Transforming the Economics of Solar: How Feed-in Tariffs Work (Video)
Image credit: solarcentury.co.uk
While there may be concerns over the rates that feed-in tariffs are set at, now that the UK has finally launched its own feed-in tariff scheme—joining the growing ranks of communities and countries from Ontario to Australia in making solar a viable investment for all—it can only put more pressure on those economies not stepping up to support their fledgling clean energy industries. But how, exactly, does a feed-in tariff work, and why is it such an attractive proposition for householders who want to invest in solar? The short video from Solar Century below gives the basic run down on how the scheme works, and why it is so important. Essentially, it guarantees homeowners a certain income for the energy they produce—even if they use that energy themselves. If they chose instead to conserve energy, they get a small extra payment for any electricity sold back to the grid.
The result means that, in addition to savings on their electricity bills, and a hedge against future energy price rises, early adopters can also rely on a guaranteed income to recoup their investment. Of course such schemes only make sense at the birth of a new market—the plan is that as more and more people invest in solar, the prices come down, and Government support can be scaled back. In fact, built into the UK scheme is a commitment that the rates paid for each kWh will be reduced over time as prices for solar come down.
And as I said yesterday, anyone complaining about Government interference in markets should look at the subsidies given to fossil fuel industries, airlines and roads before throwing too many stones. Even the International Energy Agency supports feed-in tariffs, noting that it adds very little to your average family's electricity bill, and provides a huge boost to an industry that could prove vital for maintaining a stable economy and a clean environment for years to come.
With countries like China pushing ahead with ambitious clean energy programs, the United States would do well to look at sensible, innovative but far reaching solutions for stimulating a domestic renewable energy industry. "Drill baby, drill" is looking like an increasingly outdated slogan already.
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