Pointing out that three quarters of the world’s renewable energy was installed with support from a feed in tariff (FIT), Paul Newman of the Arizona Corporation Commission explained that Arizona “is pushing the possibility of a FIT to get some renewable infrastructure in the ground.”

Unlike up front rebates based on the size of a system someone installs, an FIT would reimburse renewable energy producers based on the amount of electricity they actually generate. From a financial standpoint, it is considered a strong policy because FITs incentivize production instead of simply installation. Practically speaking, FITs can be hard to enact, however. Paying renewable energy producers on a per kWh basis means the cost often trickles down to ratepayers. Commissioner Bob Stump qualified the proposal by explaining, “there would have to be parameters on the size and cost, and have a cap (on the money available).”

Will this be politically feasible? Maybe, but it’s not a sure thing. Germany FIT has been famously successful, but the approach is relatively new to the US market. Oregon’s pilot FIT just started this summer, to much fanfare and popularity, and other U.S. jurisdictions have tinkered with the idea.

If you’re interested to learn more, the National Renewable Energy Lab has a full report on FITs from a policy perspective. Also, for more in-depth discussion on what’s going on in California and at the federal level, see Ed Gunther’s piece, “U.S. Photovoltaic FiTs and Starts.”

On balance, FITs create strong demand for solar — which would be good for states like Arizona, which is actively promoting itself as a hub for solar energy manufacturers. While nothing is guaranteed, we’re happy to see that Arizona leaders are discussing the possibility of creating a feed in tariff.