Who is in support?

Governments around the world are promoting solar energy use. Two major policies are the FITs and the RPS.

1.          Fit-in-Tariff schemes (FITs): FITs are used mostly on grid-tied solar systems, which can monitor the solar energy production so that government can set up incentives to for the PV system installation. Generally, the government pays for the energy that is generated from the PV system. Depending on the country, the government may pay generation tariff and/or export tariff with either a one time payment per watt or a monthly payment of kWh scheme for a certain amount of time frame. The payments rates differ in different countries.

l          For generation tariff, the energy supplier will pay for all the electricity the PV system generates.

l          For export tariff, the energy supplier will pay for each energy unit that is exported back to the electricity grid, so in other words, the electricity can be sold back to the energy supplier.

 

Example: Germany’s renewable energy act (EEG). The FIT provides security for PV system investors for a period of time. With rising PV system demand, there is more competition in the PV industry that results in better deployment for solar manufacturing and price cut. As a consequence of German’s FIT scheme, their energy market has started to turn away from fossil fuels and became the largest PV system installation market in the world.

2.          RPS (renewable portfolio standard): It is a regulation that places an obligation on energy suppliers to produce a portion of their energy from renewable energy sources.

Example: South Korea: starting 2012, the RPS will replaced the existing FIT scheme. It requires 14 state-run and private power utilities to generate 4% of their energy production (in excess of 500 MW) from renewable resources by 2015. And they aim to increase to 10% by 2022.