How Feed In Tariff Generally Works?
In a general perspective, the feed in tariff scheme is a guarantee that there is a certain rate that developers can sell the electricity they will produce from a renewable energy system. This is effective within a definite period as a form of assurance that the developer of such renewable energy system can have his money back in due time. As how it looks, this is a form of incentive in order to attract people and companies from engaging into the development of such systems. After, all, developing them is still costly as of the moment while its benefits to the environment are enormous. Aside from that, it is also a way of the government, to have a platform that they can say that they are for the environment. Therefore, how this scheme, in fact, works in the first place?
The general premise for a technology to be qualified to get this feed in tariff scheme is if the production or energy generation is more than five (5) megawatts. This is for domestic applications of the following systems:
- Solar electricity or photovoltaic, which are either roof-mounted or stand alone.
- Wind turbines, which are either building-mounted or free-standing.
- Hydroelectric power systems.
- Anaerobic digesters
- Micro combined heat and power or CHP.
Mechanics on How this Works
In terms of the mechanics on how this scheme works, the process starts from the electricity generation. For example, electricity generation begins from solar panels. After that, the electricity will pass through the transmission line and then to the distribution line up to the households. For domestic application, what people can do is to use it for your own household consumption. However, if developers have a surplus, then they can export those excess amounts of electricity to the grid. They will then be paid for such export.
For commercial or industrial scale of generation, then there is always tariff paid to the generator. The rate is usually above the average compared to the conventional tariff or price per kilowatt of conventional resource.
Benefits of Feed in Tariff
This can, indeed, benefit household and industrial generators in three (3) ways. These are through the generation tariff, export tariff as well as energy savings from the monthly bills.
On the generation tariff, the energy supplier is the one paying the household a certain rate for every unit of electricity. On the export tariff, it is an additional payment from the supplier for every unit that a household exports back to the grid. Further, renewable energy systems will obviously make a household save from their electric bills.
This article was written by Enviko.