An analysis of feed-in tariff remuneration models: Implications for renewable energy investment

Recent experience from around the world suggests that feed-in tariffs (FITS) are the most effective policy to encourage the rapid and sustained deployment of renewable energy. There are several different ways to structure a FIT policy, each with its own strengths and weaknesses. This paper presents an overview of seven different ways to structure the remuneration of a FIT policy, divided into two broad categories: those in which remuneration is dependent on the electricity price, and those that remain independent from it. This paper examines the advantages and disadvantages of these different FIT models, and concludes with an analysis of these design options, with a focus on their implications both for investors and for society. (C) 2009 Elsevier Ltd. All rights reserved.