A Feed-in Tariff is an incentive structure to encourage the adoption of renewable energy through government legislation. The regional or national electricity utilities are obligated to buy renewable electricity at above-market rates set by the government
Wikipedia definition (similar term):
Feed-in electricity tariffs (FiT) were introduced in Germany to encourage the use of new energy technologies such as wind power, biomass, hydropower, geothermal power and solar photovoltaics. Feed-in tariffs are a policy mechanism designed to accelerate investment in renewable energy technologies by providing them remuneration (a "tariff") above the retail or wholesale rates of electricity. The mechanism provides long-term security to renewable energy producers, typically based on the cost of generation of each technology. Technologies such as wind power, for instance, are awarded a lower per-kWh price, while technologies such as solar PV and tidal power are offered a higher price, reflecting higher costs. As of July 2014, feed-in tariffs range from 3.33 ¢/kWh (4.4 ¢/kWh) for hydropower facilities over 50 MW to 12.88 ¢/kWh (17.3 ¢/kWh) for solar installations on buildings up to 30 kWp and 19 ¢/kWh (25.5 ¢/kWh) for offshore wind. On 1 August 2014, a revised Renewable Energy Sources Act or EEG (2014) (colloquially called EEG 2.0) entered into force. The government will now stipulate specific deployment corridors to control the uptake of renewables and the feed-in tariffs themselves will be determined by auction. The aim is to meet Germany's renewable energy goals of 40 to 45% of electricity consumption in 2025 and 55% to 60% in 2035. The policy also aims to encourage the development of renewable technologies, reduce external costs, and increase security of energy supply. In the first half of 2014, 28.5% of gross electricity production in Germany came from renewable sources. The Federal Environment Ministry estimated that renewables were to save 87 million tonnes of carbon dioxide by 2012. The average level of feed-in tariff was 9.53 ¢/kWh in 2005 (compared to an average cost of displaced energy of 4.7 ¢/kWh). In 2004, the total level of reallocated EEG surcharges was €2.4 billion, at a cost per consumer of 0.56 ¢/kWh (3% of household electricity costs). By 2013, the figure had risen to €20.4 billion. The tariffs are lowered every year to encourage more efficient production of renewable energy. By 2014, the EEG surcharge – which pays for the additional costs through feed-in tariffs – had increased to 6.24 ¢/kWh. As of July 2014, the regular reductions (degressions) were 1.5% per year for electricity from onshore wind and 1% per month for electricity from photovoltaics. The solar sector employed about 56,000 people in 2013, a strong decline from previous years, due to many insolvencies and business closures. Although most of the installed solar panels are nowadays imported from China, the Fraunhofer institute ISEestimates, that only about 30% of the EEG apportionment outflows to China, while the rest is still spent domestically. The institute also predicts that Germany's solar manufacturing sector will improve its competitive situation in the future.