What is Feed In Tariff (FIT)?
FITS is the concept of putting a legal obligation on utility companies to buy electricity from renewable energy producers with a special price with a guarantee for a certain period. To further attract investors of renewable energy, utility companies are also given the duty to provide a network for renewable energy installations and jointly bear the investment risk by sesame energy user.
FITS is considered quite effective in developing renewable energy potential which generally knock on some things, like: 1) costs and prices much influenced by the energy subsidy, oil price fluctuations, and large initial capital; 2) laws and regulations that are less supportive investors renewable energy, the uncertainty risk, access to utility networks, and insurance; 3) less access to credit support, doubts about the maturity of renewable energy technologies, and etc..
The existence of good rules to support the FIT can overcome several problems, such as: priority for renewable energy to gain access to the utility grid, requires utility companies to buy electricity from renewable energy sources, determining a fixed price during a certain period, and no limiting the amount of energy sold to the grid.