at the same time, security of supply, stable electricity prices in times of increasing fossil fuel prices, environmental benefits, job opportunities, and supporting rural areas are all examples of the wider social benefits. The possibilities of building political support will exist everywhere.

Experience shows that FIT laws have best worked in countries with a broad political consensus, both for support of renewable electricity in general and for the choice of support mechanism in particular. The most successful countries (e.g. Spain and Germany) have relied on a FIT law for more than a decade, thus providing a stable political framework. Green Party politicians were critical in developing the French and German FIT laws, as was a strong alliance between green groups and the existing renewable industry. This political consensus is the only way to avoid the shift from one support mechanism to another which might hamper investors' confidence and sustainable growth of the renewable electricity sector.

Here you can learn more about the advantages of strong alliances, regional capacity-building and actors that might be opposed to the implementation of a FIT law. 

Strong alliances

Key to building political support is forming a strong alliance across many parts of society. Examples from countries with an outstanding renewable energy record show political parties, governmental actors, NGOs, environmental organisations, industry associations, utilities, financial institutions, labour unions and research institutes pulling together. In Ontario for example, farmers were an important group supporting introduction of the FIT system.

Regional capacity-building

For the support of renewable electricity, it is equally important to start capacity-building at regional level at an early stage, as in many cases regional authorities will be responsible for the administrative handling of renewable energy projects. Local and regional authorities have to be informed about the benefits that renewable energies will bring about for their region.

Possible opposition

Opposition to the support of renewable energies in general and the establishment of a FIT law in particular might come from the conventional energy industry. The industry might fear decreasing market share, especially in the case of stagnating or decreasing electricity consumption. Moreover, grid operators might fear an additional administrative burden that they will not be compensated for.

Opposition from some members of the local public is also possible (NIMBY-ism: not in my backyard). Even though support for renewable energies might be broad in the society, project development in the immediate neighbourhood of people can be rejected. To weaken this effect, it is recommended to include the local public in the decision-making process for plant locations or to facilitate a share of the financial profits to the community (either by direct financial participation in the project or tax revenues).

Answered 'yes' to all three?

If you think that your country or region has an appropriate electricity grid, you've checked out the resource availability, and you reckon there's likely to be sufficient political support, then you can safely say that your country and region is suitable for a FIT law. The next thing to do is to make sure you know what should be in a good FIT law.