Natcore Technology Inc (NTCXF)

[stopshortHatty]

Feed-in-Tariffs vs Feed-in-Premium Policies
Excerpt from NREL Technical Report “A Policymaker’s Guide to Feed-in Tariff Policy Design”, July
2010, http://www.nrel.gov/docs/fy10osti/44849.pdf
FIT Policy Definition
A feed-in tariff (FIT) is an energy supply policy focused on supporting the development of new
renewable energy projects by offering long-term purchase agreements for the sale of RE electricity.
These purchase agreements are typically offered within contracts ranging from 10-25 years and are
extended for every kilowatt-hour of electricity produced. The payment levels offered for each
kilowatt-hour can be differentiated by technology type, project size, resource quality, and project
location to better reflect actual project costs. Policy designers can also adjust the payment levels
to decline for installations in subsequent years, which will both track and encourage technological
change. In an alternative approach, FIT payments can be offered as a premium, or bonus, above the
prevailing market price.
Successful feed-in tariff policies typically include three key provisions: (1) guaranteed access to the
grid; (2) stable, long-term purchase agreements (typically, 15-20 years); and (3) payment levels
based on the costs of RE generation. In countries such as Germany, policies include streamlined
administrative procedures to shorten lead times, reduce bureaucratic overhead, minimize project
costs, and accelerate the pace of RE deployment. In addition, eligibility is typically extended to
anyone with the ability to invest, including but not limited to homeowners; business owners;
federal, state, and local government agencies; private investors; utilities and nonprofit
organizations.
FIT Payment Calculation Methodology
One of the most fundamental design challenges for a FIT policymaker is how to determine the
actual FIT payments awarded to project developers for the electricity they produce. A worldwide
overview of FIT policies reveals that a variety of approaches are used, which reflects diversity in the
policy goals. These different approaches can be divided into four basic categories.
(1) Based on the actual levelized cost of renewable energy generation. This approach is the most
commonly used in the EU, and has been the most successful at driving RE development around the
world.
(2) Based on the “value” of renewable energy generation either to society, or to the utility,
generally expressed in terms of “avoided costs.” This approach is used in California, as well as in
British Columbia.