Feed-in tariffs (FiTs) are the world's most widely used policy to drive renewable energy development. They have helped transform cloudy Germany into the world leader of installed solar power and photovoltaic manufacturing.

Key Factors to FIT Success NREL analysts have identified several key factors in a successful FIT policy: * Stability. Energy projects require several years to develop, so FITs have to be in place five years or longer to encourage certainty with investors and manufacturers. * Long-term contracts. Contracts in the range of 15-20 years allow investors time to recover their costs. * Adequate energy prices. FITs must cover project costs, plus a reasonable return to create stability, attract investors, lower risk and keep financing relatively simple. * Annually decreasing payments. As innovation and growth reduce technology costs, tariffs should be lowered according to a transparent and incremental plan. This encourages rapid deployment and increases competition among manufacturers. * Differentiate payments according to technology type, project size and resource quality. * Incorporate FIT into the electricity rate base. Tying FIT payments to ratepayers distributes costs and provides certainty that investors will get paid. * Reduce bureaucracy. Streamlining approvals reduces barriers and costs. Streamlining procedures especially helps small projects and encourages broader participation.