A Feed-in Tariff (FIT) is a policy mechanism (an instrument of law) designed to encourage the adoption of renewable energy SOURCES and to help accelerate the move toward grid parity (when renewable energy sources will have the same costs as traditional sources of electricity such as natural gas, coal, or nuclear).

FITS typically includes three key provisions: 

• guaranteed grid access;
• long-term contracts for the electricity produced;
• purchase prices that are methodologically based on the cost of renewable energy generation and tend towards grid parity. 

FITs are designed to help standardize the way electricity is purchased from generators before being distributed to consumers. Traditional energy markets have a number of creative subsidies and revenue offsets that ENABLE market operators (like the Independent Electrical System Operator in Ontario) to sell electricity to consumers at artificially low rates, like the rates we have in Ontario. Renewable energy systems rarely have access to these subsidies, so they sell at true rates, rather than artificial rates, and the market is biased towards traditional energy sources (like coal, natural gas, and nuclear) which would OTHERWISE be much more expensive. FITs are designed to level the PLAYING field, and to give renewable energy sources like wind, solar, hydro and biomass/biogas, the opportunity to sell competitively. If sources like coal, natural gas, and nuclear were purchased through a FIT rather than being subsidized, they would likely have tariff rates between $0.15 and $0.45/kWh, not the $0.055 to $0.095/kWh that Ontarians expect.

A Feed-in Tariff (FIT) is a policy mechanism (an instrument of law) designed to encourage the adoption of renewable energy sources and to help accelerate the move toward grid parity (when renewable energy sources will have the same costs as traditional sources of electricity such as natural gas, coal, or nuclear).

FITs typically includes three key provisions: 

FITs are designed to help standardize the way electricity is purchased from generators before being distributed to consumers. Traditional energy markets have a number of creative subsidies and revenue offsets that enable market operators (like the Independent Electrical System Operator in Ontario) to sell electricity to consumers at artificially low rates, like the rates we have in Ontario. Renewable energy systems rarely have access to these subsidies, so they sell at true rates, rather than artificial rates, and the market is biased towards traditional energy sources (like coal, natural gas, and nuclear) which would otherwise be much more expensive. FITs are designed to level the playing field, and to give renewable energy sources like wind, solar, hydro and biomass/biogas, the opportunity to sell competitively. If sources like coal, natural gas, and nuclear were purchased through a FIT rather than being subsidized, they would likely have tariff rates between $0.15 and $0.45/kWh, not the $0.055 to $0.095/kWh that Ontarians expect.