why are feed in tariffs so low
Feed-in tariffs (FITs) are a Government incentive, introduced in April 2010, to encourage the uptake of renewable energy technologies. They offer financial incentives to those who generate their own energy by installing solar panels or wind turbines. Despite the obvious financial benefits of FITs, the rates remain surprisingly low. In this blog post, we explore why feed in tariffs are so low and what can be done to address this issue. We’ll look at some of the key factors that influence FIT rates and outline how policy makers and consumers can work together to improve them.
Germany’s feed-in tariffs
Germany’s feed-in tariffs are some of the lowest in the world. That’s because the country has a relatively high cost of living and a large number of renewable energy sources.
As a result, Germany has to import a lot of its electricity from other countries. This means that the price of electricity in Germany is higher than in many other countries.
This also means that the German government is reluctant to subsidize renewable energy sources. Instead, it has been trying to phase out subsidies for renewable energy over the past few years.
However, this policy is controversial. Many people believe that it is preventing Germany from reaching its potential as a leader in renewable energy.
The Australia’s feed-in tariffs
The average Australian home has a solar PV system size of around 6kW. In most cases, this system will cost between $3,000 and $5,000 to install. The average daily output of a 6kW system is around 21 kWh – this means that it will generate around 730 kWh of electricity per month.
Assuming an average retail price of electricity of 28c/kWh, this system will save you around $205 per month on your power bill. In addition, you will also receive a feed-in tariff (FIT) credit for the electricity that you export back to the grid.
The current FIT rate in most states is between 6c and 8c per kWh. This means that you could earn between $43 and $58 per month from your FIT credit – giving you a total saving of between $248 and $263 per month.
However, there are a few things to keep in mind with regards to feed-in tariffs:
1) The FIT rate is set by the government and can change at any time – it has been gradually decreasing over the past few years.
2) The FIT credit is only paid on the electricity that you actually export back to the grid – if you use all the electricity generated by your system, then you won’t receive a FIT credit.
3) The FIT credit is paid directly to your energy retailer – not to you directly
The UK’s feed-in tariffs
The UK’s feed-in tariffs are set at a rate of 5.24p/kWh for new installations, and this is typically paid for by the energy suppliers. However, the government has recently announced a review of the FiT scheme, which could see the rates reduced. This has caused some concern among solar PV installers and owners, as it could make the technology less viable in the UK.
France’s feed-in tariffs
France’s feed-in tariffs are some of the lowest in Europe, at just over 5 cents per kilowatt hour (kWh). This is despite the fact that France has some of the best solar resources in Europe. The low tariffs are due to a combination of factors, including a lack of competition in the French solar market and low wholesale electricity prices.
As a result of the low tariffs, many French solar companies have been struggling to survive. In addition, the low tariffs have made it difficult for new entrants to enter the market.
The situation is unlikely to improve in the short term, as the French government is currently working on a new energy law that is expected to further reduce feed-in tariffs.
Italy’s feed-in tariffs
Feed-in tariffs (FITs) are subsidies that guarantee a fixed price for electricity generated from renewable sources. In Italy, the FIT for solar PV is set at €0.15 per kilowatt-hour (kWh) for systems up to 200 kilowatts (kW). This rate applies for 20 years and is paid on top of the market price for electricity.
The low FIT has been widely criticized by the renewable energy industry, as it reduces the profitability of solar PV projects and makes it harder to finance new installations. The Italian government has defended the low FIT, arguing that it will help to meet its climate goals while keeping electricity prices affordable for consumers.
Spain’s feed-in tariffs
Spain’s feed-in tariffs are some of the lowest in Europe, and have been decreasing steadily over the past few years. The current tariff for solar PV is just €0.14 per kWh, and is set to decrease to €0.10 per kWh next year. For wind power, the tariff is €0.05 per kWh. These rates are far below the average retail price of electricity in Spain, which is around €0.20 per kWh.
There are a number of reasons why Spain’s feed-in tariffs are so low. Firstly, the Spanish government has been gradually reducing subsidies for renewable energy projects since 2013, in an effort to cut public spending. Secondly, electric utility companies are required to purchase renewable energy at a discount to the market price, meaning that they are reluctant to pay high tariffs for it. Finally, Spain has a large amount of installed renewable capacity relative to its population, meaning that there is less need for new capacity and hence less incentive for developers to build new projects.
Despite the low level of subsidies, Spain continues to be one of the leading countries for renewable energy development in Europe. In 2017, renewables accounted for 18% of the country’s electricity mix, up from just 9% in 2010.
Why are feed-in tariffs so low?
Feed-in tariffs (FITs) are a key policy mechanism for promoting the deployment of renewable energy technologies. However, in many countries around the world, FITs have been reduced in recent years. This has led to a significant decrease in the deployment of renewable energy, and has had a negative impact on the global transition to a low-carbon economy.
There are a number of reasons why FITs have been reduced in many countries. Firstly, the cost of renewable energy technologies has fallen significantly in recent years, making them more competitive with traditional fossil fuel-based power generation. Secondly, government support for renewables has declined in many countries as policymakers have shifted their focus to other priorities. Finally, the low price of fossil fuels has made it difficult for renewables to compete on price.
The reduction in FITs has had a number of negative consequences. Firstly, it has led to a slowdown in the deployment of renewable energy technologies. This is bad news for the climate as we need to urgently transition to cleaner forms of power generation if we are to avoid catastrophic levels of global warming. Secondly, it has resulted in job losses in the renewable energy sector and has hindered the development of new technologies and businesses. Thirdly, it has created uncertainty and investor risk, which is deterring investment in renewables.
In order to reverse this trend, governments need to provide stability and long-term certainty for investors by commit