Basic FiT Design Options

When designing FiTs, the idea is to provide a balance between investment security for producer on the one hand and the elimination of windfall profits on the other. To accomplish these goals, the design of FiTs has therefore become increasingly complex. Empirical studies, however, have identified a number of design criteria which legislators should consider when drafting or improving FiT legislation. The figure illustrates the most 12 most important criteria.

 

Detailed information, case study experiences and expert advices on these design criteria can be found in the WFC publication "Powering the Green Economy - The Feed-in tariff handbook" (M. Mendonca, David Jacobs and Benjamin Sovacool 2010). To design your own FiT legislation, please read the next section on features of a good FiT law.

 

 

While the principles of designing a REFiT are universal, lessons from industrialized countries may not all be applicable in other parts of the world. "Powering Africa Through Feed-In Tariffs: Advancing Renewable Energy to Meet the Continent's Electricity Needs" discusses the general principles in an African context. The book was published in 2013 by the World Future Council and Heinrich Böll Foundation with support from Friends of the Earth.

 

This report is written in the framework of the International Feed-in Cooperation with the goal to describe and analyse the feed-in tariff designs applied in the Member States of the European Union. Innovative design options to reduce the electricity generation costs as well as the costs for society are presented and investigated. Best practice examples are analysed and their consequences for RES-E generators and electricity consumers are described. Download the report for further information.

 

In this paper, the authors propose an innovative two-part FIT, consisting of both a capacity payment and a market-based energy payment, which can be used to meet the renewables policy goals of regulators. This two-part tariff design draws on the strengths of traditional FITs, relies on market mechanisms, is easy to implement, and avoids the problems caused by distorting wholesale energy markets through above-market energy payments.