A feed-in tariff (FIT) is a system wherein producers of solar energy sell the energy they produce to the local utility, at a price based on the cost of generating that energy.
Photo Credit: Sunetric
The feed in tariff program originated in Germany in 2000 with the aim of encouraging the uptake of solar energy by assuring investors – whether it be a business or a homeowner – a guaranteed return on their investment. Feed-in tariffs are usually designed to wind down over time.
A solar feed in tariff is often accompanied by a long-term (15-25 year) purchase contract. Payments are performance-based, offering an incentive for producers to maximize how much they sell back to the grid.